Grand Committee
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Arrangement of Business
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The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)
My Lords, Members are encouraged to leave some distance between themselves and others and to wear a face covering when not speaking. If there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Revised Energy National Policy Statements
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Lord Callanan
That the Grand Committee takes note of the draft Revised Energy National Policy Statements laid before the House on 11 October 2021.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, our purpose here today is to consider updated energy national policy statements, which we propose to designate later this year, subject of course to the outcome of a public consultation and parliamentary scrutiny.
NPSs for all types of nationally significant infra- structure should comprise clear guidance on the legal, policy and technical issues that project sponsors need to consider as part of their applications for planning consent under the Planning Act 2008. They enable the Planning Inspectorate to examine the application before any recommendations are sent to the Secretary of State for determination, and underpin the delivery of legally robust and timely planning decisions by the Secretary of State. Importantly, where the need for a type of nationally significant infrastructure is established in an NPS, that need cannot then be questioned on an individual application for development consent.
The NPS framework is complemented by two supporting assessments: the appraisal of sustainability and the habitats regulations assessment. The appraisal of sustainability ensures that the likely national environmental and socioeconomic effects of the national policy statement are identified and evaluated. The habitats regulations assessment identifies and assesses the likely effects of the national policy statement on nature conservation and specially protected sites.
The suite of energy NPSs was first designated in 2011. They set out national energy policy and form the framework for decision-making on applications for development consent for nationally significant energy infrastructure projects. The overarching strategic national policy statement, EN-1, sets out the need case for certain energy infrastructure and general assessment principles. The other five NPSs set out technology-specific assessment principles. The Government published their energy White Paper, Powering Our Net Zero Future, in December 2020. The White Paper presents our vision of how we make the transition to clean energy by 2050, building on the Prime Minister’s 10-point plan.
Of course, since the energy White Paper, the Government have published the Net Zero Strategy. This sets out clear policies and proposals for keeping us on track for our coming carbon budgets and for our vision for a decarbonised economy in 2050. The strategy raises our ambitions to hit our climate targets, as well as delivering our goals to create new jobs and industries as we capitalise on green economic opportunities. The energy NPSs need to reflect this scale of ambition.
The agenda established through the energy White Paper and net-zero strategy mark the start of a decisive shift away from unabated fossil fuels to clean energy technologies. This means renewables, nuclear, CCUS and new technology options such as low-carbon hydrogen. Deploying a range of low-carbon technology options keeps us in line with our objective to ensure that our supply of energy always remains secure, reliable, affordable and consistent with our net-zero target.
The Government decided that it was appropriate to review the existing energy national policy statements to ensure that they reflect the policies set out in the energy White Paper. The review would ensure that we continue to have a planning policy framework which can deliver the investment required to build the infra- structure needed for the transition to a clean energy system.
I should be clear that updating the NPSs is not the only way that we will satisfy our infrastructure needs. Through the national infrastructure strategy, the Government have committed to a major reform programme to refresh how the nationally significant infrastructure project regime operates. This reform programme will make the planning regime more effective and bring government departments together to deliver more certainty in the process and faster outcomes. The Department for Levelling Up, Housing and Communities will be providing further information on how it is taking the NSIP reform programme forward later this year.
The draft revised energy NPSs, which we have consulted on, reflect our policy that a diverse mix of technologies will be required to deliver on our energy objectives. However, where a technology no longer meets our objectives, it is right that this is removed from the mix, and the NPSs are clear that there is no longer any role for new nationally significant coal or oil-fired electricity generation. We believe that the market is best placed to determine the best solutions for very low emissions and reliable supply, at a low cost to consumers. This means that we should use the NPSs not to deliver specific amounts or limit any form of electricity infrastructure, but rather to set out the framework under which they can be consented. This approach facilitates competition and spurs both investment and innovation in technologies which are cheaper and more efficient.
We will need a significant amount of new energy infrastructure. Electricity demand is set to double as we electrify heating and transport. Networks need to adapt for the future electricity system. We will also need oil and gas to support a smooth and orderly transition to a clean energy future and to ensure security of supply. Natural gas will still be needed for heating homes and workplaces, until we are able to deploy low-carbon alternatives, so we need infrastructure to support the importation, storage and transmission of oil and gas. Natural gas infrastructure might also be repurposed in the future for use by other gases required to deliver a net-zero economy, such as low-carbon hydrogen or for transportation of carbon dioxide to storage.
The nuclear power generation NPS, EN-6, was reviewed but not amended as there are no changes material to the limited circumstances in which it will have effect. However, it would not be appropriate to withdraw the NPS at this time given that the information that it contains may be relevant to development consent order applications under examination and the need to maintain a stable nuclear planning and consent regime. The Government went out to consultation with an updated energy NPS last September. The consultation closed in November. The draft energy NPS has been scrutinised by the BEIS Select Committee in another place; its report and recommendations are due to be published shortly, I am told. We will consider the recommendations and responses to the consultation, and publish our response in due course.
National policy statements for energy must be clear about the urgent need for new energy infrastructure, to meet our climate change commitments and continue to ensure a secure and affordable supply of energy. They must also identify the potentially negative impacts of such infrastructure at a local level to enable planning decisions to be taken which weigh up this national need against potential impacts, based on expert evidence and with full stakeholder involvement. The documents that we have consulted on strike the right balance between these factors. I appreciate that there are many views on this, and I look forward to hearing all the contributions to today’s debate. I beg to move.
Lord Whitty (Lab)
My Lords, I thank the Minister, particularly for explaining the relationship of these documents to planning decisions at both national and local level. Last night, I took home all the documents that are piled up over there, together with the energy policy White Paper and hydrogen White Paper, and tried to make sense of them. I failed utterly, although the Minister’s explanation has made it slightly clearer. Nevertheless, I shall bore the Committee with my reflections, looking at the totality of the papers before us.
I note in the present draft that the Government frequently use nuanced forms of modal verbs—namely, could or can rather than should or will. That is perhaps too loose a form of words for the immense task that we have before us in meeting our net-zero targets in particular. As the Minister said, those net-zero targets have a direct impact on not only what are traditionally regarded as nationally significant developments but the local effects that those developments will have on their areas and populations.
Therefore, the final version needs to be a little more definitive than the one before us. The key target here is clearly that for 2035. Decisions taken in planning now will not see fruition for at least three or four years and, in many cases, much longer. The 10-year run-up to 2035—meeting the 78% reduction, I think in emissions by that date— therefore depends on crucial decisions to be made in the next two or three years. That requires clearer guidance in the overriding policy statement, less freedom of manoeuvre and less nuance in the guidance given, otherwise we will have inconsistent decisions.
I take just four examples of where we need a clearer decision on the basis for any national or local decisions before they can be taken. The Minister will be familiar with the arguments in many areas—we debated nuclear yesterday and have debated other aspects—but I shall go through them quickly.
The first is obviously the replacement of natural gas heating for homes and buildings. On that, we need clear decisions on whether a hydrogen-based system can meet most of our gas needs, whether we will have enough hydrogen and how it will be produced—presumably, it will be green hydrogen. The hydrogen strategy itself, although very useful, leaves a lot of questions unanswered. We need to know whether there will be differential impacts in different parts of the country. If we are to have large-scale hydrogen for industrial and domestic purposes, heating may well extend only to the area within a few miles and everybody else will have to rely on transferring on to the national grid for direct electrification of their heating or, in the more rural and suburban areas, probably heat pumps. So there will be different impacts of that decision but if what is currently natural gas heating, which heats 80% of our homes and buildings, is to be replaced, we must be clear how it will be, and in what parts of the country it may be replaced by different forms of lower-carbon heating.
My second example is related, because one of the replacements for our gas grid proposed for our domestic heating has been district heating—effectively, local networks. If we are to have local networks on a major scale, we cannot rely on a planning process which takes propositions for development, retrofitting or individual buildings on a one-by-one basis. You have to designate substantial domestic or industrial building areas to be obliged to take the form of district heating that is given planning permission on the grounds that it is nationally significant. If we are to see district heating—I am in principle in favour of it, as long as its consumers are protected, because clearly there is no competition in those circumstances—we need to ensure that we have powers to designate the whole area, otherwise, by and large, it will not work. That includes not only new developments but the retrofitting of existing buildings and factories.
Thirdly, there is the issue of offshore wind. It has been a huge success and, in the period between now and 2035, will continue to be one of the major contributors to reducing our total carbon emissions. However, the development of offshore wind has been somewhat haphazard. By and large, a single array has a single landing point onshore and each is owned by different companies or consortia. There are planning considerations, usually addressed locally to start with, of how you bring offshore wind onshore and what the connections look like, because they will also be mostly in areas of natural beauty or other rural areas which do not like the disturbance. If every array has an individual landing point, that is a huge number of planning decisions if we are to meet the objectives in the energy White Paper.
If, however, there were to be an offshore network so that several arrays could be connected, some engineers argue that we could reduce the number of landing points by something above two-thirds. That requires a government intervention to ensure that we have an onshore and offshore network that limits the number of onshore connection points. That is a key strategic decision and, if decisions on new or enhanced offshore arrays are taken on a one-off basis, we will never reach the decision to amalgamate them into an offshore grid.
My second-to-last point relates to nuclear, which we discussed at some length yesterday. It is also important that we have early government decisions on a number of nuclear aspects, particularly the designation of nuclear reactor sites—a project that successive Governments have utterly failed at over the past 20 or 30 years. Any sizeable nuclear reactor will create significant planning effects on the surrounding area and there will be strong political pressures as well. That means that, if we are to go for a new generation of nuclear power—by and large, I am in favour of that, whether on the size of Sizewell or on a smaller size facilitated by the Rolls-Royce developments on small modular reactors, et cetera—we need to know where it will go and all the planning hurdles have to be overcome. That will again require a much clearer government decision on where those sites will be.
Of course, the most acute and difficult decision for the Government, and for all of us, is the issue of the storage of waste and waste disposal. We already have a historic legacy of waste from now-closed reactor. If we are to have a new generation of nuclear, while it will be much more efficient, there will be high-radioactivity waste to be disposed of. We need a decision on that urgently.
I hope that the final version of the statement indicates that there are key decisions that the Government have already taken, or are about to take, which will define the parameters of any subsequent decisions, even on relatively large-scale projects. I hope that those will be addressed.
My final point is that as far as I could see, certainly in the overriding document, there is a major omission on carbon reduction. As I understood it, the National Infrastructure Commission indicated that the energy efficiency project, to insulate and otherwise improve the energy efficiency of our homes, should be regarded as a nationally significant project. That is operated street by street, at best, but it is still in totality a major contribution towards meeting our net-zero targets. It should really be dealt with in the same way as these other single-site projects. I hope that the Minister, and the final version, will take that into account and that it will be somewhat shorter and more to the point than the present document, so that all protagonists can understand where we stand on that and where their own projects stand.
Baroness Neville-Rolfe (Con)
My Lords, energy is a serious topic, as we have been forcefully reminded very recently. Indeed, my own house in Wiltshire was cut off from the electricity grid as a result of recent storms for two days. Since our village has no gas supply, that brought real discomfort to all, but especially of course to the very old and infirm. Luckily, the village has an emergency generator, started up by supportive volunteers who learnt who and how to help across our community during Covid.
My first point is a simple one. It is the responsibility of any Government to ensure that energy is supplied as required both to domestic customers and to enterprises of all kinds. Any Government who fail in that task will be judged harshly and might well not be a Government for very long. No amount of enthusiastic rhetoric on sustainability, climate change or habitat enrichment will serve as an effective excuse. I am not sure that the document before us is as unequivocal in recognising this reality as it could, and ought, to be. Keeping the lights on, literally and metaphorically, is the number one priority in energy policy. All other aspects are secondary to that.
Having said that, it is sensible to have documents of the kind before us today to help with planning and other decisions. Naturally, there will be a need for constant revision, since the world changes more quickly than we sometimes recognise. Twenty-five years ago—less than a third of the average lifetime—most countries, including this one, relied heavily on coal. Indeed, a recent UK Prime Minister was heavily criticised by some politicians for allegedly devastating the UK coalmining industry. Now the same people are critical of any attempt to retain any coal mining at all in the UK, even if the objective is to retain one or two heritage railway lines, as some may recall from our debates on the Environment Bill and my vain efforts to save the Thomas the Tank Engines. How the world changes! Coal was once the epitome of virtue to some; now it represents the devil to the same people.
Personally, I favour a more nuanced and balanced approach to energy policy. I would add that gas is a very important part of any transition to net zero, and that shale has played a major part in the transition in the US, and indeed in its growth. So we need to see regular textual revisions to these documents every few years, as policies change and innovations come through. The noble Lord, Lord Whitty, has rightly just talked about the potential role of hydrogen and town heating systems, as well as of nuclear, where I think we are on more common ground. On this question of revisions, I very much hope my noble friend the Minister can indicate how often he envisages that changes might be made.
My other main point is to emphasise how much investment there will need to be in infrastructure if the presently expected move towards electrification, including electric vehicles, comes to pass. That has two major implications. First, we need to be clear how and where the investment will be made. We need to be assured that those concerned with the grid and other electrical infrastructure have a viable plan to achieve this investment. I am not clear that we can yet feel confident on that point. Secondly, we need to know from whence the very large sums needed are to come. I note that a main method of financing green investments so far has been to impose green levies on consumers. That is one approach, but I note that it has quickly come into question now that electricity prices have risen steeply and inflation has taken off sharply. Some argue, rightly I think, for moderation, but all this certainly needs more thought.
Finally, I return to the storms and what they have taught me. Despite the advent of the 105 number, which I remember launching a few years ago when I was fortunate enough to be in the Minister’s position, consumers are in serious trouble when their power lines go down. We also need more thought about how people might prepare. Perhaps retailers could start selling first-aid style kits, with candles, matches, gloves, woolly hats, primus stoves and an old-fashioned phone that plugs in when the wi-fi and cordless phones do not work. This of course is not an issue for the statements before us, but we always need to think about how to make life easier and bearable for the consumer. Throughout history, too much of the energy debate has been provider and government-led, and that concerns me. I was therefore glad to hear that our Economic Affairs Committee will be looking at some of these knotty issues. I hope it will be able to help tackle the problems, including those that hit the poorest in the country, old and young.
Lord Teverson (LD)
My Lords, I welcome this document. I remember some 10 years ago sitting here and going through all six of the previous documents. It does not seem so long ago, which is a sad fact, but there we are. It is right that a lot has changed since the statements first came out during the coalition Government.
I do not want to talk particularly about net zero; I want to talk about the other emergency that we have and ask a number of questions on it: the biodiversity emergency, and how that relates to the national policy statement. There are some specific questions that I want to ask at the end. I welcome the fact that biodiversity is mentioned quite a bit—I have mainly gone through the overarching document—but I do not understand how the Environment Act that we passed at the end of last year relates to biodiversity net gain in terms of nationally significant infrastructure projects. Paragraph 4.5.2 of the overarching document states:
“Although achieving biodiversity net gain is not an obligation for projects under the Planning Act 2008, energy NSIP proposals should seek opportunities to contribute to and enhance the natural environment by providing net gains for biodiversity.”
Yet Schedule 14 to the Environment Bill, which is about biodiversity net gain, states:
“The biodiversity gain objective is met in relation to development for which planning permission is granted if the biodiversity value”
is attributable to the percentage, which, as we know, in the Environment Act is 10%. Given that the Environment Act, primary legislation passed only at the end of last year, relates biodiversity net gain to a planning permission —and I understand that NSIP is a planning permission— does the 10% net gain apply to such projects? Is that true also of marine projects? In any case, even if the Environment Act does not apply to them, does the Secretary of State expect that marine projects will also create biodiversity net gain?
It is great to go on about biodiversity net gain, but, as we know, there is a requirement in the Environment Act that such net gain be protected for at least 30 years. That has to be done by local authorities, as I understand it from the Environment Act, but when it comes to NSIPs, who is going to make sure that net gain that is promised as part of NSIPs’ planning permissions is actually delivered through that period of at least 30 years? If that policing and enforcement do not take place, we know that it will not happen or will disappear along with everybody’s corporate memory of the original agreement. I would be very interested to understand the Minister’s idea of that. I am sure that both he and I have exactly the same objectives in that area.
On a similar environmental theme, I could find no mention within the documents of the circular economy. This is one of the other areas that government is starting to get involved in and where it is starting to see that, rather than a linear economy, we should move to a circular economy in terms of global resources. How will the Government start to look at that in terms particularly of renewable energy as well as all the other areas that there are? On renewable energy, we have got as far as looking at wind turbine blades, but that is about as far as it goes, and I do not think that the industry has been fully responsible yet in that area.
On waste disposal, the noble Lord, Lord Whitty, was absolutely right. I know that the Government are doing a study on networks of offshore wind pipelines and energy cables; it is particularly important, as development starts in the west, in the Celtic Sea, to understand what is going to happen, so that we do not have the sort of spaghetti junction that we have in the North Sea.
I also want to comment briefly on nuclear waste. I was disappointed that EN-6 was not actually updated. I think that the Minister may reply by saying that it is in process, which, if so, is fair enough. But on page 16 of the original EN-6, the footnote, which I thought was a typing error when I first read it, says:
“Geological disposal of higher activity waste from new nuclear power stations is currently programmed to be available from around”—
wait for it—“2130”. That is still 120 years away, and I wonder whether the Government would like to reconsider that and maybe bring it a little forward. The document does say at the end, to give it its due, that they—this is the coalition Government—might see
“potential to bring forward this date”.
I shall put it in my diary to check if it happens by then, but it would be great if we could bring it forward.
Lastly, I again checked “energy security” on a phrase checker, and it came up with “text not found”. The document does mention energy security, but only in relation to two things. One is the capacity market, all around the area that the noble Baroness, Lady Neville-Rolfe, mentioned—keeping the lights on—which the capacity market is very much about. The other area is cyberattacks, which as we know are very topical and important. But there is nothing on what we would understand more broadly as energy security in this overall document, and I find that quite an interesting omission.
I look forward to the Minister’s reply, particularly in the area of who is responsible for making sure that biological and biodiversity net gain actually happens over the next 30 years for this level of project.
Lord Moynihan (Con)
My Lords, I declare my interests. My commitment to the environment came with me into my first ministerial job in the 1980s, and the energy world provided me with a second opportunity of ministerial office. Since then, I have regularly worked in both sectors. I was privileged to be elected the first president of the British Wind Energy Association, and I introduced the first competitive market framework for renewables in the UK, the non-fossil fuel obligation in 1990. Since then, as set out in the register, I have continued to work in the energy sector, culminating in my current chairmanship of Buckthorn Partners, which works in energy transition.
This short debate, particularly well set out in EN-4 before the Committee, and the wider strategy referred to by my noble friend the Minister, provides us with the opportunity to discuss the issues set out admirably by the noble Lord, Lord Whitty. Looked at rhetorically, the current high watermark of the relentless destructive attack on the oil and gas industry, with John Kerry citing the May 2021 International Energy Agency report as evidence that there should be no more new oil and gas investment anywhere in the world, is foolish and ultimately destructive. That is so in political terms, as it ignores the transitional pain inflicted on families and industries around the world, and it is counterintuitive, as it encourages highly polluting coal to be used in electricity generation, thus causing yet further pollution to our planet.
However, today, at least in this Committee, we have a more moderate, sensible and civilised energy debate, as the documents before us highlight. We vitally need to produce gas within a regime of strict environmental standards against the chorus of politicians clamouring to inflict windfall taxes on North Sea producers to help struggling families, who are struggling primarily because of eye-wateringly expensive energy policies. This came as we brought to a close a record year of low investment on the UK continental shelf. This has to change.
We all watch European customers, both residential and industrial, facing the extreme post-Covid pain of record power prices and gas prices, at some $200 per barrel of oil equivalent, which means that a European fertiliser producer, or any European industrialist using natural gas as a feedstock, is now paying eight to 10 times more for energy than a US or Middle Eastern competitor, and nearly 15 times more than a Russian competitor, due to the unprecedented differential between global spot prices, at some $200 per barrel of oil equivalent and much lower market gas prices in self-sufficient countries such as the US, Russia, et cetera. Europe, including the UK, could now lose a significant proportion of its industrial base to “home fire” very quickly indeed if this energy crisis continues.
We also anguished in 2021 at the all-benevolent coal-to-gas switch, the most effective atmospheric cleansing policy yet devised, being reversed in China and other parts of Asia as they burned more coal again due to gas prices reaching levels exceeding $300 per barrel of oil equivalent. Now we all sit on the precipice watching if the stability-threatening energy price tsunami will sweep away many industries before it, or whether the tide will turn the turn as the political elite of the West confronts its poorest citizens being crippled by the energy crisis imposed on them. Are the hopeful recent reports that—long overdue—the EU will include gas in its taxonomy of green energy a sign of energy sanity returning, or is this a false dawn, with Germany’s new Government showing ever more radical eco-credentials?
A wise voice in this debate to whom every Government should turn for advice is Philip Lambert, who, leading Lambert Energy Advisory, has continued to highlight the critical role of gas, as mentioned by my noble friends Lady Neville-Rolfe and the Minister, if the world is to pursue accelerated decarbonisation and create a responsible energy mix that balances affordability, reliability, energy security and environmental needs. With consistency in his approach to energy policy in recent debates, Lambert continues to emphasise that gas plus renewables, as so obviously on offer in the UK with its strong offshore gas plus offshore wind resource blend, are complementary partners and able to lead the phase-out of coal, as well as supporting blue/green hydrogen buildout efforts.
Recently, Lambert set out the problem in a rather innovative way, saying that it is very simple to understand if one uses a stark medical analogy. The climate doctors of the western world, who gathered at Glasgow for COP 26 in November, have decided, with very little real democratic debate or scrutiny that the global patient, threatened by the “certainty” of extreme and catastrophic climate change, now needs an accelerated transfusion of the “fossil fuel” portion of the global energy lifeblood which courses through the global economic body every day, underpinning the heartbeat of our modern life of mobility, health, domestic living, food production and industrial process. The climate doctors’ prognosis, as underpinned in the IEA paper of May 2021, is a “net zero world” by 2050, the ongoing “capital starvation” and progressive transfusion of 80% of the current energy lifeblood of the world—the 101 million barrels of oil equivalent per day of oil, 66 million barrels of oil equivalent per day of gas and 70 million barrels of oil equivalent per day of coal.
In this incredible medical transfusion experiment, we need to dispense as quickly as possible with 80% of the world’s energy lifeblood. But as any responsible medical doctor will testify, no transfusion process should happen unless the patient can receive with complete certainty instant similar amounts of “clean bloodstream” —ie, new clean energy blood of 237 million barrels of oil equivalent per day—otherwise, the patient will literally die. Yet breathtakingly, the climate doctors currently have only developed small, highly uncertain and intermittent—albeit very welcome—“new blood sources” to transfuse back into the body. After 20 years and nearly $5 trillion of investment into “new energy blood”, the world has only 15 million barrels of oil equivalent per day of wind and solar, against the 237 million barrels of oil equivalent per day required—and this bloodstream flows, as 2021 has demonstrated, only sporadically to the heart when the wind blows or the sun shines. Moreover, the all-in cost of intermittent renewables into power systems is rising not falling, due to the high cost of system balancing and legacy subsidy and government guarantee costs.
Our journey to this began 40 years ago exactly, and we have reached a global position of 15 million barrels of oil a day equivalent of renewables against the necessary 237 million, but instead of recognising that we are entering a vital stage of transition, many demonise gas—which, if revoked from the energy equation, as so many campaigners would have us do immediately, will unquestionably damage the world economy. Of course it is right to invest heavily in solutions to take us to net zero, but this should be done alongside acceptance of gas as a critical component of the energy mix in the UK as we move towards net zero and welcome ESG approaches. Setting an arbitrary date of 2050 is little wiser today than forecasting the date of storms in the UK next winter.
I should add that most of the rest of the energy lifeblood is made up of biomass, which entails burning primarily wood at higher carbon intensity than coal at a time when the world should be protecting all existing forests and planting billions of new trees, not cutting them down, especially as the tree is still the most effective carbon capture and storage process in today’s world, with the carbon abatement costs still 10 times cheaper than a human-manufactured CCS plant. So the climate leaders have been ironically highly successful at starving the global gas machine of essential investment needed to overcome natural global gas production declines of 3% per annum, let alone allow gas productive capacity to increase to beyond its current level of 66 million barrels of oil equivalent per day to facilitate the all-important environmental initiative: the global coal-to-gas switch.
We are therefore waking up to the nightmare that high gas prices may in 2022 imperil the very viability of mass renewable rollout, because the back-up needed to create a firm power product out of intermittent renewable production relies basically on gas—or coal if gas is too expensive. The real nightmare for renewables producers is new obligations on them—rather than energy customers or taxpayers—to pay the full costs of back-up supplies. This, plus a rise in interest rates to challenge their leveraged model, could push some renewable energy players in 2022 into the same difficulties as faced recently by the mass bankrupted energy suppliers in the UK, who promised “100% renewable electricity” and other seemingly attractive product brands but then faced the full storm of reality when wholesale gas/power prices soared and the questionable irresponsibility of the UK Government’s populist “price cap” policy was fully revealed, and they may well end up in the same place. I foresee many of the current wind operators facing financial difficulty. Certainly, a new generation of companies will take over but the next five years are going to produce harrowing headlines around the world along with calls for significant nationalisation.
Policymakers must cease their rhetorical attack on natural gas, realising that for a responsible energy transition to occur, a solid partnership between best-in-class renewables such as offshore wind in the UK or solar in India and best-in-class gas—zero methane leakage, environmentally responsible and cheap—is required. That means tax-effective measures to extend the life of fields in the North Sea, postpone decommissioning, bring onstream new gas fields and maximise recovery rates within a clear and certain framework of strong, environmentally responsible policies. This surely is the great window of opportunity for the UK so we can produce a clean, firm power product via our integrated and environmentally responsible gas/renewables/trading model into the market, which will begin to wake up to the fact that firm power is a premium product, not a cheap, guaranteed given.
Maybe the last word should be left to our Chancellor, Rishi Sunak, who recently commented that North Sea gas
“plays an important part of our transition to net zero.”
He added:
“I want to make sure that people acknowledge that we should also exploit our domestic resources. We have resources in the North Sea, and we want to encourage investment in that because we’re going to need natural gas as part of our transition to getting to net zero. And in the process of getting from here to there, if we can get investment in the North Sea that supports British jobs, that’s a good thing. So that has to be part of the mix as well.”
Baroness Sheehan (LD)
My Lords, it was good last September to finally have sight of the draft updates for the range of energy-related national policy statements, first introduced a decade ago in 2011. I will restrict my remarks today to the infrastructure that we need to deliver net zero with regard to our shorter-term horizons —for example, the rollout of electric vehicles—and will not be tempted to talk about gas and its phase-out.
These updates, according to the Government, focus on regulatory, policy and technology changes to guide those involved in determining development applications for major infrastructure projects in England and Wales. As the noble Baroness, Lady Neville-Rolfe, pointed out, National Grid is going to be crucial in delivering this. It sits at the heart of Britain’s energy system. It is fully behind the net-zero ambitions and is committed to playing a leading role in enabling the transition, as indeed it must, because without its wholehearted commitment the transition would not be realisable. In its briefing, however, it states that while it was looking forward to the reviewed national policy statements, it has been left rather disappointed. In its view—I would say a rather well-informed one—current drafting does not provide the step change needed to deliver the scale and pace of nationally significant infrastructure development that will be needed to meet the Government’s own net-zero ambition.
That should really give the Government cause for concern. There is no sense of urgency or appreciation of the scale or pace of change needed to deliver nationally significant infrastructure development, which lies at the core of what we are trying to achieve here. I wonder whether BEIS is aware of its concerns and is taking them seriously. We are otherwise in real danger of falling short of meeting the challenging targets that the Government have set on electric vehicle ownership, as an example. These cars will need electricity—a lot of it, as the Minister himself said. The current grid, however, cannot supply what we will need. As an aside, and as the noble Lord, Lord Whitty, mentioned, the Government have to take on board the imperative of reducing demand. One quite effective way of doing that, and one that there is growing public concern about, is to make homes more energy efficient. That would take a lot of demand off the national grid, so I feel that is a real missed opportunity here.
There is also concern about what we are hearing from industry leaders about the importance of BEIS’s offshore transmission network review, which is producing a blueprint known as an holistic network design for the onshore and offshore infrastructure required to connect the Government’s target of 40 gigawatts of offshore wind by 2030. Why is the crucial work of the OTNR and the HND not explicitly referenced in the draft NPSs?
Another point of concern is that delivering the scale of nationally significant infrastructure needed will inevitably impact on the local communities and environments that host this infrastructure. Industry must have clear guidance from government on the levels of mitigation and compensation that developers are expected to deliver locally. On the flip side, the communities affected must also have some idea of what they will be up against. Communication with industry and local communities is going to be key. I wonder whether BEIS has taken that on board. Unfortunately, the draft NPSs are silent on these points. Again, can the Minister address that, as it will be really important if the infrastructure behind these policy statements is to be successful?
I add that Energy UK, the trade association for the energy industry, also has real concerns about the lack of a strong focus on net zero. In particular, there is real concern about the fast pace, flexibility and adaptability that will be needed to realise net-zero ambitions. The energy NPSs will therefore need to be revised and updated regularly, certainly more frequently than once a decade, so I ask the Minister: how often will the Government review these NPSs?
Baroness McIntosh of Pickering (Con)
My Lords, I am delighted to follow the noble Baroness. I refer to my interests as declared in the register: I am the honorary president of the advisory board of National Energy Action and, perhaps of more relevance, I was delighted to undertake a placement with BP as part of the Industry and Parliament Trust and had the privilege of visiting a North Sea oilfield.
I welcome today’s debate on the documents and thank my noble friend the Minister for bringing them to us. I want to ask a series of questions. As there are a number of them, I will quite understand if my noble friend might find it easier to respond in writing.
Following the critical floods of 2007, the Pitt review concluded that there should be an audit of critical infrastructure, most of which seemed to be energy substations that were at serious risk of flooding. How regularly does such an audit take place and when was the last one performed?
In the principal policy statement before us today, EN-1, there is welcome reference to climate change adaptation. Is there any reason—perhaps I have missed it—why mitigation has been left out? Many of the references that are made would cover mitigation as well as adaptation. I welcome in particular paragraph 4.9.11, which states:
“If any adaptation measures give rise to consequential impacts (for example on flooding, water resources or coastal change) the Secretary of State should consider the impact of the latter in relation to the application as a whole and the impacts guidance set out in Part 5 of this NPS.”
I think that, somehow, the Minister is secretly aware of my fixation and passion for SUDS, or sustainable urban drainage; I am also an honorary vice-president of the Association of Drainage Authorities, which apply to the lower drainage areas, of which we have plenty in North Yorkshire. I am therefore delighted that, on pages 93 and 95, there is reference to the reduction of flood risk and, in particular, the “hierarchy of drainage options” in relation to sustainable drainage systems and other green infrastructure. That is very welcome, and I hope that my noble friend will be able to expand on those points.
My background gives me a real concern about how energy is generated, transmitted and distributed in rural areas. My noble friend Lady Neville-Rolfe had a similar experience to my own, where a family home was without electricity for six days and included a particularly elderly population who had no such luck as to have a generator. That was during Storm Arwen, and we have seen many others since then. Rural areas are often off grid and face particular challenges in receiving fuel. They tend to be dependent on LPG, solid fuel and oil to heat homes. As my noble friend the Minister will be aware, these are not covered by the price cap and those areas face an even higher increase in costs, particularly because of activities this week in Ukraine—today there has been an additional spike. To what extent will the NPS reflect this and look to rural-proof any nationally significant infrastructure that is envisaged under the proposals before us today?
I for one particularly accept and welcome the nuclear energy mix. My noble friend said yesterday in the debate on the Bill that 85% of our UK nuclear capacity is to go out of commission by 2028. If, as I understand it, the national policy statement for nuclear power generation, EN-6, is not part of the package before us today, what would be the timetable for its review, and would it be subject to a further debate here and looked at separately by the BEIS Select Committee in the other place? I think that we are going to be increasingly dependent on nuclear and, obviously, 15% is not going to hack it after 2028.
The noble Lord, Lord Whitty, in his remarks, made reference to hydrogen and heat pumps as two separate issues. I, for one, do not understand how hydrogen will work and what the use of hydrogen will be, but I was particularly relieved that fracking did not happen in north Yorkshire, for the very simple reason that it would not only be difficult to fund but there was no way that the wastewater could be safely taken away and disposed of. Fracking and hydrogen, as I understand it, will have remarkably large uses of water. I certainly welcome a greater understanding of how we would deal with that.
I leave the Minister with the thought that we need a coherent, well-thought-out and consistent policy, and I for one would argue that we should not penalise those who live in rural areas. I would be interested to learn how we are going to rural-proof any energy policy, particularly regarding significant national infrastructure as it comes out.
The noble Lord, Lord Whitty, also referred to district heating, which is closely linked to energy from waste. I do not understand why we are not using more energy from waste or, indeed, combined heat and power. I remember going to visit SELCHP, the south-east London combined heat and power scheme, before it actually became the combined heat and power scheme. It seems that we solve two problems in one go, if we go down the path of energy from waste and combined heat and power. We are disposing of hard to get rid of rubbish; we want to incinerate it, because we cannot get rid of it in landfill—it is very hard to get rid of. North Yorkshire and I think probably most local authorities are exporting this rubbish to countries such as Holland, where it is burned and goes into the local network. I hope that my noble friend and the department will learn from the Danes and other Scandinavians, as well as the Austrians and Germans, who use this, as my aunt and uncle in Denmark have enjoyed over a period of time, to reduce their heating and hot water costs by feeding the energy from waste into the local grid, so the local community benefits.
I shall say a word on renewables. Under the excellent and skilful chairmanship of the noble Lord, Lord Teverson, we looked at offshore wind farms and received very powerful evidence to show that there are significant threats to sea mammals and sea wildlife through the use of offshore wind, which should be explored before there is a further rollout of offshore wind and arrays, to which the noble Lord, Lord Whitty referred. The most significant thing for rural areas that causes me alarm is that, once the energy generated reaches shore from an offshore wind farm, it has to be transmitted almost entirely by overhead powerlines and pylons. My noble friend and I suffered a loss of electricity, as did thousands more in the two recent storms—and any reduction of transmitting power by overhead powerlines and pylons would be welcome. It is not generally understood that we lose 30% of our electricity through transmitting energy in this way, so it is wasteful, not sustainable, and that must be addressed. I welcome my noble friend’s response as to how we can better transport the energy from offshore wind farms when it reaches shore. I support the call of the noble Lord, Lord Whitty, for limiting the number of onshore connections in that regard.
Like my noble friend Lady Neville-Rolfe, I am a keen supporter of heritage railways, and that is something that my noble friend might like to address in his remarks —whether they will be able to source their coal. I speak as the honorary president of the most-visited tourist venue in north Yorkshire, the North Yorkshire Moors Railway. I hope that my noble friend will ensure that we can continue to enjoy heritage railways sourced by locally produced coal.
In conclusion, I ask my noble friend how he intends to address energy efficiency to stop wasteful transmission, as I described; how to make electricity more sustainable and resilient; how to future-proof the increasing demands and how the Government will meet the additional electricity required to power electric vehicles. In particular, I ask, as have others, how often the Government will review the national energy policy statements and, finally, what plans he has to rural-proof the national policy statements and how we expect the department to do that.
Baroness Jones of Moulsecoomb (GP)
I wish the Minister had shown me his speech before he gave it today, because I could have gone through it with a red pen. Repeating wishful thinking does not make it happen. “May” and “might” is not a policy, and I shall now describe what the Government’s energy policy should be. I am really happy to send it directly to the Minister, in case he is in any doubt about what I am saying.
If we had insulated Britain, people would not be choosing between heating and eating. If we had not “cut the green crap”, as Cameron said, over the past decade, we would be saving £2.5 billion off energy bills. If we had not had a Tory Government for the past 12 years, we would be doing a lot better than we are now.
Renewable energy was cheaper to produce than gas even before the big explosion of oil and gas prices in recent months. There is now a huge gap between what it costs to produce renewable energy and what it is sold for as part of the national grid. If renewables now dominated the energy sector in the UK, everyone would be buying electric hobs and ovens as gas prices soared and electricity prices continued to go down. Rich and poor would all be better off, and the planet would be better off; the only people not better off would be the fossil fuel companies such as Shell—but I think we can manage without their doing particularly well, personally.
We have the perverse situation where green consumers who want green energy are paying extra because we have an energy system dominated by fossil fuels. For example, if someone is selling electricity to the national grid, why are they getting only 5½p per kilowatt hour, when it is being sold back to them for 21p per kilowatt hour? I understand that operators have costs to pay, but those small-scale producers, those homeowners, ought to be getting at least twice what they are now. I have a lot of questions; that is the first.
If gas producers are pushing up the price of electricity, why are households with renewables not getting more for their investment? Why are the fossil fuel giants the ones being rewarded for destroying the planet and ripping off consumers? That is another question.
I know that the Conservative Party receives millions of pounds in donations from the oil and gas industry; we have discussed that in this Chamber before. For example, the Prime Minister got something like £2 million in donations from Russians, possibly oil and gas producers, since he became Prime Minister. The case for a dirty fuel tax is overwhelming, and I wish everyone in this House and this debate would support a move that benefits this planet and consumers. Perhaps that is another question: why not have a dirty fuel tax?
Unfortunately, we have a Government in the pay of the oil and gas industry who have agreed the price cap for consumers going up by 50% in April. By contrast, households in the feed-in tariff scheme selling electricity to the national grid are tied to the retail price index, which will go up by 7.5%. That is a decision by the Government; why is that?
The potential for solar on the rooves of houses, warehouses and shops is absolutely massive, and this is the year when the Government should be giving it the biggest push by upping the amount that people are paid. Getting solar panels on more rooftops could make us far less reliant on gas in future years. Removing the planning block on wind farms supported by their local community would stop reliance on foreign gas. In fact, bringing back all the “green crap” would make us more independent and energy secure.
It is progress—I will give the Government this credit—that the Government have removed the arbitrary cap on how large solar farms can be, but why are we still building new houses and warehouses without basics such as solar panels? Why are there any new houses being built that are not net producers of energy? That is another question. We know how to do it. We know that new houses in the decades to come will have to be built that way or retrofitted, so why do we not do it now? The clever engineers at the national grid say that they can be ready for net zero by 2025, so why cannot we make this happen sooner rather than later? That is another question.
Why can we not use the technology that we have to make renewables the dominant source of our electricity within the next three years? That is another question. Why can we not scale up the use of emerging technologies of battery storage and hydrogen production to capture all that renewable energy in a form we can use to power vehicles, houses and factories when we need it? If we show that solar panels are an investment that really pays off, then more people will see the logic of heat pumps earning them money back. Making Britain independent of foreign gas supplies is a side-benefit of going renewable, the main reason obviously being the climate crisis.
Greens are often accused of wishful thinking, but in my view, and in that of an increasing number of people, we are the realists. The reality is that we have the technology to reach net-zero carbon emissions in the next few years; what we do not have is the political will. The Government’s wishful thinking is that they can keep using oil and gas, even beyond 2050. Instead of using all the potential sources of renewables, they rely on non-existent “greenhouse gas removal technologies” —more wishful thinking—to square this circle in reaching net zero. This is the wishful thinking of politicians who have taken dirty money from the dirty-fuel industries. I am sure the Minister knows that Germany has just cancelled the Nord Stream 2 undersea natural gas pipeline and is saying that it will overhaul its energy supply strategy. I would so love the Government to do this, and I would give them full credit for it.
Another bit of wishful thinking is the Government’s approach to waste incineration, which has driven me mad since I was a councillor. It is good that the Government state:
“The amount of electricity that can be generated from EfW”—
or energy from waste—
“is constrained by the availability of its feedstock, which is set to reduce further by 2035 as a result of government policy.”
However, unless they stop local authorities building an excess of new incinerators across the country and signing up to legally binding contracts for the next 25 or even 35 years, the words have no meaning. Money talks, and the contracts require councils to burn and not recycle. In some areas, the amount of recycling is going down because of the incinerator contracts that councils have signed. Burning waste instead of recycling is bad for air pollution and, obviously, bad for the climate. Can the Government commit that they will not allow the import of waste from abroad for burning in UK incinerators?
I know that we had the debate on nuclear yesterday, where my noble friend Lady Bennett of Manor Castle demolished the Government’s arguments for it, but I will say now that nuclear is not needed. We are developing tidal and wave power. Houses leak less heat when they are insulated. We have more efficient batteries as well as the conversion to hydrogen gas. The storage of energy is becoming an everyday thing, whether that is in a car or a battery on the side of the house. In the coming decades, more and more houses and communities will become net producers of energy. Are we seriously expecting them to buy nuclear energy from Hinkley at three or four times the price they are producing it for themselves?
Nuclear is dangerous. It leaks; it produces waste that we do not know how to dispose of; and, above all, we have to build new plants on the coast in an age of rising tides. Every single IPCC report since 2007 has increased the worst-case scenario for sea levels. Sizewell C has a massive sea defence system at the height of 18 metres based on the 2018 IPCC analysis, but that worst-case scenario is already out of date this year. If we build nuclear stations, they will become islands awash with sea water.
The Government’s energy strategy needs to abandon the idea of balance based on dirty fuels, whether fossil or nuclear. It needs to do its bit to mitigate the climate emergency by fast-tracking the cheaper solutions of renewables and insulation. It needs to show some bravery and create a dirty-profits tax that will encourage clean energy. In short, the Green national policy on energy would be good for the planet, good for consumers and independent of Russian gas and the flux of world prices.
Baroness Foster of Oxton (Con)
My Lords, black gold powered the industrial revolution. Where would we be today without it? Thank goodness the noble Baroness opposite, the noble Baroness, Lady Jones, was not around at the time. To produce enough firewood in the 1860s equivalent in energy terms for domestic consumption would have needed 25 million acres of land a year—nearly the entire farmland of England.
Mining was dirty and dangerous, but it became acceptable because we needed the energy. In fact, my late grandfather was a coal miner in the Cronton colliery, which had its share of disasters. A hundred and sixty years on, we are in a very different place, because geopolitics is determining what we should do next; the debate has been taking place today in the other place. This is about not just energy supply but energy security. Successive Governments did not really see this coming. In fact, you could say that they did not see the wood for the trees. North Sea oil and gas lulled us into a false sense of security, and we should never have allowed our nuclear programme to practically wither and die. In 1997, the Blair Government failed to carry out their plans to renew four nuclear generators that we needed. A few years later, Gordon Brown sold off our new nuclear capability to Japan.
It was an interesting debate yesterday, and I welcomed the information from my noble friend the Minister on our plans to push ahead with Hinkley Point and our nuclear programme in general. I also believe that the contribution by Rolls-Royce for the mini nuclear pods is a fantastic step forward, but we need to go further. However, there is an elephant in the room that needs to be discussed. A few years ago, we thought it worth while to drill for shale gas in Lancashire—just one area out of many across the UK. It was estimated that there were 37 trillion cubic metres of gas in the Bowland fields, and extracting just 10% would have been enough for us to be self-sufficient for the next 50 years. The programme would have regenerated a number of areas and could have created 75,000 pretty skilled jobs. That is what you call a real step in levelling up, and it is only the tip of the iceberg. But it does not suit the agenda of many of the more extreme activists of the green lobby. Misinformation on safety and relentless lobbying—mostly by those who did not even live in the surrounding area—stopped the programme.
It is astonishing that our energy policy can be determined by Extinction Rebellion, Insulate Britain and others who would like to take us back centuries. The irony is that those same people expect a roof over their head, central heating, hot water, mobile phones, iPads, washing machines, a dishwasher, a car and everything else that we all expect these days, as well as clean water and food on their plate. All that requires energy, which renewables alone will never be able to provide. As we know, we import 50% of our gas from abroad, mainly from Qatar and Norway, with some from Russia. If we continue along that road, by the end of the decade that will have risen to 70%. This winter, we imported shale gas from the USA, which this year will sink 19,000 wells—up from 16,000 only two years ago. The hypocrisy is nauseating, when you come to think of it.
Is fracking dangerous? No more than other extraction processes. Will there be the odd tremor? Well, probably, but technology has moved on in leaps and bounds, and there were many more tremors and much worse happened from deep coal mining, as I highlighted. To fill in those wells is positively absurd, and to carry on increasing our reliance on energy from abroad is equally absurd when it is beneath our feet.
I have welcomed the great strides that we have made for clean and green energy provision, and I echo and welcome the detailed analysis of the situation by my noble friends Lady Neville-Rolfe and Lord Moynihan, but we need to look outside the box and keep an open mind on how we move forward. I therefore I ask my noble friend the Minister to take back these comments and to let us have a debate on the specific issue sooner rather than later.
Lord Naseby (Con)
My Lords, I apologise for speaking in the gap, but I had not realised that we had to have a list in the Moses Room. I shall be brief. I spent a number of years on the Select Committee on Energy in the other place. I very much welcome this framework, this document and the associated ones. As my noble friend just said, since Brexit we are on our own and therefore security of supply is vital.
I will make four key points. I was pleased by yesterday’s debate in our own House on nuclear. That is part of the way forward, and the very exciting bit is the development by Rolls-Royce of the mini-plant concept.
Unfortunately, solar is becoming a little controversial in rural England. The estimate given is that 150,000 acres of good farming land is being taken up every year. On top of the fact that nearly 100,000 acres are already going for other uses, industrial and so on, one has to ask, with regard to the planning decisions that are being made, whether there should be a clause or a requirement for the protection of the national interest. My noble friend may or may not know, but there is certainly considerable concern over the Mallard Pass and Cottam solar farms, and the Sunnica solar farm near Newmarket.
I have one suggestion to make, which was prompted by driving down from Northampton earlier today. There are now hundreds of warehouses across the nation and they all have flat roofs. Every one of those warehouses is an opportunity for solar. We should look at that urgently, put it into the planning requirement for any new ones and put some persuasive methodology ahead for those which have already been built.
On offshore, my noble friend Lord Moynihan covered most of that. However, I went out to offshore when I was in the Commons, and we have to make sure that we continue to explore and use those resources properly.
Finally, on the domestic front, heat pumps are not the perfect answer. They are extremely expensive. Quite frankly, I have talked to some people who have heat pumps and they are not exactly a source of warmth that most people would expect. The answer must lie in low-carbon hydrogen. I know that it is at its very early stages, but we need to move forward with research on that area, both in universities and in other research institutes. We need to give some major incentives to take it forward so that we can neutralise the gas emissions from the 70%-plus of homes that have gas-fired heating.
Lord Oates (LD)
My Lords, the Liberal Democrats welcome the fact that the Government have set an ambitious net-zero target for 2050 and have recognised that that requires a 2035 decarbonisation target for the climate sector. We also welcome the target of 40 gigawatts of offshore wind for 2030. All this ambition is welcome, and we welcome the recognition in the Overarching National Policy Statement that wholesale transformation is required in our energy system. However, we remain unconvinced that the Government recognise what they have to do to achieve those targets. These national policy statements underline the gap between rhetoric and the detailed application and clarity that are required.
The net-zero target must be the overwhelming priority and challenge for the energy sector and for government as a whole. However, these documents simply do not supply the clarity and detail that the energy industry, the planners and other decision-takers will need. To have any chance of meeting the 2030, 2035 or 2050 targets, we need a much more joined-up approach across government and industry.
The national policy statements seem to be, at best, nodding acquaintances of the Energy White Paper, the 10-point plan, the offshore transmission review and the holistic network design policy—and, at times, almost complete strangers to them. The NPSs need to be clear about how the various policy documents should be taken into account by promoters and decision-takers, because the lack of integration threatens to fatally undermine the Government’s ambitions. If we are to deliver 40 gigawatts of offshore wind by 2030, we need the transmission infrastructure to deliver it to where it is needed. As the noble Lord, Lord Whitty, said, we must address the issue of an offshore grid and how we bring it onshore. The noble Baroness, Lady McIntosh, made the startling point that we lose 30% of power in transmission, so we must think about a much smarter and more locally distributed grid.
We must think much differenter—if that is a word—about the whole way we deal with the energy system. It is not a word, by the way. As a result of all this new infrastructure, there will have to be new substations, cables and so on. It is important that we think about how the impact on communities is mitigated. What is the Government’s approach to undergrounding cables, particularly in some rural areas? What is their approach to the mitigations that communities need? Industry needs clarity on this, because it has to plan, but it does not get that from these documents.
Energy storage and release will also be critical in the new energy system that we will need. The NPS needs to be much clearer about the scale of what is required. EN2 talks about pumped hydro storage and it is welcome that it does, although it gives little detail, but there is nothing about using green hydrogen as a storage vector. The Minister will correct me but I think that, in the past year, about £1 billion was paid to abate wind. This is crazy: that wind power could be creating green hydrogen, which could then be used where we need it in the energy system. We need much more about that. That is one of the points we were discussing in the debate yesterday on the Nuclear Energy (Financing) Bill. The Government must think much more creatively about how we deliver power.
The noble Lord, Lord Whitty, and a number of others stressed the importance of energy efficiency—the noble Baroness, Lady Jones, in particular. That is critical. It is crazy that so much of the energy we consume at the moment is going not to heat us, but straight out of the roof or the windows. We need a national plan for energy efficiency. Again, we discussed this yesterday. The Minister protested that much was being done and agreed with the noble Lord, Lord West, that it was also all terribly difficult. Some of it certainly is difficult, but a lot actually is not.
What makes even the relatively easy quite hard, however, is that there is a real lack of skills. For instance, if you want exterior wall insulation on your house and are in London or the south-east, good luck with that, because the few people who can deliver it are up to their eyeballs in work—and loads of them have just given up. There have been various government projects, such as the green homes grant scheme, and previously, under the coalition, the Green Deal scheme. But the industry invests, the schemes are then scrapped and now those people are fed up.
We have a massive skills shortage and there must be a plan to deal with it. If the Government care about levelling up, one of the best ways they could deliver jobs all around this country would be to reduce the energy we consume and how much we pollute our planet. We know that the Treasury is always behind these schemes going wrong, so I have a lot of sympathy with the Minister because it always thinks in the short term and these schemes can be delivered only in the long term.
Some noble Lords who spoke in this debate did so as if the climate emergency was a concept that we could choose either to believe in or not. I can only assume that the noble Baroness, Lady Foster, has not read the IPCC report on the impacts that are coming from climate change because there was certainly no mention of them whatever in her speech or, I think, of climate change at all. We heard a lot about what she regarded as absurd, but what is really absurd is that we are still building houses that leak energy. We should have had a standard in place from 2016; one was put in place by the coalition Government but scrapped by the Government who came after them. We should not be building homes that leak energy or have no national plan for the energy efficiency of our building stock. We should never have done what the Government who came in after the coalition did, which was effectively to ban onshore wind.
The noble Baroness, Lady Neville-Rolfe, raised the issue of green levies—the noble Lord, Lord Forsyth, raised it in the Chamber earlier. We really need to be clear that it is not green levies that are pushing up energy bills at the moment but the staggering cost of fossil fuels. The sooner we move off them, the better. That is what we need to be doing. In fact, total household expenditure on energy bills fell between 2010 and 2020. It did so in large part because of the energy efficiency measures that were funded through the green levies, so we should not allow this misnomer to take hold.
My noble friend Lady Sheehan raised the concerns of the energy industry about the policy statements. I hope the Minister will answer some of the very legitimate questions that the industry posed, particularly on how the various government policy documents should be taken into account by decision-takers. Also, what is expected from industry on community mitigation and why is the work of the offshore transmission review and holistic network design not properly addressed in the NPSs? How will those statements be expanded to include hydrogen and CCS, in line with government policy?
I was struck by my noble friend Lord Teverson’s question about when the geological disposal facility will come online, and whether the date in the original nuclear planning statement for operation of the GDF from 2130 was correct. I must say that it seemed like the first realistic statement I have heard about that geological disposal facility, because we have been told decade after decade that it is just around the corner. I hope the Minister can clarify that.
As I said at the outset, we welcome the Government’s ambitious targets but we need the detail about how they will be met. These national policy statements fall short in doing that.
Lord Lennie (Lab)
My Lords, I thank the Minister for his comprehensive introductory statement and all other noble Lords for their contributions to this debate. My noble friend Lord Whitty made it plain that there is not enough imperative in these statements. They need, I guess, to be more inclined towards planning consents rather than against, or a balanced view. The noble Baroness, Lady Neville-Rolfe, reminded us that it is about keeping the lights on at the right price. The noble Lord, Lord Teverson, reminded us about avoiding silo thinking. The noble Lord, Lord Moynihan, was on about prices and costs, as a gas advocate.
The noble Baroness, Lady Sheehan, asked how often this policy and these NPSs would be reviewed. The noble Baroness, Lady McIntosh, talked about the rural effect and rural-proofing future policy, while the noble Baroness, Lady Jones, talked about replacing the whole policy, in her usual fashion. The noble Baroness, Lady Foster, advocated fracking, rather than importing fracking from the United States. The noble Lord, Lord Naseby, supported nuclear fuel, as we do as well, and advocated solar as a future-proofing of warehouses. Then we came to the noble Lord, Lord Oates, who introduced the whole concept of “differenter” to all of us, a new language for us all to grasp.
This national policy statement updates the Liberal Democrat Minister’s statement in 2011 in the coalition Government. I may be wrong, but I think that it was a Liberal Democrat Minister at the time. It will form the framework within which the Secretary of State will take decisions on the nationally significant energy infrastructure developments under the Planning Act. As we have heard, it is accompanied by a series of specific statements which in combination establish the criteria that will be taken into account when considering energy planning applications. The need for the update, as we have heard, is explained by the Government announcing the move to net zero, to be brought forward and achieved by 2050, and the marker, that we will have moved three-quarters of the way towards this by 2035. They are both confirmed in the NPS.
The dash for gas has screeched to a halt and is replaced by a reaching out for renewables. What we have is the establishing of a prime market in energy of wind, solar and nuclear fuels, with only a back-up residual use of carbon fuels as a supplement. This policy shift is welcome—but is it entirely believable? Currently, almost 80% of UK energy is fossil-fuel generated, and there are reports that the Government are about to announce, or have already announced, the licensing of six new oil and gas fields in the North Sea. The Times on Monday carried an interview with Greg Hands in which he confirmed, or appeared to confirm, that the North Sea fields would be developed as a new prime market develops. Is that true and, if so, do the Government believe that it is consistent with the prioritising of renewables in the NPS? What message do they think that it would send out to the energy market and the energy sector overall?
On timing, the need to speed up the planning process and decision making is essential, given the rightful hastening of the net-zero target. Evidence given to the BEIS Select Committee reveals that, while it takes only a year to build an offshore wind farm, it takes about eight years to get planning consents through the process. The NPS establishes a new legal framework for planning decisions, balancing the need for infrastructure against its impact on communities. If it takes eight years to gain approval for new infrastructure to support renewable energy production, it is unlikely that any approvals will be achieved before the next likely review of this NPS. Is the Minister concerned about the timescale, can it be shortened—and, if so, what evidence can the Government point to in support of that? The energy sector needs answers to these questions before risking capital on major infrastructure projects.
That leads to the whole question of costs and prices of energy. The NPS makes passing reference to the costs of energy, but does not focus on it, despite the fact that it is clearly the number one issue facing household budgets. The Chancellor has announced that households will be forced to take a loan from the energy companies in the short term, to be to be paid back in the medium term, but has not offered any longer-term solution to the problem of these high energy costs, other than the prospect of repeated compulsory loans across the board. The NPS skirts around this. It talks about energy at affordable cost, but does not put forward any proposals about how that will be achieved. Does the Minister see the issue of costs as a short-term one or as a strategic problem and, if the latter, how does he feel it should be addressed, and does he think it should be addressed in this NPS?
A decarbonised future should make the UK less reliant on the importing of energy; 79% of energy is currently fossil-fuel generated. Currently, the UK imports about half of its gas-fired energy; it is therefore significantly subject to world price movements, over which the Government remind us they have little influence or control. But the Government of the nearest neighbour, France, have announced a 5% increase, while here in the UK we face a 50% price hike in the Ofgem price cap review.
The Labour Party has no doubt that nuclear energy should play an increasingly significant part in the energy mix of the UK’s decarbonised future. Parliament debated yesterday the financing of nuclear energy, and strategically the two are interconnected—so the absence of any strategic proposal in the NPS is all the more surprising. About half of UK gas is imported, and about one-third of UK energy is gas-fired, so it is a big number when considering the fuel costs that the industry has little control over. Does the Minister see a future when UK energy cost and prices are in the main controlled by decarbonised UK energy markets? If so, when is that likely to happen, and by when will the UK no longer be reliant on importing a significant proportion of its energy?
Onshore wind development has been removed from the NPS—maybe it was in 2016, I am not sure. That appears to show a lack of confidence in that form of energy. I do not know whether it does not meet the de minimis level for inclusion in the NPS, but why was that decision taken and what impact has it had on onshore wind development? Is it because of its not meeting the de minimis levels, or other factors?
The NPS sets out a series of factors that will be taken into account by the Secretary of State in reaching his decisions about approvals of infrastructure projects. How many consents have been made since the last NPS was published? Does the Minister believe that it will increase significantly in the period before the next review? While we are on that subject, when does the Minister feel that the next review should be? Should it be in five years, as discussed in the evidence sessions before the statement was released, or in 10 years, as is the case with this NPS update from the last one? The pace of change and development in energy supply and infrastructure will be exponential in the next period, if we are to meet net zero, and the NPS needs to future-proof to reflect this. Government policy appears to be “wait and see” before judging planning applications, which will almost certainly mean that we do not meet our net-zero ambitions.
Lord Lennie (Lab)
The planning process for renewables and low-carbon development such as hydrogen and CCS should ensure support for infrastructure projects such as aviation over and above competing interests. The inclusion of emerging technologies alongside renewables that will contribute to net zero—hydrogen, CCS, biomass—as well as the infrastructure and storage necessary, should be advanced and advocated by the NPS. A presumption in favour of them in the planning process should be the watchword of the NPS, not neutrality as it currently appears; I think the noble Lord, Lord Whitty, made that point.
The long timescale between this and previous NPSs has resulted in policy falling significantly behind current thinking and technological advance. Keeping NPSs under ongoing review and updating them as required would be more likely to reflect advances in technological development and would therefore more likely play an important part in our move to net zero.
Lord Callanan (Con)
My Lords, I thank everyone who contributed to this debate. As always, it has been interesting and informative, if not all directly related to the subject under discussion—I am looking at the noble Baroness, Lady Jones; I will come on to that in a minute. I will address many of the points made in turn, but first I will bring the Committee back to the subject under discussion and will talk about the energy national policy statements.
Our world-leading agenda to transform the energy system requires a planning framework for nationally significant infrastructure which can process the pace and scale of planning decisions in line with this transformation. Updated energy NPSs are critical to achieving this. The review will make the policy framework for the provision of energy infrastructure clearer and more up to date.
In the context of the wider reform programme for nationally significant infrastructure, up-to-date energy NPSs will support project sponsors, the Planning Inspectorate and ultimately the Secretary of State in timely consideration and decisions over when and how to provide significant to critical infrastructure.
We believe that the documents we have consulted on and which are being examined by the committee of the other House at the moment strike the right balance between the need for new energy infrastructure and the impact that such infrastructure will have, and they will enable planning decisions to be taken at the required pace.
I thank the noble Lord, Lord Whitty, and many other noble Lords who have used this debate to make some interesting and wide-ranging comments on energy policy. However, I repeat that our purpose today is to consider whether the NPSs are fit for purpose in performing their critical purpose, which is to provide a legal framework for planning decisions on nationally significant energy infrastructure.
I thank my noble friend Lady Neville-Rolfe for her comments on timing and security of supply. Within that, the NPS establishes the need for the infrastructure required to deliver the energy objectives. This includes ensuring that we have a supply that is secure and reliable as well as consistent with our net-zero ambitions.
A number of noble Lords, including my noble friends Lady Neville-Rolfe and Lady McIntosh, the noble Baroness, Lady Sheehan, and the noble Lord, Lord Lennie, asked me about the timetable for future reviews. Of course, there will be change over time, and we will review the documents when appropriate—so I do not want to give an absolute commitment to a specific time; we will do it as required. The exact timing of a review will depend on the specific circumstances that apply in the case of each national policy statement, but it is expected that a public announcement on whether a review is required should be made at least every five years. This reflects the position that was set out in the Government’s published guidance.
I thank the noble Lord, Lord Teverson, for his comments on biodiversity. He will be aware that Schedule 15 to the Environment Act 2021 introduced specific requirements for biodiversity net gain in relation to NSIP development. This schedule is not yet in force, and Defra is currently consulting on exactly how it will be implemented. Of course, the NPS will be amended to bring it in line with the Environment Act before it is designated.
I welcome the comments from my noble friend Lord Moynihan and my noble friend Lady Foster’s support for the energy NPS. I can assure both of them that the NPS recognises the need for continued investment in oil and gas infrastructure during the transition to clean energy. It was recognised also by the climate change committee that we will continue to need oil and gas infrastructure during the transition. I think some of the simplistic exponents sometimes miss the point that this is a long-term transition. Unless we want to unplug people’s boilers or stop them putting petrol in their car tomorrow, there is an ongoing requirement for investment, and it makes more sense to obtain oil and gas from our own reserves than to import it from Russia, Qatar, Saudi Arabia or American shale gas reserves through the medium of LPG.
I say in response to the noble Baroness, Lady Sheehan, that we believe that the draft NPS strikes the right balance between clarity on the need for the types of infrastructure required to deliver on our climate commitments and retaining security of supply and identifying the potentially negative impacts of such infrastructure at local level. This enables planning decisions to be taken which weigh this national need against these potential impacts, based on expert evidence and, of course, on full stakeholder involvement. Of course, there will always be different views on whether we have got this balance right, and we are currently analysing the responses to the public consultation. We will take account of these and any resolutions or recommendations from the parliamentary scrutiny process before issuing our final response.
The draft NPS reflects the work of the offshore transmission network review and the policy is written to support that work. Future changes will depend on the outcome of the OTNR. The urgency and scale of offshore wind farm development—I remind the Committee that there is to be a fourfold increase by 2030—mean that radial routes to shore are in many cases not viable given the environmental and community impacts.
I say to my noble friend Lady McIntosh that we recognise the desire for a settled siting policy for new nuclear and we are seeking to deliver a robust and comprehensive framework. Three years is the rough working estimate to develop, consult and deliver on an NPS. I can assure my noble friend that a new nuclear NPS will be subject to the same requirements of public consultation and parliamentary scrutiny as these energy NPSs. I can also assure her that the NPSs cover climate change adaptation and mitigation—mitigation is covered by part 2 and new section 5.2 of EN-1.
The noble Baroness, Lady Jones—where to start? In her wide-ranging contribution, I lost count of the number of questions that she asked me. I think I got up to about 25 before I lost count. The noble Baroness will, of course, appreciate that in the context of this short debate it is not possible to answer all her points. I am sure that we will have lots of debates and questions on these subjects in future. Of course, I do not think that any of her questions had anything to do with the subject of this debate, which is on the NPS. I am afraid that the noble Baroness knows that we disagree over this. A lot of her solutions sound great, but they are overly simplistic nonsense in most cases.
In many respects, I agree with the noble Baroness. Of course, we want to see more renewables. We have the largest offshore renewable capacity in the world—and we going to increase it fourfold. It has been a British success story; the price of new offshore wind is now at record low levels. It is a good thing, but it is inherently intermittent. During the recent stormy weather, we saw that wind generation for the UK was up to almost 50% of our capacity, which is great, but a few months ago, when we had a weather depression, we saw wind capacity at about 2% to 3% of our national energy needs. We need a diverse mix of supply—so we need nuclear and existing oil and gas infrastructure and supply and, yes, we need renewables as well.
I do not disagree with the noble Baroness. Of course, we want to see energy efficiency schemes, as energy efficiency is by far the best form of generation; the energy that you do not use is required. We are spending £9.2 billion over this Parliament on energy efficiency and insulation schemes. I am proud of our record. Of course, we can have an argument over whether we should be spending even more, but as regards our levels of investment compared to any previous Government, we are spending record sums on environmental schemes. On ECO alone, the contribution that we are making to that is going up to £1 billion a year, starting in March this year, in addition to the £9.2 billion that we are investing through direct government support. The vast majority of that is going to help fuel-poor households and those on lower incomes to benefit from increased investment and increased energy efficiency in their homes, to make their bills smaller and their homes warmer. That is a key point.
I assure the noble Baroness that we will have time to debate all her many questions and points in future, but I hope that she will forgive me if I do not address all those issues now, because it is not a matter for today’s debate.
In response to my noble friend Lord Naseby, of course we need to preserve our most productive farmland as best we can, which is why the draft NPS continues to advise that the effective use of land is prioritised by focusing large-scale solar farms on previously developed and non-agricultural land, provided that it is not of high environmental value. It also suggests that, when a proposal involves greenfield land, poorer-quality land should be used in preference to higher-quality land.
In response to the noble Lord, Lord Oates, the draft energy NPS set out the Government’s policy for delivering nationally significant energy infrastructure and providing a legal framework for planning decisions at the national level. This includes balancing the need for new infrastructure against the impacts of such infrastructure. It will provide guidance on some of the issues that the noble Lord raised, such as the presumption in favour of underground cables in areas of natural beauty, but many of the important issues raised by the noble Lord, such as energy efficiency and housing, are outside the scope of these documents.
Lord Oates (LD)
I am grateful for the Minister’s response, but could he address one specific question that I asked about guidance on community mitigation? This is something that the industry is really clear on—that it needs to have guidance, because it is going to have to bring onshore lots of cable and lots of new energy infrastructure. It really needs clarity from government about what it should be doing there. I would be grateful if the Minister could address that point.
Lord Callanan (Con)
During the planning process itself, community mitigations will be taken into account, providing the national framework to enable local planning decisions to be taken. Community mitigations of course play an important part in the planning process.
As I said earlier in response to the noble Baroness, Lady Jones, improving the energy efficiency of homes is the most effective way to permanently reduce energy bills by reducing the amount of energy required to heat the home, and it can tackle fuel poverty in the long term. I covered all the schemes that we have, including ECO, home upgrade grants, the local authority delivery scheme, the public sector decarbonisation scheme and the social housing decarbonisation scheme—myriad different schemes, all contributing quietly and in the background to upping the energy performance of the homes that we all live in.
The noble Lord also mentioned the need for clarity in the approach to CCUS and hydrogen. The NPS establishes the need for CCUS and hydrogen infrastructure, but we do not want prematurely to introduce detailed guidance before we know more about the impact of such projects. We will consider whether to develop a technology-specific NPS for CCUS and hydrogen infrastructure as the technology and the project landscape evolves.
The noble Lord, Lord Lennie, asked how many consent decisions have been made under the current regime. The answer is that 65 decisions on energy projects have been made under the existing suite of energy NPSs. We are, of course, expecting a significant increase in the number of applications as the transition to net zero continues. He also asked about onshore wind. It was removed from the NSIP regime in 2016 through amendments to the Planning Act 2008. This means that all planning applications for onshore wind turbines in England are made to the local planning authority, or to the Welsh Government in Wales. As national policy statements are statutory guidance, and as onshore wind is now not included in the 2008 Act, it was no longer appropriate for the national policy statements to provide specific policies in relation to onshore wind.
Finally, to reply to my noble friend Lady Foster’s point about fracking, it is important to realise that Lancashire is not Texas. The UK is a relatively densely populated island compared to most parts of the US. Although we are not in principle against the idea of fracking, it must be done with the consent of local communities and we need to be aware of its environmental impact. Also, as we discussed during Questions in the House a few weeks ago, it is not the short-term answer that many people think it is. Even if we managed to overcome all the environmental objections, and even if we managed to progress the scheme, it would be many years, if not a decade, before we got meaningful quantities of shale gas out of the ground. Even then, the quantities that we would be able to produce in this country would have no meaningful impact on the overall gas price level. We continue to keep these matters under review, but it does not represent the easy solution that we might like to think it would in this circumstance.
Baroness Neville-Rolfe (Con)
I am grateful to my noble friend for answering all our points so clearly and fully. I asked a question about coal for heritage railways. He may not be aware of it, but in the debates on the Environment Act we were told that it would be fine because we could get coal from Russia. He may want to take the point away. Perhaps he could update us, because I assume that we will not now be getting coal from Russia. Also, I wanted clarification on an issue to do with planning. I think he said that some kind of planning for renewable infrastructure would take three years, but somebody—maybe it was the noble Lord, Lord Teverson, or the noble Lord, Lord Oates—said that it took one year to build an offshore wind turbine and eight years to get planning. Clearly, we have to speed planning up for necessary infrastructure; that has come through very strongly in the work that I have been doing in the Built Environment Committee. To have an answer on what we can now expect—how long planning applications of different types will take—either today or on another occasion would be very helpful.
Lord Callanan (Con)
The whole purpose of these national policy statements is to try to speed up the planning process in the first place by setting a national framework within which the local decisions can be taken. As with all these things, it is a question of getting the balance right. Of course we want to try to speed up the process, but the problem with energy policy is that it takes many years, if not decades, to put the infrastructure in place.
We are announcing, we hope, some progress on new nuclear and passing new legislation in the next few months to enable it but we will not see the fruits of that until the early 2030s. The process for the infrastructure which we see in place now was put in place 10 or 12 years ago. The reason that we have a problem with nuclear now—I am sorry to bring it back to party politics—was because when Labour came into office in 1997, that Government ruled out new nuclear. Tony Blair said in the manifesto “We see no case for new nuclear”. Now, that is a party-political point and I think many Labour Members now think that was a mistake—maybe it was right in the context of the time but it was probably a mistake. Correcting these mistakes takes many decades in order to get the infrastructure in place.
Lord Lennie (Lab)
If I may reinforce the point I made, if it takes eight years to get consent for something, that is eight years before the first brick is laid, as it were. If that period can be foreshortened, the fruits of the labour can be brought forward accordingly.
Lord Callanan (Con)
We are always open to finding new ways of speeding these things up, but you also have to take into account the concerns of local communities which have to put up with this infrastructure and try to mitigate the effects on them.
I return to the point that my noble friend Lady Neville-Rolfe asked me about heritage coal. I am very well aware of this issue; I am told that my noble friend Lady Bloomfield is a hero in the heritage railway community because she was able to write to them to say that heritage coal would still be available to them to operate their railways. There are many sources of coal apart from Russia. Significant quantities of coal are still produced in Germany and Poland, so I am confident that they will still be able to get the coal to power their excellent machines. I do not think anybody, even the most committed climate zealot, would object to the relatively small quantities that they would use for their heritage equipment.
Baroness Foster of Oxton (Con)
I did not raise the issue of fracking necessarily as a short-term measure. With any energy, we know that it takes a long lead-in time to come to some sort of results. One of my key points was the fact that we are already importing 50%; by the end of the decade, that will rise to 70%. Neither am I talking about doing things without the consent of people who live locally. Of course, you must have the appropriate places to do these things. I have raised this issue so that we can start looking at it. It may be feasible in the not-too-distant future. because we just do not know at the moment what is going to happen.
Lord Callanan (Con)
My noble friend makes a good point. Supplies of gas from the North Sea are slowly declining. We will still have a need for fossil fuels, gas in particular, but of course the long-term trajectory of gas use will fall as we decarbonise the power supply and heating in homes. We might well not be importing larger quantities; so it would be a larger proportion of the smaller amount that we will require in future. However, we keep all these things under review and if all the environmental objections can be overcome and the difficult engineering processes solved, we are of course open to considering that. I just caution my noble friend that the difficulties are considerable and there are no easy solutions in this.
With that, I think I have dealt with most of the points that were on the subject of the national policy statements. I thank all noble Lords for their contributions.
House of Lords
Hong Kong: Political Prisoners
The Lord Bishop of St Albans
To ask Her Majesty’s Government what representations they have made to the Government of Hong Kong about the (1) human rights, and (2) release, of pro- democracy political prisoners remanded in custody under that Government’s national security law.
Lord Alton of Liverpool (CB)
My Lords, on behalf of the right reverend Prelate the Bishop of St Albans, and with his permission, I beg leave to ask the Question standing in his name on the Order Paper. In so doing, I declare my interests both as a patron of Hong Kong Watch and as vice-chairman of the All-Party Parliamentary Group on Hong Kong.
The Earl of Courtown (Con)
My Lords, the mainland Chinese and Hong Kong authorities have used the national security law to target pro-democracy figures, curtail freedoms and shrink the space for opposition, a free press and civil society. The UK continues to raise its concerns directly with Hong Kong and Chinese authorities. We continue to urge Beijing to uphold its international obligations, including the rights and freedoms protected in the joint declaration.
Lord Alton of Liverpool (CB)
In thanking the noble Lord, I will put to him a question put to me by a courageous Hong Kong activist, Chung Ching Kwong, about young pro-democracy activists most at risk of arrest. Can we be told, she asked, when the Home Office will introduce the promised and welcome new regulations to include within the BNO scheme young people with a parent who is a BNO passport holder and born after 1997? What are we doing to work with other Commonwealth countries to provide an international lifeboat for young Hong Kongers who do not qualify for the BNO, and what estimate have the Government made of their number?
The Earl of Courtown (Con)
I thank the noble Lord, Lord Alton of Liverpool, for his question. We are sympathetic to the circumstances of children of BNO parents born on or after 1 July 1997 and are considering what more can be done to support this cohort where they wish to build a permanent life in the United Kingdom. We will continue to bring together our international partners to stand up for the people of Hong Kong, to call out the violation of their freedoms and to hold China to its international obligations.
Lord Cormack (Con)
My Lords, is it not time for us to reconsider British judges giving a veneer of respectability to an appallingly repressive regime?
The Earl of Courtown (Con)
The national security law poses real questions for the rule of law in Hong Kong and the protection of fundamental rights and freedoms promised by China in the joint declaration. Our assessment of Hong Kong’s judicial independence is increasingly finely balanced. It is, therefore, right that it is kept under review.
Lord Thomas of Gresford (LD)
My Lords, I know that there have been recent discussions between the Lord Chancellor, the Foreign Secretary and British judges who continue to serve on the Court of Final Appeal. That fine court declared recently that these new laws under the national security law trump rights guaranteed by the Basic Law. What were those talks about and what was their result?
The Earl of Courtown (Con)
My Lords, I was not privy to those conversations, but the noble Lord is quite right about the situation in Hong Kong relating to breaches of the joint declaration that have continued over time.
Lord Mackenzie of Framwellgate (Non-Afl)
My Lords, I recall that, before the transfer of sovereignty in 1997, judges and anti-corruption police officers were routinely seconded to Hong Kong to assist with the administration of justice under the then colonial constitution. Can the noble Earl say how many of the individuals concerned remained in post at the changeover, whether British judges still served the new Hong Kong Administration after the transfer of sovereignty and what the position is now?
The Earl of Courtown (Con)
My Lords, in relation to judges in Hong Kong, I answered the question on the first supplementary, but we are aware that a number of UK nationals are members of the Hong Kong police, having joined prior to the handover of Hong Kong to China in 1997. The Government have no jurisdiction over this matter; the national security law poses real questions for the rule of law and the protection of fundamental rights and freedoms promised by China in the joint declaration.
Lord Flight (Con)
My Lords, while Hong Kong has been an open and free economy, it has brought great help to China. Are we making sure to point out to the Chinese Government that, if they turn it into a quasi-police state, they will lose the huge economic advantages of its success?
The Earl of Courtown (Con)
My Lords, the consequences of Beijing’s actions in relation to Hong Kong have been made very clear on many occasions. As the noble Lord will be aware, since 2021 we have launched a bespoke immigration route for BNOs, suspended the Hong Kong-UK extradition agreement and extended the arms embargo to cover Hong Kong.
Baroness O’Loan (CB)
My Lords, can the Minister tell us whether any representation has been made by Her Majesty’s Government on care for the families of those pro-democracy activists imprisoned under the national security law, particularly in the light of the withdrawal of so many human rights organisations from Hong Kong, leaving them with no recourse?
The Earl of Courtown (Con)
My Lords, the noble Baroness makes a very good point about those who have been arrested under the NSL. There are difficulties here, as she will be aware, around consular assistance for BNOs and dual nationals; it is available only in third countries, but not in China, Macau and Hong Kong. However, where we have legitimate humanitarian or human rights concerns, we can and will lobby the relevant authorities and demonstrate our political support.
Baroness Merron (Lab)
My Lords, following up on previous answers from the Minister, given the level of interference in the Hong Kong judicial system, does he agree that the context in which there was thought to be a continuing role for British and Commonwealth judges has fundamentally shifted? Is it not now time for those judges to be withdrawn from the judicial system? Will the Minister work with Commonwealth partners to get this done?
The Earl of Courtown (Con)
My Lords, I thank the noble Baroness for that question. As I said, our assessment of Hong Kong’s judicial independence is increasingly finely balanced. It is therefore right that it is being kept under review. It is essential that both the Hong Kong judiciary and Hong Kong’s legal institutions can operate independently and free from political interference. Whether to withdraw judges from Hong Kong is decided by the Supreme Court, in conjunction and consultation with Her Majesty’s Government.
Viscount Waverley (CB)
My Lords, when leaving Hong Kong and entering the UK, what passport do our friends actually travel on? China does not recognise dual citizenship, so which takes precedence in this instance? When will the amendment of the noble Lords, Lord Alton and Lord Patten, to the Nationality and Borders Bill come before us? Will it come back on Report and be properly addressed?
The Earl of Courtown (Con)
My Lords, I cannot predict what will happen in legislation in the future, but I am sure the noble Lord will be made aware in due course. The noble Lord also asked about people travelling from Hong Kong. They are able to travel under the Hong Kong SAR passport.
Lord Carlile of Berriew (CB)
My Lords, given that it is now palpably clear that human rights are under severe attack in Hong Kong, how much longer does the review of UK judges’ position have to take before they are firmly advised to play no further part in the Hong Kong judicial system?
The Earl of Courtown (Con)
My Lords, the noble Lord makes a fair point, but these are issues relating to whether there are judges from the United Kingdom serving in Hong Kong. This is under review continually. I do not have any more information on that, but if there is any more, I will write to the noble Lord.
Baroness Bennett of Manor Castle (GP)
My Lords, I declare my position on the All-Party Parliamentary Group on Hong Kong. I will understand if the Minister does not know that the Hong Kong Baptist University student newspaper was suppressed in January, but its staff and students suffered. The HKBU said that it could not promise to guarantee student safety if they chose to attribute their resignation to the way they had been treated. In answering the noble Lord, Lord Alton, the Minister said that he sympathised with the situation of young Hong Kongers. Is sympathy really enough for people such as those brave students, who are taking action to try to defend human rights?
The Earl of Courtown (Con)
I could not agree more with what the noble Baroness said on the importance of those who have been protesting. It is very clear to all who watch the newsfeed. The Government hope to be in a position to say more this issue in the forth- coming days on, ahead of Report on the Nationality and Borders Bill.
Hunting Trophies
(2 years, 2 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Selkirk of Douglas
To ask Her Majesty’s Government when they plan to introduce legislation to ban the import of hunting trophies; and what is the proposed timetable for that legislation.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)
My Lords, it is a manifesto commitment to ban the import of hunting trophies from endangered animals. We will be bringing forward legislation to deliver this measure as soon as parliamentary time allows.
Lord Selkirk of Douglas (Con)
My Lords, I thank the Minister for what he has just said. Will he acknowledge that the Government have the opportunity, by getting this Bill on the statute book as soon as possible, to play a significant part in saving many rare animals from a horrible and unnecessary death? Therefore, can he confirm that the Bill will go further than the manifesto commitment and cover more than 1,000 additional near-threatened species, as stated in the government press release of 10 December? Is he aware that, at the end of last year, more than 300 carcasses of endangered species had been shipped to this country since 2019? Is it not the case that any delay in enacting the legislation would result in many more large animals being killed?
Lord Benyon (Con)
My Lords, there were about 20 licensed imports of trophies in the year 2020 and I suspect that many others may have been illegally transported around the world. My noble friend is right to say that the scope of what we are proposing is all species listed in Annexes A and B of UK wildlife trade regulations, which are broadly equivalent to Appendix 1 and 2 of CITES. That is about 6,000 species. Over 1,000 further species are not listed in the WTR annexes but are assessed on the IUCN red list as near threatened, vulnerable, endangered, critically endangered and extinct in the wild. Only a very few of those are actually hunted for trophies.
Viscount Hanworth (Lab)
Can the Minister explain why the MoD continues to sanction the slaughter of Canadian brown bears to produce ceremonial headgear for our soldiers when there are perfectly viable alternatives?
Lord Benyon (Con)
My Lords, I am not an expert on this, but I understand that the bearskin is a product of a heritage cull which has to take place in certain parts of the world and is not an endangered species import.
Baroness Jones of Moulsecoomb (GP)
My Lords, the Prime Minister is infamous for breaking his promises. He has promised this ban, but will it be another broken promise?
Lord Benyon (Con)
My Lords, there is a Bill coming forward relating to issues of animals abroad. That will be published in the near future. The noble Baroness would not expect me to second-guess parliamentary procedures, but it will be introduced soon.
Baroness Fookes (Con)
My Lords, given that there are suspicions arising that certain other animal welfare aspects are to be dropped from the Bill to which my noble friend refers, will he forgive me if I say that I entertain considerable suspicions as to whether the Government are back-tracking?
Lord Benyon (Con)
My noble friend’s question suggests that she has the advantage on me and a greater understanding of the pre-legislative discussions that are going ahead. As far as I am concerned, what was in the manifesto will be brought forward in a Bill in the near future.
Baroness Pinnock (LD)
My Lords, it was reported in the media over the weekend—I think this is what the noble Baroness was referring to—that the Government are doing an about-turn on imports of fur and foie gras, both of which are abominable for those of us who have animal rights at the forefront of how we treat the natural world. Would the Minister care to comment on why there has been this about-turn?
Lord Benyon (Con)
I have read some of the speculation in the press, but this is not something that has come to me in my department as part of these discussions. We will see in the near future whether the noble Baroness is right or wrong when this legislation is published and pre-legislative discussions have taken place.
Lord Forsyth of Drumlean (Con)
My Lords, does my noble friend agree that, if people do not like the process by which foie gras is made, the option is not to buy and not to eat it and we do not need the Government to ban it?
Lord Benyon (Con)
The Government are bringing in a range of animal welfare measures. We have a proud tradition in this country across parties of having concern for animal welfare. There is a long list of measures that the Government can take, have taken and will take. When the animals abroad Bill is published, everything in it has to be seen in relation to a much wider determination to protect animal welfare.
Baroness Hayman of Ullock (Lab)
My Lords, further to the questions from noble Lords around what has been in the press, if bans on foie gras and fur imports are to be dropped from the animals abroad Bill, can the Minister confirm whether the noble Lord, Lord Goldsmith, is being sidelined by the Government and his department? He has previously stated that the Government would legislate to ban fur imports at the earliest available slot. There seems to be general back-tracking on animal welfare promises from this Government, so can the Minister assure us that the noble Lord, Lord Goldsmith, has the full support of the Prime Minister and the Treasury on these matters?
Lord Benyon (Con)
I can assure the noble Baroness that my colleague and noble friend Lord Goldsmith has the full confidence of the Prime Minister and is very active on these issues. He would be answering this Question if he was available.
Lord Rogan (UUP)
My Lords, I note that the Defra consultation on this matter received over 44,000 responses, with 86% of respondents supporting the proposed ban. As the noble Lord, Lord Selkirk, said, 300 trophies have since been bought into the United Kingdom. Can the Minister tell the House how many more trophies are likely to be imported into this country before the long-awaited ban is implemented?
Lord Benyon (Con)
The noble Lord knows the length of time it takes for legislation to get on to the statute book, but once it is there, imported trophies will be banned. I would expect that, if the Bill comes in in the relatively near future, by this time next year the noble Lord’s ambitions will be realised.
Lord Hannan of Kingsclere (Con)
My Lords, has my noble friend the Minister made any assessment of the possible unintended consequences of this legislation? In the late 1970s, Kenya banned trophy hunting and saw the number of its elephants plummet. South Africa and Rhodesia, as it then was, went the other way and said that, if you owned land, livestock on that land was your property. As a result, local people treated large animals as a renewable resource rather than a pest. Can my noble friend confirm whether the Government have assessed whether there might be increased pressure on the habitats of rare species as a result of this legislation?
Lord Benyon (Con)
As part of the consultation, we heard from a number of different organisations and Governments, including those of South Africa, Mozambique, Namibia, Canada, Zambia and Botswana, all of which support trophy hunting as a conservation tool. There is a wide-ranging debate about the value of well-managed conservation hunting and the impact it can have on increasing the number of rare and endangered species as against badly managed hunting, which sees large amounts of rare and endangered species killed and has no value to conservation.
Covid-19: Vaccination Programme
Lord Londesborough
To ask Her Majesty’s Government what financial support they will provide to the global Covid-19 vaccination programme in 2022; and how many vaccine doses the United Kingdom has donated to date.
Lord Sharpe of Epsom (Con)
My Lords, the UK has committed up to £1.4 billion to help end the Covid-19 pandemic and address its impacts. This includes funding for COVAX, which has now delivered more than 1 billion vaccines worldwide. We are working with partners on how to finance Covid-19 vaccines more sustainably for 2022 and beyond. To date, the UK has donated 32.2 million doses; 29.5 million have been delivered to recipient countries. COVAX is in the process of allocating and delivering the remaining 2.6 million doses.
Lord Londesborough (CB)
I thank the Minister for his detailed response, but we are way behind the WHO’s target of vaccinating 70% of the world by September. Just 6% of people across low-income countries are fully vaccinated, while 3 billion people have not received a single dose. Last month, the Prime Minister was warned by 300 leading scientists that wealthy countries were pursuing
“a reckless approach to public health”.
Will the Government step up and further commit to the UK’s £1 billion fair-share contribution towards the urgent $23 billion funding needs of the Access to COVID-19 Tools Accelerator, and help to address this moral and economic dereliction of duty?
Lord Sharpe of Epsom (Con)
My Lords, the UK is in total agreement with the noble Lord that vaccine inequity is shocking. We are committed to supporting global vaccination and equitable access in the poorest countries. That is why we used our G7 presidency in 2021 to push for more commitments and continue to play a leading role with COVAX and other partners in strengthening procurement and delivery efforts with partner Governments. We have delivered £548 million to COVAX’s advance market commitment, which will help to deliver up to 1.8 billion doses for developing countries in 2022. To date, more than 1.19 billion vaccines have been delivered globally through COVAX to 144 participants, including 1 billion doses to almost all of the AMC-eligible countries. Some 86 of those countries are eligible, and 44 of them are in Africa.
Baroness Thornton (Lab)
My Lords, does the Minister agree that it is unacceptable that, through mismanagement, this Government allowed more than 500,000 vaccines that could have gone to developing countries to be destroyed? Given that the UK has the expertise, technology, resources and production capacity to vaccinate the whole world, why is the vaccination gulf between us and the global south so great?
Lord Sharpe of Epsom (Con)
My Lords, I thank the noble Baroness for her question, which relates to shelf life. Decisions on donation are driven by the availability of vaccines from domestic supply. Once the Health Secretary is confident that vaccines are available to donate, the Foreign Secretary prioritises how they are shared. Avoiding vaccine expiry and the wastage of vaccines is a UK core objective, determining when and where we share and deploy our doses. For all bilateral donations, we have sought assurances that recipients have the capacity to roll out the quantity of doses in line with the national vaccination programmes ahead of their expiry date. Vaccines delivered by COVAX are delivered in consultation with countries and distributed in line with the WHO’s equitable allocation framework.
Baroness Sugg (Con)
My Lords, the price point of how we declare our donated vaccines as overseas development assistance matters here, and the Centre for Global Development has a robust calculation showing that the average price the UK has paid is $4.40. This is less than the OECD’s DAC ODA amount of $6.72, but we can indeed charge what we pay for them. Can my noble friend the Minister reassure me that the Government will not make any profit from the vaccines that we donate, which were, of course, originally bought for the UK? Charging poorer countries more than we paid for these vaccines not only is morally wrong but will reduce our international development spending further.
Lord Sharpe of Epsom (Con)
I thank my noble friend for her question. She is right: the OECD’s Development Assistance Committee secretariat has now provided guidance for reporting donations of excess Covid-19 vaccine doses in 2021 in ODA. The UK is considering this guidance together with our other commitments and obligations and is actively engaging with the Development Assistance Committee secretariat on valuing Covid-19 vaccines in ODA assistance in 2021. The DAC secretariat will review its methodology for donations in 2022, and all donations to date have been to ODA-eligible countries.
Lord Wigley (PC)
My Lords, what consideration have the Government given to the possibility of offering tax incentives or financial aid for companies from the United Kingdom which might set up manufacturing plants in overseas countries so that they can help directly in those areas?
Lord Sharpe of Epsom (Con)
My Lords, I am not familiar with the tax incentives that may have been offered, but we have provided technical support to develop business cases for, for example, Biovac to manufacture vaccines in South Africa, the Institut Pasteur in Dakar, Senegal, and to the Moroccan Government. The technical support helped to catalyse investment that will see Covid-19 vaccines produced on the African continent in 2022. We also welcome the work of the COVAX supply chain and manufacturing task force, which brings together partners to identify immediate and longer-term actions to increase the volume and security of global vaccine supply.
Baroness Sheehan (LD)
My Lords, this March the UK is hosting the pandemic preparedness summit, at which CEPI, the Coalition for Epidemic Preparedness Innovations, is aiming to raise $3.5 billion for its 2022-26 strategic period. Will the UK Government take this opportunity to commit £300 million and act as a diplomatic leader to ensure that CEPI has the resources it needs to continue its crucial work?
Lord Sharpe of Epsom (Con)
The noble Baroness is quite right: the UK is hosting the global pandemic preparedness summit on 8 March this year, and that will raise funds to achieve CEPI’s goal to develop vaccines against new threats in 100 days and rapidly scale up regional manufacturing for affordable global supply. CEPI’s new five-year strategy aims to develop vaccines to prevent future pandemics, cutting the time it takes to develop new vaccines from 300 to 100 days. The UK is a long-term partner of CEPI and one of its biggest supporters, giving £276 million in funding since 2018. There will be a pledge of more money towards CEPI at the replenishment summit next month, but I am afraid that I do not know the number. I could go on about CEPI, but I think that is enough.
Baroness Deech (CB)
My Lords, it is reported that Nigeria will give away hundreds of thousands of doses because it is unable to deliver them, and that Iran likewise has wasted nearly a million doses because they were made in America. What steps can the Government take to make sure that the infrastructure is available and that doses will not be wasted for political reasons?
Lord Sharpe of Epsom (Con)
I think I have already answered the question on shelf life. I obviously cannot comment on the Iranian Government. In terms of what more the Government can do, I have already outlined a number of measures we are trying to take with regards to shelf life in particular. As I say, these decisions are taken very carefully by the Foreign Office and the health department.
Lord Udny-Lister (Con)
My Lords, will the Minister tell us what is happening for those countries which have difficulty in getting supplies in because of conflict or non-recognition? I use the example of Somaliland, where all the supplies go through Somalia and then arrive in Somaliland only when they are out of date. There are a number of countries like this, so what action is being taken to deal with these problem areas?
Lord Sharpe of Epsom (Con)
My Lords, the UK is supporting the humanitarian buffer of last resort to support populations displaced by conflict in various parts of the world, including Afghanistan. Obviously, we welcome continued application of this instrument to support vulnerable populations where needed.
Baroness Ritchie of Downpatrick (Lab)
My Lords, yesterday the Prime Minister said in the other place:
“We will continue to support other countries in developing their own surveillance capabilities, because a new variant can emerge anywhere.”—[Official Report, Commons, 21/2/22; col. 44.]
Can the Minister detail when the Government will reinstate the overseas aid budget to 0.7% of GNI to provide that necessary capability and funding capacity to help countries in the developing world deal with new variants?
Lord Sharpe of Epsom (Con)
The noble Baroness is aware that I cannot say that—it is a matter for the Chancellor. But I can say this: on 30 December, the Foreign Secretary announced a £105 million emergency package to support low-income countries, particularly in Africa, to prepare for and respond to omicron. That includes scaling up testing, especially in parts of Africa where testing rates remain lowest, and it will enable health systems to track and respond more effectively to Covid-19, improving access to medical oxygen supplies, and so on.
Baroness Blower (Lab)
My Lords, I am sure the Minister agrees that Her Majesty’s Government should redouble their efforts to ensure that vaccines are shared in a safe, timely and effective manner, but can he also say whether only vaccine doses that are actually used should be accounted against the ODA budget?
Lord Sharpe of Epsom (Con)
I am afraid I cannot say that, but the ODA budget and how we account for these things are currently being considered by the department. I am sure more information will be forth- coming very soon.
Windfall Tax: Oil, Gas and Energy Companies
Lord Sikka
To ask Her Majesty’s Government what consideration they have given to levying a windfall tax on the profits of oil, gas and energy companies.
Baroness Penn (Con)
The Government place additional taxes on the extraction of oil and gas, with companies engaged in the production of oil and gas on the UK continental shelf subject to headline tax rates on their profits that are currently more than double those paid by other businesses. To date, the sector has paid more than £375 billion in production taxes. All taxes are kept under review and any changes are considered and announced by the Chancellor.
Lord Sikka (Lab)
My Lords, the primary cost of producing oil, gas and green energy has hardly changed. Only the selling price has, resulting in excessive profits without any additional effort for the companies. A windfall tax is needed to help hard-pressed households. Why are the Government so wedded to their ideology rather than helping the people?
Baroness Penn (Con)
My Lords, the noble Lord is correct to talk about price fluctuations in the sector, of course. In spring 2020, the price of oil crashed to below $20 a barrel. That year saw investment in the sector at an all-time low, so an abrupt tax change would create further uncertainty and potentially undermine significant investment in that sector. However, the Government remain committed to supporting households with the cost of energy and have set out plans to do so.
Lord Naseby (Con)
My Lords, instead of threatening major companies such as Shell and BP, would it not be more sensible and in the interests of UK Ltd to recognise that we need those companies to pioneer work in new areas of supply for fuel and power, particularly hydrogen and areas like it?
Baroness Penn (Con)
My noble friend is right. The North Sea transition deal is a global exemplar of how the Government can work in partnership with the offshore oil and gas industry to achieve a managed energy transition.
Lord Bilimoria (CB)
My Lords, like the noble Lord, Lord Naseby, and as president of the CBI, we feel that a windfall tax is not efficient, as it puts investments at risk for companies that are key to our transition to net zero. Does the Government agree? Secondly, do they agree that this is absolutely the wrong time for our tax burden to be at its highest level for 70 years? Businesses have suffered so much through the pandemic; will this not stifle what is already a fragile recovery?
Baroness Penn (Con)
My Lords, the Government agree that an abrupt tax change could put investment in this sector at risk. While the overall tax burden is high, we have had to take certain decisions to aid our recovery from the pandemic. We saw the Government put in place so much support during the pandemic, but we need to recover, for example by getting on top of NHS waiting lists.
Lord Browne of Ladyton (Lab)
My Lords, the Minister tells us that the Government are concerned that a windfall tax would deter companies from investment, so let us look at that. The Norwegian Government tax companies at 22% and add 53% for those that operate in the North Sea. We apply 40% tax to profits, but we have massive rebates for investment and for decommissioning, with the result that, over five years, 19 companies that operate in the North Sea have paid no tax at all. The Norwegians have no problem getting corporate investment in the North Sea; why would we have any problem getting corporate investment in the North Sea, if we took some of these unearned profits this year to help poor people with difficulties paying their own energy bills?
Baroness Penn (Con)
My Lords, I want to be absolutely clear that the Government have put in support to help people pay their energy bills—we are spending around £9 billion on that. The noble Lord is right that the UK provides tax relief for decommissioning costs, which is something that we have in common with Norway. Of course, different oil and gas fields are at different levels of maturity and have different costs relating to further extraction, and that is reflected in our approach to the North Sea oil and gas fields that we have in the UK.
Baroness Sheehan (LD)
My Lords, despite fine words on net zero, it is nigh on impossible to get an accurate picture of the amount of money that oil majors spent on renewables. The little we do know shows that their words pay lip service only. Eni spent less than 2% on investment in renewables, and Shell and BP spent similarly derisory amounts. It really is time to stand up to them: tax their extreme profits and use the money to help people who are having to make desperate choices between heating and eating.
Baroness Penn (Con)
My Lords, I am afraid that the Government do not agree with the approach of the noble Baroness. However, where we do agree is on the essential nature of providing further support to households that are struggling with their fuel bills. That is why we are providing a £150 cash rebate for homes in council tax bands A to D, which is about 80% of all households, and a further £144 million of discretionary funding to councils for those households that would not otherwise qualify for that rebate.
Lord Forsyth of Drumlean (Con)
My Lords, if we were really concerned about the cost of energy to poor people in our country, would it not be a good idea to remove the green levies that are adding to their bills? Surely it is naive beyond belief to imagine that we can do without gas and oil in the immediate future. The reason that prices are so high is that we are not able to produce enough of our own gas supplies. That requires investment and surely means not taxing the people who are capable of providing it.
Baroness Penn (Con)
My Lords, my noble friend is right that in the short to medium term we will continue to need oil and gas supplies, and that is why the Government think that it is important that investment continues to be made in our oil fields. But we also need to fund the transition to a net-zero economy, where we move more towards clean and renewable energy in the longer term. That is why we have programmes such as the North Sea transition deal, to do that in a managed and orderly way.
Lord Tunnicliffe (Lab)
My Lords, let me be absolutely clear: the Labour Party would immediately implement a windfall tax on oil and gas profits. Unlike the Government’s buy now, pay later scheme, our plan would provide a genuine £200 off most household bills, with targeted support of £600 for those who need it. The Chancellor will make his Spring Statement a month from tomorrow, just weeks before the energy price cap is hiked. Will the Government use that occasion to do the right thing and adopt Labour’s proposals?
Baroness Penn (Con)
My Lords, Labour may say that it would impose a windfall tax immediately but under its proposals the support would not then be passed on to consumers immediately; it would take far longer under its plans to get money into people’s pockets. Furthermore, Labour’s plans for a VAT cut would not target support at those who most need it, with some of the wealthiest households saving the most money under the proposals.
Baroness Boycott (CB)
My Lords, surely the Government agree that the long-term future has to be renewable energy, yet at the moment the oil companies are putting out that 20% to 25% of our energy bills is coming from green levies, when in fact the figure is 8%. This cannot be the moment that we take our foot off the gas, so to speak. Will the Government give the House a guarantee that they will not reduce the green levy but look to increase it, so that we do not end up with these problems again and again?
Baroness Penn (Con)
My Lords, I would not speculate on the green levy or any other tax or levies outside of the Budget process. What I would say to the noble Baroness is that we remain committed to our transition to net zero. While we recognise that in the short term we need to continue our oil and gas supplies, in the longer term we need to move to greener forms of energy.
Lord Oates (LD)
My Lords, does the Minister recognise that between 2010 and 2020 real energy bills for consumers fell? That was in significant part because of the green levies which helped to reduce energy consumption, quite contrary to what the noble Lord on the Government Privy Bench has just said. Will she ensure that we do not cut these energy-saving levies, and will she make absolutely clear that what is driving up prices is the cost of fossil fuels, not of renewables and green levies?
Baroness Penn (Con)
My Lords, I believe I have already answered a question about the level of the green levy on bills. However, I have also given the reassurance that the Government are committed to their net-zero targets. That involves a transition from fossil fuels to greener forms of energy, which is why we have a plan in place to do so.
Baroness McIntosh of Pickering (Con)
My Lords, does my noble friend agree that it is only in this sector that the industry is not paying for future infrastructure? Will she ensure that, rather than funding renewable energy through green levies, companies will be able to go to the market and fund them in the usual way?
Baroness Penn (Con)
My Lords, the green levy on bills is in place to help move the transition towards more renewable energy sources. It has been successful in doing that so far. The Government remain committed to that transition.
Living with Covid-19
(2 years, 2 months ago)
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Baroness Smith of Basildon (Lab)
My Lords, the Prime Minister was clearly very upbeat throughout his Statement yesterday, announcing an end to all legal Covid restrictions in England and setting out part of the Government’s living with Covid plan. The pace and the efficiency of the vaccine programme, the justification for the changes, has been extraordinary. I again commend and thank the scientists, staff and volunteers of the National Health Service, and indeed some Ministers, for their collective efforts.
As many in your Lordships’ House have said before, Covid and our necessary response to it has taken an enormous toll on the nation’s physical and mental health, on society as a whole and on every aspect of our economy—we are all desperately keen to get back to how things were. Yet even the Prime Minister admits that Covid is not going to suddenly disappear, which means that this next stage—with a now hopefully much reduced virus—has to be well thought out, manageable and resilient over time.
I would like to probe the background to the decision with the noble Baroness and clarify some of the points about how we move forward. First, as the noble Baroness is aware, the BMA and other bodies do not believe that the decision is evidence led. Can she offer any reassurance to your Lordships’ House and state whether the decision is in line with the recommendations of SAGE, as well as those of the Chief Medical Officer and Chief Scientific Adviser?
On these Benches, we are optimistic that we could well be moving on from the very worst of this pandemic. Vaccinations, testing and self-isolation have been highly effective in reducing infections and transmission and thereby reducing the likelihood of new variants. But the SAGE advice is that something worse than omicron will be an ever-present threat. So, with all the restrictions being removed, there is real concern that ending the legal requirements to isolate and stopping free tests on 1 April feel quite arbitrary. So, can the noble Baroness say anything further about the evidence base for the timing of those two points following restrictions being removed, and commit to placing supporting information in the Library? Also, will there be an impact assessment on the consequences of lifting restrictions all at once, alongside the testing and self-isolation, and what mitigations are being considered?
On self-isolation, the Prime Minister draws a comparison with flu in terms of staying at home. Yet we know Covid is much more highly transmissible. If I have understood this correctly, the advice is to make a personal decision on whether or not to self-isolate. But without a legal requirement, what assessment has been made of high-risk workplaces such as care homes and the National Health Service? The noble Baroness will understand that most people want to do the right thing. But some are going to struggle with, on the one hand, guidance telling them to self-isolate if positive, and, on the other hand, pressures—either financial or from an employer—forcing them to work.
Can the noble Baroness also provide further details on the cost of purchasing tests? With rapidly increasing household bills, paying for testing, particularly where an employer might require it, will be an additional pressure for many. The Prime Minister has said that free tests will be available to the oldest age groups and the most vulnerable. What about those working with them? In the Statement, Mr Johnson merely offered that the Government were working with retailers to supply tests, so can the noble Baroness shed any further light on this, including on whether the reports of £3 for each individual test are accurate and whether the price will be fixed?
Also, will there be a greater effort to support UK manufacturers rather than relying on imports? Most of the tests I have had have come from China. Also, what is the Government’s response to concerns about the sale of the UK’s flagship Vaccine Manufacturing and Innovation Centre in Oxford, at a time when vaccines are so important?
The Prime Minister reflected on the eye-watering amount of money spent on test and trace. He said it was more than the entire budget of the Home Office. Given the criticisms of that service, is the noble Baroness satisfied that the budget was well managed and value for money, or will an independent assessment be made of this?
In terms of going forward, despite the success to date of vaccines, only two-thirds of those eligible for a third jab have had one. The advice is that two jabs are not enough to provide maximum protection. With all the regulations being scrapped, how will the Government ensure that everyone eligible for a booster actually gets one? With the evidence that immunity and protection are reduced quite significantly over time, we welcome the rollout of a further booster for those who are over 75. Can the noble Baroness say how long this will be for? Will it be ongoing at least for the foreseeable future, perhaps as people reach their 75th birthday?
In the Statement, the Prime Minister committed to monitoring future outbreaks. That seems sensible. But what was missing from the Statement was what the Government would do if they identified such an outbreak—or even if the emergence of a new variant was identified. Without testing and self-isolation for those infected, I am not clear what the Government’s plan is. So, can she provide any further information on that and the purpose of the monitoring, or write to me if it is not yet available?
It is absolutely critical that the right measures are in place to support people to make the right, proportionate choices going forward. We know now that, moving forward, we have to live with the virus. But that is not the same as ignoring it, and I am really not sure that the Government have the sequencing of events or the messaging right. Following this announcement, it seems that the message that the Covid-weary public can take away is that Covid is no longer a threat, because it is not essential to know whether you have it or not, as there is no testing, and it is not essential to self-isolate if you have. That is going to lead many to conclude—wrongly, as even the Prime Minister has admitted—that the pandemic is now over. So, can the noble Baroness today give us some reassurance of what the Government’s plans are in the face of any further outbreaks or new variants and what the Government are going to do to encourage the public and signal the importance of everyone getting their booster? Also, reassurance on the issue of government monitoring of any new variants or outbreaks would be really helpful, because we need to understand why the Government are doing that and what the plan is if they identify any.
Lord Newby (LD)
My Lords, I begin where the Prime Minister concludes his Statement:
“We do not need laws”,
he says,
“to compel people to be considerate of others. We can rely on that sense of responsibility towards one another”.—[Official Report, Commons, 21/2/22; col. 45.]
If this were the case, many laws would not be on the statute book and, indeed, many aspects of the regulations that we have had in place over the last two years would not have been necessary. For this Prime Minister to claim that we can rely on the sense of responsibility towards one another shows a remarkable lack of self-awareness. He did not behave responsibly even when there were laws in place, so to remove all legal restraints at one fell swoop seems to me, at best, an extremely risky option. Doing so makes sense only if we are confident that the costs involved are manageable.
It is obviously a great relief that numbers are falling and that serious illness is on the wane, but the death only last week of one of my colleagues, having been in ICU with Covid, is a timely warning to us all that this disease is far from done. While everybody agrees that we have to learn to live with Covid, that is not the same as getting rid of every precautionary measure. We need to ensure that cases continue to diminish, the vulnerable are protected and pressure on the NHS is bearable.
The Prime Minister repeatedly said yesterday that taking personal responsibility requires people to test themselves and to self-isolate if they think they have the disease, but, for those on limited income, including the millions who are not eligible for sick pay, the cancellation of self-isolation support payments will make that an impossible choice. If faced with heating or eating, or paying for a coronavirus test, it is pretty obvious which will be the lowest priority. So, we have real concerns about getting rid of free testing, especially for those who are either vulnerable or have family members who are vulnerable.
The latest testing figures show that, every week, nearly 4 million people are taking regular Covid tests—on average, two a week. This includes people who take tests to protect their elderly relatives and friends, as well as vulnerable workers in people-facing industries such as hospitality who are concerned about their health. If people have to pay for this, we estimate that it could amount to an annual testing cost to an individual of up to £500. Does the Minister agree that this is simply unfeasible for many people and is also, in effect, a tax on caring? While the Prime Minister said that half a million people who are the most severely immunocompromised will get free tests, their carers and families will not.
There is also a more important principle at stake here. The Government have consistently said that the NHS is safe in our hands because it is free at the point of need. However, Covid-19 is a notifiable, highly infectious disease under the Public Health (Control of Disease) Act 1984 and the Health Protection (Notification) Regulations 2010, which say that medical practitioners must test potential cases under the NHS so that infections can be managed and monitored. Currently, all notifiable disease tests are free of charge but, from 1 April, that will no longer be the case. So, how can the Government claim that the NHS will continue to be free at the point of need? In this case, it clearly will not.
The Statement refers to SAGE’s concern about the future path of the pandemic, which underlines the importance of the survey work carried out by the ONS and Imperial College. Can the Leader confirm that these surveillance operations at ONS and Imperial will continue on a substantial scale, and can she say how quickly full, free testing and tracing can be restarted in the not unlikely event of another variant emerging?
While vaccination remains a vital tool in learning to live with Covid, some people’s immune systems wane quickly after their booster jabs. The Statement says that these people will have access to antivirals and other treatments, but the antivirals must be administered within 48 hours of symptoms starting. Can the Government confirm that such people will get access to rapid testing, to be able to start these vital treatments within the first 48 hours?
Finally, the Statement mentions the UK’s G7 plan for future pandemics. How do the Government respond to comments from the WHO that countries such as the UK are dismantling the precautions needed to ensure a safe reduction in Covid? We will learn to live with Covid, but the Government have a lot more work to do to ensure that we do it with minimal risk.
The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)
My Lords, I thank the noble Baroness and the noble Lord for their comments. On behalf of the whole House, I send condolences to colleagues on the Liberal Democrat Benches on the loss of one of their dear colleagues, and to Lord Chidgey’s family. He is in our thoughts.
The noble Baroness and the noble Lord asked about SAGE advice. We have continued to take and publish the best advice and analysis from scientific groups such as SAGE and its subgroups, which has been used in decisions taken by Ministers, alongside economic and social considerations. The latest SAGE advice was referenced within the strategy that was published on 10 February. We will continue to publish SAGE advice as and when we have it.
The noble Lord rightly pointed out that the proportion of infections from the current omicron variant resulting in hospitalisations is significantly lower than in previous waves, with less than one per 100 infections, compared with over four per 100 infections during the alpha peak. Although there is a delay, we are also seeing a welcome fall in deaths, which we expect to continue.
The noble Lord and the noble Baroness both referred to the changes in the self-isolation regime and the legal requirement finishing on 24 February. We will be replacing that with guidance in the short term, still advising people with Covid to stay at home and avoid contact with others. From 1 April, we will be issuing new guidance setting out the ongoing steps that people with Covid should take to minimise contact with other people. There will be specific guidance for staff in particularly vulnerable services, such as adult social care, healthcare, and prisons and places of detention. Health and social care workers will continue to be asked to stay at home following the lifting of the legal requirements to self-isolate. We will review over the coming weeks the long-term approach to managing Covid in health and social care settings and will publish adult social care guidance, again by 1 April.
The noble Lord and the noble Baroness asked about testing. Free symptomatic testing will remain available to those at highest risk of Covid and to social care staff. Again, details will follow ahead of 31 March. We will also set out in due course further details on which high-risk groups and settings will be eligible for continued free testing. The noble Lord and the noble Baroness also asked about the costs of tests. We will be working with retailers to establish and develop a private market for lateral flow tests. There have been private markets operating in the US and many European countries for some time now. Retailers will be setting the price, but we will be ensuring that the private testing market is properly regulated, including monitoring prices charged, and we will continue to work with UK companies in developing lateral flow tests, which the noble Baroness referred to.
The noble Baroness asked about the value of test and trace and its cost. Of course, we are all aware that we began the pandemic with no diagnostics industry and yet have conducted the most tests in Europe. We have conducted more than 460 million tests, and over 36.3 million positive cases and their contacts have been reached who could have spread the virus. We have built a testing network from scratch that can process millions of tests per day—more than any other European country—and over two billion lateral flow tests have been distributed across the UK since the start of the pandemic. That is a pretty impressive record.
The noble Baroness mentioned, rightly, that we have accepted JCVI advice for a new spring booster, to be offered to those over 75, older care home residents and those over 12 who are immunosuppressed. Those doses will be given six months after their most recent booster dose. We have also procured five million patient courses of antivirals, more than anywhere else in Europe, which is a significant supply and will provide a crucial layer of protection going forward. We are rolling out neutralising monoclonal antibodies and antiviral treatments for patients at highest risk. Up to 1.3 million patients could benefit if they are clinically eligible, and we have a plan to personally communicate with these relevant patients so that they can take advantage of the treatments that we have invested in.
Both the noble Lord and the noble Baroness talked, quite rightly, about future surveillance and what we would be doing about it. UKHSA will continue to sequence infections and monitor a range of data, including infections, hospital admissions, patients in hospital and deaths with Covid. It will maintain critical surveillance capacity, including the Covid infection survey, genomic sequencing and additional data, and this will be augmented by continuing the SIREN and Vivaldi studies.
As the noble Lord and noble Baroness pointed out, we will have to keep a very close eye on the emergence of new variants, so we will retain the core capabilities and infrastructure required to scale up a proportionate response in the event of a resurgence or a new variant. Obviously, this will involve the continued use of pharmaceuticals as the first line of defence, along with continuing to develop capacity to respond in the health system. We will retain laboratory networks and diagnostic capabilities so that PCR testing can be stood back up in the event of a resurgence, and we will retain the ability to stand up the national trace response if it is needed. Local health teams will continue to use contact tracing and provide context-specific advice, where they assess that to be necessary, as part of their role in managing local outbreaks, as they do with other infectious diseases. We will also maintain the ability to increase asymptomatic testing in the NHS and care homes.
UKHSA continues to have good stocks of lateral flow tests and will manage them to enable the Government to establish an adequate stockpile that could be rapidly deployed in future outbreaks. We will also continue to run public health campaigns such as we have seen in the past to encourage people to think about their behaviour and to ensure the continuation of the good work that we have done to understand how to deal with Covid.
Finally, the noble Lord asked about the global scene. He is probably aware that in March we are hosting the Global Pandemic Preparedness Summit for the Coalition for Epidemic Preparedness Innovations, and we are working with international partners on future pandemic preparedness, including through a new pandemic treaty, an effective early warning system—or global pandemic radar—and a mission to make safe and effective diagnostics, therapeutics and vaccines available within the first 100 days of a future pandemic threat being identified; this is, of course, a global problem.
Baroness Brinton (LD) [V]
My Lords, the 3.7 million clinically extremely vulnerable people already follow government advice for them, regularly checking the daily Covid dashboard to see how many cases there are in their area. This will be even more important when others no longer have to self-isolate when they get Covid. They cannot do this when widespread testing and the daily dashboard stop. What advice would the Leader give these people on how to assess their own risk after 1 April?
Baroness Evans of Bowes Park (Con)
The noble Baroness is absolutely right that throughout the crisis we have led the way on data reporting, and have ensured that data is always available to the public. UKHSA will keep the content and frequency of reporting on Covid—including the GOV.UK dashboard—under close review, to ensure that statistics are being produced of the appropriate quality and transparency, and that they remain useful and relevant in accordance with the code of practice for statistics. So we will continue to publish information.
Lord Hunt of Kings Heath (Lab)
My Lords, I refer to the SAGE advice, from the last meeting, that the Leader mentioned. It was said that some people may take the removal of free and accessible testing as a signal that they should continue to attend workplace social gatherings while showing Covid symptoms. What is the Government’s response to that? Why are they getting rid of free testing?
Baroness Evans of Bowes Park (Con)
We have always made it clear that as we move through Covid we would move away from free testing, and that is what we intend to do. As there are now high levels of immunity across the population as a result of vaccination and natural infection, future testing and isolation will play a less important role in preventing serious illness, and, as I have said in response to the noble Baroness and the noble Lord, we will be working with retailers to establish and develop a private market for lateral flow tests.
Lord Bilimoria (CB)
My Lords, last summer and winter the CBI, of which I am president, said that there must be a three-pronged attack. The first prong was vaccines, and hats off to the Government for an excellent vaccine programme. The second was providing free lateral flow devices to businesses and citizens, and the Government have been the best in the world at doing this so far; no other country has done it like we have. The third was antiviral treatments, and the Government have almost 3 million. Why are the Government withdrawing the free lateral flow tests so early, when it has taken one year for people to get used to using them regularly? We ran out of them in December and January. They are very effective. Why are the Government doing this? Surely they are being penny-wise and pound-foolish. Businesses and citizens should be using them. We need them for a while longer.
Baroness Evans of Bowes Park (Con)
The noble Lord will be aware that we have announced that we will end free testing, but it will not finish until the end of March; we are not stopping free testing immediately. There will obviously be the opportunity for people to get tests during that time. As the noble Baroness said, the test, trace and isolation budget in 2020-21 exceeded the entire budget of the Home Office. It cost a further £15.7 billion this financial year and £2 billion in January alone, at the height of the omicron wave. We want to move to the next phase as we begin to live with Covid, and ending free testing is one aspect of that approach.
Lord Robathan (Con)
Unusually, I congratulate the Government—first on the outstanding success of the vaccine programme, which really has been world leading, and secondly on this policy of living with Covid. It is extremely important that we rely on personal responsibility and common sense, and do not listen to the siren voices from SAGE and others who say that we must stay locked down for ever. Can my noble friend please tell me what the death rate has been in the last month, compared with the death rate in 2018-19?
Baroness Evans of Bowes Park (Con)
I thank my noble friend. I do not have the exact figures to hand but, as I said, the reporting of deaths is always slightly delayed. It has started to decline now and we expect this to continue. The latest evidence suggests that the risk of presentation to emergency care or hospital admission with omicron is approximately half that for delta.
Baroness Ritchie of Downpatrick (Lab)
My Lords, access to free testing with lateral flow tests ensured that many of those who cannot afford to pay for tests were able to take them and to help prevent the transmission of highly transmissible variants. Will the Leader therefore tell the Prime Minister from your Lordships’ House today that we want the free lateral flow tests to remain for a considerable time longer to ensure that the Government have the necessary contingency capabilities to respond rapidly to any new variant, as outlined in the Government’s Statement in the other place yesterday? We know that unless other countries have the capacity to deal with variants, we are all in a state of danger.
Baroness Evans of Bowes Park (Con)
As I mentioned in response to a previous question, we are giving notice that free lateral flow tests will come to an end at the end of March. But, as I also said in an earlier answer, we will retain laboratory networks and diagnostic capabilities to ensure that PCR testing can be stood up in the event of a resurgence or a dangerous new variant.
Baroness Browning (Con)
With these changes in various settings, can my noble friend update the House on what the guidance is now for in-patients in hospitals? Exactly what level of barrier nursing will there be to make sure that Covid patients—like those with any other contagious disease—are protected, in their own interests and those of other vulnerable in-patients?
Baroness Evans of Bowes Park (Con)
As I said, in due course we will set out further details on which high-risk groups and settings will be eligible for continued free testing. As I also said, we will publish guidance specifically in relation to adult social care and other high-risk settings well in advance of when we move towards the end of free testing.
Baroness Meacher (CB)
My Lords, I want to raise a very particular issue raised initially by the noble Lord, Lord Newby, and the noble Baroness, Lady Brinton. The Government are rightly retaining free tests for exceptionally vulnerable people but by the time an exceptionally vulnerable person is found positive, it is too late; he or she may die. Will the Government consider tweaking the rules to enable the children— and maybe the husband and other members of the household—of exceptionally vulnerable people to have free lateral flow tests so that the exceptionally vulnerable person can then take exceptional measures to protect themselves if one of their household is found to have Covid?
Baroness Evans of Bowes Park (Con)
As I say, we are not ending free testing immediately. There is some time and obviously, as I said, there will be further guidance and information on a whole range of issues including, I am sure, the situation the noble Baroness mentions. We have announced that the end of free testing is coming but we have also made it very clear that for vulnerable groups there will be further guidance and information about where testing will continue to be available.
Lord Alton of Liverpool (CB)
My Lords, will the noble Baroness return to a question put to her by the noble Baroness, Lady Smith of Basildon, about the number of lateral flow tests that have come from the People’s Republic of China? Is she aware that by the summer of last year over a billion such tests had been bought by the United Kingdom? This week in another place, it was confirmed that we have bought 24.1 billion PPE items with China registered as their country of origin, including 10.7 billion gloves. Before we consider this further during the course of the Health and Care Bill, on an amendment from her noble friend Lord Blencathra, will the noble Baroness undertake to tell us how much has been spent on these items and what we are doing to build up our own resilience and reduce dependency?
Baroness Evans of Bowes Park (Con)
As I said in response to the noble Baroness, we are working with manufacturers in the UK to encourage the build-up of supply and capability in this country and we will continue to do so because we want resilience in this area.
Lord Roberts of Llandudno (LD)
My Lords, may I remind the House that we are not dealing with one nation but with four nations? The devolved Administrations —Northern Ireland, Scotland and Wales—all take their own decisions and rightly so because they held referendums and so on to give that authority to the particular nations. What discussions have taken place to try to get some resolution? For instance, yesterday I was on the train from Llandudno Junction—a wonderful area for a holiday—and I had to wear my mask until I got to Shotton; at Shotton we were entering England so I could discard my mask. Have we learned any lessons at all about international UK relations following this pandemic?
Baroness Evans of Bowes Park (Con)
We have worked very closely with devolved Administrations throughout the pandemic to effectively support citizens but, of course, health is a devolved issue so the Administrations have made their own decisions. We have also provided £860 million to the devolved Administrations so they can take the precautions they consider necessary on top of the combined £77.6 billion confirmed in the autumn Budget, so we have worked well together. As I say, however, devolution means that it is for the Administrations to decide their way forward. I believe the First Minister of Scotland, for instance, made an announcement today about changes to the rules in Scotland so I think we are moving forwards together, albeit perhaps at a slightly different pace.
Lord Forsyth of Drumlean (Con)
My Lords, does my noble friend agree that St Augustine is alive and well on the Opposition Benches? We should remember that these measures were brought in to stop the NHS being overwhelmed. There is no sense whatever that that is happening. If we cannot remove these measures now, at a time when we have done so brilliantly in getting the population vaccinated, we never will and the cost to the economy will be enormous. To hear the president of the CBI, no less, describe £2 billion a month as penny-pinching makes me wince.
Baroness Evans of Bowes Park (Con)
I thank my noble friend. He is right that our plan for living with Covid prioritises moving to a world where the country manages Covid like other respiratory diseases. Our response is underpinned by four principles: living with Covid by removing restrictions while encouraging safer behaviours; protecting those most vulnerable to Covid; maintaining resilience to be able to spot and respond to new variants; and securing innovations and opportunities from our Covid response, including investment in life sciences.
The Lord Bishop of Coventry
My Lords, thanks to the noble Lord, Lord Londesborough, earlier this afternoon your Lordships’ House considered the matter of global vaccine equity, and my sense was that, in many among the House, there was a feeling that more could be done on that front. Would the Leader say whether the Government also feel that more might be done to ensure vaccine equity in the UK itself, as an expression of the noble and laudable commitment to levelling up?
Baroness Evans of Bowes Park (Con)
Certainly, we have been very focused on targeting those communities which have not taken up the vaccine as much as we would like—for a whole array of reasons. For instance, we have invested a further £22.5 million in a community vaccine champion scheme to support 60 local authorities with the lowest take-up, following a £23 million investment in the initial scheme. We have vaccine ambassadors speaking 33 languages between them who are promoting uptake across the country. The recently launched Office for Health Improvement and Disparities will systematically tackle the top preventable risk factors associated with ill health and improve the public’s health and health disparities.
Baroness Chisholm of Owlpen (Con)
My Lords, I am pleased to hear my noble friend say that the Government are still thinking about free testing for social care areas. Would it be possible for her to take back to her colleagues that, if we are not going to have free testing anymore, it would be good to ensure that there are public announcements to tell the public how they should self-isolate if they think they have any Covid symptoms—in the same way as they would with the flu, cold or other illnesses?
Baroness Evans of Bowes Park (Con)
I entirely agree with my noble friend and, as I said, we will be producing further guidance in advance of the end of March, when free testing, for the vast majority of the general public, comes to an end. We will also be publishing further details about the high-risk settings and groups who will be eligible for continued free testing.
Baroness Fox of Buckley (Non-Afl)
My Lords, good riddance to the draconian Coronavirus Act, but could the Government commit to reviewing public health laws which have been used so damagingly to attack civil liberties? Secondly, beyond rolling back laws, how are the Government planning to counter disproportionate fears and risk aversion? The nudging seems to have been rather too successful in frightening people. For example, so many in care homes are still not allowing family members to see relatives and there are miserable rules in place which are the opposite of homely and welcoming. This matter is beyond laws—there is a lot of encouraging to do.
Baroness Evans of Bowes Park (Con)
I agree with the noble Baroness, and that is why we will continue with public health campaigns, as we have seen in the past. We will also be reiterating to the public the safe behaviours we have learnt: the washing of hands; improved hygiene; ventilation; and all those other measures that we can take which do not involve restrictions on people’s lives but which can help ensure we keep Covid at bay—which is what we all want.
Baroness Finlay of Llandaff (CB)
My Lords, when people are in hospital and seriously ill, they are often desperate to see their own family and their family are desperate to visit them. However, at the moment, there are very severe restrictions in place. Will free testing be provided to families to facilitate them visiting and to help take a more compassionate view towards those who are often disorientated, frightened and find that they cannot even telephone their own family because they are in a hospital unit where the phone does not work?
Baroness Evans of Bowes Park (Con)
As I have said, we will be publishing further guidance and information on the high-risk groups and settings where free testing may be available. However, I cannot make that commitment to the noble Baroness.
Lord Dubs (Lab)
My Lords, of course the vaccine programme has been a success, and I concede that. However, almost all of us here know people who have died of Covid. We have had the highest death rate in western Europe, and that sits badly with the tone of self-congratulation which characterised the Statement. Is it not time that the Government showed some humility as well?
Baroness Evans of Bowes Park (Con)
I am sorry the noble Lord felt that way; I do not think that was the tone at all. However, this Statement gives people hope that we are beginning to move out of a very difficult period for citizens across the country. We are all trying to move together to a world where we can manage Covid like other respiratory diseases, because the emotional, social and economic cost of what we have all been through in the last two years has been devastating. I think the public as a whole, and all of us here, I am sure, want to try to move on while understanding the risks ahead, making sure we have surveillance and the ability to ramp things up if we need to—let us hope we do not—to make sure we can keep everybody safe.
Baroness Altmann (Con)
My Lords, I understand the sensitivities and nervousness being expressed around the House about this move, but there is no right time to do this. We must move on from this virus; it is two years on. To restore confidence to the public in living with this virus, I think the Government’s decision is commendable, just as the decision not to impose isolation before Christmas turned out to be correct. On the £2 billion cost of free testing, the national insurance increase that we are about to impose—although I hope the Government may reconsider it—is planned to raise £12 billion. That is just six months’ worth of free testing.
Baroness Evans of Bowes Park (Con)
I thank my noble friend and am grateful for her support for the approach we are taking. As she rightly says, we need to move on and learn to live with Covid. This is another step in that direction.
Lord Brooke of Alverthorpe (Lab)
My Lords, I regret that the noble Baroness dismissed the noble Lord, Lord Dubs, so peremptorily. We have one of the worst records on deaths from Covid in Europe. We have seen that we have one of the unhealthiest countries in Europe. We now have the freedom with Brexit to make many changes which people previously said we were unable to make. When will a programme be set out to make this country the healthiest in Europe?
Baroness Evans of Bowes Park (Con)
As I have said, we have launched the Office for Health Improvement and Disparities, which will systematically tackle the top preventable risk factors and associated ill health, such as smoking and obesity, to improve the public’s health. We will also set out a strategy to tackle the core drivers of inequality in health outcomes in a new White Paper on health disparities this year.
Viscount Thurso (LD)
My Lords, what advice will the Government give to employers? Will responsible employers be expected to provide testing for their employees?
Baroness Evans of Bowes Park (Con)
We will revise the workplace guidance for employers and work with them; again, it will be published shortly, before the full measures we announced yesterday come into effect.
Lord Hannan of Kingsclere (Con)
My Lords, at the weekend Her Majesty the Queen was reported to have tested positive. I am sure noble Lords on all sides will join me in wishing her every success, but I was struck that, immediately, some commentators and politicians jumped on the announcement, saying that therefore we must not go ahead with the unlocking. Surely the two most salient facts are that omicron will reach even the most protected person in the country and that, if a 95 year-old woman can carry on working with her typical devotion to duty, we have reached the point where these non-clinical, non-pharmaceutical interventions are, if not wholly purposeless, certainly disproportionate?
Baroness Evans of Bowes Park (Con)
On behalf of the whole House, I am sure, I wish Her Majesty the Queen all the best and a quick recovery from her current illness.
Procedure and Privileges Committee
17:22 - Division on Lord Foulkes of Cumnock’s amendment - Ayes: 144 / Noes: 133 - Lord Foulkes of Cumnock’s amendment agreed.
The Senior Deputy Speaker
That the Report from the Select Committee Divisions: pass-readers; Sessional select committees; Participation of eligible members in oral statements and repeated urgent questions (6th Report, HL Paper 152) be agreed to.
The Senior Deputy Speaker (Lord Gardiner of Kimble)
My Lords, the report before your Lordships covers three distinct issues. Before I move to the recommendations on the conduct of Divisions, I will cover the committee’s other recommendations.
The Standing Order on sessional committees is straightforward and the report sets out the committee’s position.
On our recommendation for Oral Statements and the amendment in the name of the noble Lord, Lord Foulkes of Cumnock, on 1 December, we debated the committee’s fourth report. This report recommended that the practice of speakers’ list for Oral Questions, which was adopted as part of our hybrid House procedures and retained after we returned largely to business as usual in September, be discontinued. Since that time, the House has been essentially self-regulating during Question Time and the Leader has brought in eligible Members who wish to participate remotely, following consultation with the usual channels. The committee’s sense is that this change has worked well and, for that reason, we now recommend it be extended to Oral Statements and repeated Urgent Questions.
I am well aware that some noble Lords believe the Lord Speaker, not the Leader, should undertake this role. Indeed, the noble Baroness, Lady Quin, tabled an amendment to this effect last December, which she ultimately withdrew. The amendment from the noble Lord, Lord Foulkes, is in a similar vein, seeking to provide for the Lord Speaker to call on virtual participants during Questions, Oral Statements and repeated Urgent Questions, rather than the Leader of the House. While the noble Lord’s proposal would represent a change to the procedures of the House, it also raises practical considerations, such as the configuration of the House, which would need further consideration by the Procedure and Privileges Committee before any change could be implemented. With all due deference, this is the third time this Session that we have had a debate on this issue, but I am, as always, in the hands of the House.
I now turn to the recommendations relating to the conduct of Divisions, which we debated at some length on 25 October. As noble Lords are aware, last summer, the two Houses jointly launched a project to introduce pass readers in their respective Division Lobbies to replace the clerks who, before the pandemic, would take down the names of those voting in Divisions. The pass readers were installed last October, but it was clear from our debate on 25 October that our original proposal for how to use them, which would have involved the provision of two pass readers in Prince’s Chamber and the abolition of Tellers, did not find favour.
I said to your Lordships then that the Procedure and Privileges Committee would reflect further, and we have now done so. I believe that our revised proposal meets many of the concerns expressed last October while securing the key benefits of pass readers. Under the procedure we have proposed, which is reflected in the proposed amendment to Standing Orders 52, 53 and 54, Tellers will be appointed and, if they are not appointed within three minutes, the Division will be cancelled. Noble Lords will vote in the Lobbies but will do so by presenting their security pass to one of the pass readers. They will then leave the Lobbies, as before the pandemic, by passing the Tellers.
I will not detain the House by explaining the process in more detail, as there is a very clear summary in the report, but I should comment briefly on the amendment from the noble Lord, Lord Cormack, which would require the House to return to the system of conducting Divisions that operated before the pandemic, without the use of pass readers, except with regard to disabled Members who have been deemed eligible to vote remotely under Standing Order 24A. Again, this is of course a matter for the House, but I underline that your Lordships’ committee was unanimous in its support for pass reader voting and for the procedure described in the report before the House today.
We have already modelled that procedure as far as possible on that which operated before the pandemic. Our proposals retain Tellers and would see voting taking place in the Division Lobbies. However, the committee has also sought to embrace innovation through the deployment of pass readers, rather than requiring clerks to record names manually, as was the case before the pandemic. I can assure your Lordships that the system will be tested fully and staff will provide whatever support is needed to noble Lords as we introduce the new system, if that is the House’s wish. I should emphasise that the Procedure and Privileges Committee will keep the new system under review, but I am confident that the introduction of pass readers will deliver significant benefits. The recording of the names of noble Lords will be faster, more reliable and more accurate, and the results will be delivered more quickly.
The experience in the other place gives me confidence in offering these assurances. Since pass readers were introduced, there have been 73 Divisions in the other place with, on average, around 450 MPs voting per Division—a total of more than 33,000 votes cast. On no occasion has the pass reader failed to record Members’ names correctly. Moreover, the system has allowed voting lists to be published online with unprecedented speed, within two to five minutes of Divisions ending.
I believe that these benefits are worth securing. As a committee, we have thought carefully about the issues raised by noble Lords last October. Our view, as reflected in our recommendations, is clear. I hope that the noble Lord will feel able not to press his amendment, particularly with the assurance I have given that we will keep the operation of the new system under review. I believe that the committee’s report—it is your committee, my Lords—deserves your Lordships’ endorsement and support. I beg to move.
Amendment to the Motion
Lord Foulkes of Cumnock
As an amendment to the first Motion in the name of the Senior Deputy Speaker, at the end insert “but that this House believes that the Lord Speaker should call remote participants during questions, oral statements, and repeated urgent questions, rather than the Leader of the House”.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, I thank the Senior Deputy Speaker for the courteous way in which he has dealt with these issues, both formally and informally. I am most grateful to him for discussing them with me.
First, I emphasise that I think it is crucial that we have an efficient and fair system to allow our remote disabled colleagues to participate as much as possible. Secondly, I approve the extension of their ability to participate. The only issue before us is who calls them to speak, and that brings me to my amendment.
Let me say what my amendment is not. It is not a party-political issue in any way whatever. It does not in any way compare us with the other place because the other place does not have an arrangement to allow disabled people to participate remotely; in fact, yet again the other place is not as enlightened as we are in this House, just as we were first with televising the House and on many other innovations. And it is not a beauty contest; I think we would lose right away if it were.
So why am I proposing this amendment? First, the chair of all the meetings I have ever been to has been the moderator of the debate. That applies to committees of this House, where the chair calls people to speak. Secondly, the Leader of the House has many other responsibilities. Even today, just before this debate, she dealt with an important Covid Statement, and later today, she will give a Statement on the crucial issue of Ukraine. She is a member of the Cabinet, and has many other responsibilities. Why should we require her to do this, when we have a perfectly competent Lord Speaker and, if I may say so, an equally competent Senior Deputy Speaker, as well as many other Deputy Speakers who stand in and carry out that responsibility very well? In fact, we saw a perfect example of this earlier today, when my noble friend Lady McIntosh of Hudnall called the noble Baroness, Lady Brinton, to speak remotely on the previous Statement. She did it with skill and effectiveness. Among everything else, with due respect to the Senior Deputy Speaker, she proved that the configuration of the House, which was his main argument, is not a problem. She was able to deal with it perfectly.
I would be interested to hear colleagues’ views before I decide whether or not to press this amendment, but I now have the pleasure of moving what I think is just a simple but very important amendment.
Lord Grocott (Lab)
My Lords, I do not know whether the noble Lord, Lord Cormack, is going to speak at this point. If he is not, I am always happy to say a few words.
Lord Cormack (Con)
I am grateful to my friend, the noble Lord, Lord Grocott. I was expecting my amendment to be called from the Woolsack, but I am glad to speak now. I begin in a similar vein to my friend, the noble Lord, Lord Foulkes, because another friend—although he is no longer technically my noble friend—the noble Lord, Lord Gardiner, the Senior Deputy Speaker, is the very embodiment of courtesy. None of us could ever criticise him for not listening carefully and seeking to understand what we are saying.
There is a danger that we will make a permanent change to our procedures this afternoon. When electronic voting and pass reading were first talked of, it was the height of the Covid crisis and this was another way of helping. The original proposal was that, at a suitable moment, we would all vote within the Parliamentary Estate and pass readers would be installed, both in the Lobbies and the Prince’s Chamber. There was even talk of having readers in the Royal Gallery. One understands why: it would have enabled people to keep socially distancing and still discharge their duties where they should be discharged—on the premises.
There have been a few changes since then, not the least of which was announced this afternoon. When we had that debate on 25 October, my noble friend Lord Taylor of Holbeach, who sits in front of me now and I hope will contribute to this debate, made one of the most perceptive interventions when he talked about the crucial role of the teller. That, for some reason, had been ignored by the committee. The noble Lord, Lord Gardiner of Kimble, kindly did not press the Motion that afternoon. He withdrew it and said he would take it back to the committee, and he acknowledged the force of the argument on tellers. Now he comes back with a revised version.
First, this is not something to deal with Covid anymore. It is a permanent change to our voting arrangements. He says it will be reviewed, and I hope it will, carefully and thoroughly, taking account of the views of Members in all parts. I believe we owe that to those who have joined your Lordships’ House in the last two years who, until September last year, had no idea what a proper Question Time is like. Many of them, for entirely understandable reasons, liked the idea of the printed Question list, which we had. I was always against it, as were many noble Lords who have been here for a long time, but I have lost count of the number of newer colleagues who have come to me, since we reverted to spontaneity, and said, “You and your friends were right—it is better this way”. I would like those newer Members, who have no experience of the old system of voting, to experience it, because then they will have something to measure against. That would be entirely fair and reasonable.
I would like us to go back to voting as it was at the beginning of March, two years ago. Noble Lords who were there then know the system. There is a certain conviviality in the Division Lobbies, which can be positively helpful. Of course, we are talking of voting in the Division Lobbies; this is no longer a Covid-related change.
Lord Grocott (Lab)
My Lords, this is not the first time we have had this debate and it will not surprise many people that I agree wholeheartedly with the amendment in the name of my noble friend Lord Foulkes. I think it is time, maybe at the conclusion of this debate, to test the opinion of the House.
I want to put this in some kind of context. It has been 17 years since we established the position of Lord Speaker. It was highly controversial. The main concern expressed by those opposed to the inauguration of a Lord Speaker was that they feared we would end up with a Speaker like in the House of Commons. I had a great deal of sympathy for that view, but surely we can reach the conclusion now, after 17 years, that there has been at no stage the slightest evidence of the Lord Speaker here becoming like a Speaker in the House of Commons—adjudicating on points of order and the rest. We can say categorically that the Lord Speaker’s position in this House is not like the Speaker in the House of Commons and there is no remote possibility of that happening. I hope we can put that particular scare story to bed.
I also point out that, slowly over these 17 years—things do not happen quickly in this place—there has been a movement of responsibilities towards the Lord Speaker. Every one of those movements, small and slight at each stage, has seemed to be absolute common sense as soon as they have been introduced. The most recent, of course, is that the Lord Speaker now introduces the business, as opposed to the clerk sitting at the Table—for example, announcing when a Statement is to be made and what it is about. They were all common-sense proposals that the person in the chair does those things.
Does anyone listening to this short debate think that the sensible thing now would be to move the clock backwards and reinstate those responsibilities wherever they existed before—in part with the Clerk at the Table and, more significantly, with the Leader of the House? I do not think anyone does, and I am certain that, if we made the very small change that my noble friend is proposing, we would think it was common sense to go back to it after an experimental period of six months. So I hope the House will make a decision on this. I always try to understand opposing views, but I really cannot see a case for it remaining with the Leader of the House—not least, of course, because the Lord Speaker is the same person there every day. There is continuity, predictability and common sense.
I will speak briefly on the amendment from the noble Lord, Lord Cormack. Again, I am very inclined to support the case he makes, for this reason: I think these pass readers are, in a sense, a solution to a problem that does not exist. I was a Teller on numerous votes over a long period when there were several ties—we had lots of excitement in those days; the tension built up and all the rest of it—and there were lots of Divisions won or lost by two, three or four votes. I cannot remember a single instance when there was a problem with the telling system that existed and we needed a recount. It worked perfectly well. The Senior Deputy Speaker said that we must move with the times—well, by all means, although we tend not to do that with any great haste normally in this Chamber. The truth is, there is no problem to be resolved—unless he can demonstrate it to me. If people can do it well enough, do we really need a machine to do the job? I am not convinced, and I await the rest of the debate to see whether I can be.
I will make one final brief plea to the Senior Deputy Speaker. He said on 13 July that the question of the sitting hours of this House would be reviewed by his committee. I would like an update, please, on how that review is going and when he expects to bring a suggestion to the House.
Lord Forsyth of Drumlean (Con)
My Lords, I have a great deal of sympathy with my noble friend Lord Gardiner. He listened to the debate, and he and his committee have come back with a perfectly reasonable solution. The issue that concerned us most was the role of the Tellers, and that has been sorted.
Having said that, I am concerned about the constitutional position. We get a Writ of Summons which entitles us to come here and vote. During the period of the previous Clerk of the Parliaments, when we could not get in here because of people gluing themselves to the pavement, blocking the road and everything else, I went to see him and said, “What has happened to the Sessional Orders that we pass every year?” He said, “They’re really decorative. They don’t really matter”. They matter immensely, because it means that a mob could actually prevent us voting and, more importantly, people in the other place voting—
Lord Forsyth of Drumlean (Con)
Indeed, as my noble friend says, as in the Capitol.
So, I am just a bit concerned that, in order to cast my vote, I need a document issued by the House bureaucracy. Noble Lords may say that the House bureaucracy will never take their vote away—but I noted what happened to the previous Lord Speaker, who had her right to come and have a drink or cup of tea here taken away because she had not done the Valuing Everyone training as she had been ill. I noted also that, just before Christmas, on our very last day, those of us who use the House of Commons underground car park—I have used it twice in 22 years—were sent an email telling us that our pass would no longer work to give us access to the underground car park; this was without any consultation whatever.
So I would say to my noble friend that, if he wants to have a gadget and an electronic voting system because he thinks somehow that Tellers cannot count and clerks cannot tick off people’s names on a computer, fine, but I do worry that, in order to vote, I have to have this document. I change my suit when I come down from Scotland, noble Lords will be pleased to hear, and, sometimes, I leave my pass in my pocket and discover that I do not have it. Okay, I can get past the policeman by showing him my driving licence or something of that kind, and I am told that I can go downstairs and get another pass—but why should we have to get another pass in order to vote? If people have forgotten their pass, surely the Tellers can—
Lord Forsyth of Drumlean (Con)
Of course you can get in without a pass; surely the noble Lord knows that perfectly well. You say to the policeman, “I am a Member of the House”, and you show him your driving licence or some other form of identification. If this is where we are moving—to a situation where our ability to come here and vote is decided by the rules of the Administration—that is an undesirable development. The way around this is simply to say that, if you do not have your pass, you can still vote by going to see the Teller. My noble friend here tells me that he has not registered for PeerHub, but he can go to the Table Office and he will be able to vote if there is a Division this afternoon. So I just think that it should not be conditional.
The other thing that I will say will probably make me very unpopular indeed. I do understand why we want to allow remote voting for those people who are not able to come to this House; I get that. I think that the numbers need to be limited and the reasons need to be genuine for that to work effectively. But I do not understand how it is possible for people to be eligible to vote remotely while also appearing in this House from time to time; I find that a bit confusing.
More importantly, one thing that really irritates me about the coverage of this House is that I read regularly how we get paid more than £300 a day. We get £300 a day to cover our expenses, overnight accommodation and whatever else is required to be able to attend this place. When we were not able to attend because of Covid, we were given half a day’s allowance if we operated remotely—but those people who appear remotely at the present time get a full day’s allowance. I believe that undermines the ability to defend the system, which is about paying that £300 or whatever it is per day to cover the expenses of attending here, and I think that should be looked at. I am sorry if I sound like Gradgrind, but we are talking here about spending public money and we need to be able to justify why it is being done.
So I say to my noble friend that I will support him but that he should think about the point made so eloquently by my noble friend Lord Cormack. There should not be an absolute requirement to have a pass in order to vote in the Division Lobbies of this House.
Baroness Hayman (CB)
My Lords, I will not follow the noble Lord, Lord Forsyth, in everything that he said, but I would like to register my absolute support for the point he made about the Sessional Order and the importance of gaining access to this House, particularly when there are difficulties outside. On other issues, I am extremely diffident about commenting on the powers of the Lord Speakership, for reasons that the House will understand, but, having had more than a decade since I left office, I feel that I might be allowed a little leeway on the subject.
Lord Hunt of Kings Heath (Lab)
My Lords, I sympathise with the noble Lord, Lord Forsyth, on the issue he raised about the pass reader. It seems to me that the reason that we are continuing with it is for the convenience of the administration and not for any other reason. I say to the Senior Deputy Speaker that there is a sense in which a more proactive administration is seeking to manage Members of this House in a number of ways. I caution him and the commission that we may reach a point where Members say that this is unacceptable. I think we are getting close to that point. At the end of the day, it is for Members of this House to make these decisions and not the professional administration, much as I admire the work that it does.
In relation to the Speakership, my noble friend’s amendment is so miniscule that surely the Senior Deputy Speaker will agree to it. He mentioned technical issues. I do not know whether it is that the Lord Speaker cannot see a screen from the Woolsack, but it is perfectly possible to put a screen where the book rest is—in fact, there is a screen there. Secondly, he said in the introduction that this was the third time this Session that issues have been raised about the Speakership. I put this point to him: surely it would be possible for us to have a more general review of the role of the Speaker, and then to allow us to have a proper debate.
Clearly, this has been a controversial area for many years. The House has always been keen to champion self-regulation, and page 47 of the Companion, on the conduct of the House, makes it clear that it is for Members of the House themselves to ensure the preservation of order but that it is also the role of the Leader and other Members on the Government Front Bench to advise the House.
All I would say is that while I welcome, like the noble Lord, Lord Cormack, the return to Question Time as we now do it rather than having a speakers’ list—because that was clearly killing the thing off—nonetheless, self-regulation is not working. Essentially, it worked when Members were prepared to give way gracefully—I am afraid that that is not happening and I sense a reluctance of the Front Bench to intervene. I simply do not believe it is working. Surely it is time for a more fundamental review, alongside, I would certainly hope, acceptance—and I hope that my noble friend Lord Foulkes will put it to the vote—of my noble friend’s amendment today.
Lord Hamilton of Epsom (Con)
My Lords, I very much support the noble Lord, Lord Hunt, because I do not really buy in to this idea of the noble Lord, Lord Grocott, that we are all agreed that we do not want to have a Commons-type Speaker. There are many on his side of the House who precisely want a Commons-type Speaker. Let us face it: any extra powers that we give to the Lord Speaker merely move us closer to that. We have to be a little bit wary, and it is absolutely right, as the noble Lord, Lord Hunt, said, that we should have a serious debate about what sort of Lord Speaker we actually want, and try to establish how many powers he should have and how many he should not.
I did not really understand the argument of the noble Lord, Lord Foulkes, that the Leader of the House is constantly leaping to her feet to call people to contribute remotely. As far as I can see, it is the Chief Whip who is doing that a lot of the time, and I do not think that the onerous duties on the Leader of the House are that great when the Chief Whip can deputise for her.
Baroness Hayman (CB)
I am extremely grateful to the noble Lord for giving way. He talked about not giving any extension to the power of the Lord Speaker. The point I was trying to make was that this would not be giving any power to the Lord Speaker. There would be no element of choice about who was speaking; it would be giving a miniscule duty to the Lord Speaker. I do not think we should see it as part of a slippery slope towards a Commons-type Speaker at all. We should see it as a simple improvement in process in the House.
Lord Hamilton of Epsom (Con)
I stand corrected by the noble Baroness, Lady Hayman. Clearly, we are not talking about powers being given to the Lord Speaker but, as she says, about duties. As you impose more duties on the Lord Speaker, obviously the role that he or she plays in the House gets greater than it was before.
I turn now to my noble friend Lord Cormack’s amendment, which basically wants us to go back to the status quo. Here, I totally agree with the noble Lord, Lord Grocott. We have to ask ourselves: in having these pass readers, what are we actually achieving? I will try to help my noble friend the Senior Deputy Speaker by suggesting that perhaps this is to save money. If it is, perhaps he can tell us how much money he thinks he is going to save by doing this, because then we could get the whole thing into perspective. Otherwise, there does not seem to me to be any seriously pressing argument as to why we should change rather than go back to the original system that we had before this pandemic started, which seemed to have worked extremely efficiently. I agree with the noble Lord, Lord Grocott, that the onus is on the Senior Deputy Speaker to say why we should change, when it seemed to work so very efficiently before we ever started all this.
Baroness Butler-Sloss (CB)
My Lords, I would just like to say that my noble friend Lady Hayman is speaking such excellent sense that the House should uniformly agree with her.
Lord Brooke of Alverthorpe (Lab)
My noble friend Lord Foulkes asked us to give our views, particularly on the role of the Speaker. I take a different view from what has been expressed by my colleagues. It is interesting to note that only two contributors to this debate have not been ex-MPs. I have been in the House for 25 years this year, and I have seen the House change from when Labour came in in 1997 and we had hundreds and hundreds of hereditaries; it was a different Chamber entirely. I then saw the change after they had left. I sense the House was probably at its best between 2000 and 2010.
Lord Brooke of Alverthorpe (Lab)
We had a very good Government then, but it was nothing to do with the Government. From 2010 onwards, we had a big influx of new Peers coming in, and we have this odd situation in which we have so many on the Lib Dem Benches compared with their weight in the country—but this is the House; we are different from the Commons. I have sensed that as more and more MPs have come into this Chamber, they have exercised more and more influence and played a bigger part. I am in love with them all, so there is nothing wrong with that.
The conduct of the House has changed. My noble friend Lord Hunt put his finger on it about self-regulation. I am a radical. If we have a debate on anything, I would say we should have a debate on the composition of the House. That is what the country will require us to engage in at some stage, but we are not there. So what are we now? We are a House whose Members have respected each other, regardless of party, to a very fair degree; where the Whips have played a lesser role in the past than you find down at the other end; and where, particularly in our committees, we have worked so well. We come together and try to produce something for the common good.
When I came in here, this Chamber was about the common good and was not as political. In a sense it was, because the Tories had all the seats, but the hereditaries tempered it to a degree in that they looked for the good right across the board. I believe in self-regulation while the House continues to function and to have representatives put in it as at the moment. If we go to a different scene entirely, I think we have to look for a different type of Speaker.
With respect to my good friend, the noble Baroness, Lady Hayman, I think she is perfectly right but I do not believe it would rest there. There is a push and a change taking place that would require the Lord Speaker to take on more and more responsibilities in different ways to that which we are currently talking about. I am reluctant to embrace a change that puts power with the Speaker, in a Chamber that needs fundamental change. My noble friends are normally in favour of fundamental change to the way the House is composed.
I hope we will support the report before us and not embark on what I believe is a change—a foot in the door—that would lead to even bigger changes, without a fuller debate on it than we have had to date. I hope we will back the recommendations from the committee.
Viscount Stansgate (Lab)
My Lords, I am not sure it is to my advantage to follow my noble friend’s speech, in view of some of the matters he raised. I accept the invitation of the noble Lord, Lord Cormack, who said he hoped to hear some of the voices of people who are new. When we debated the matter in October, I was very new; now I am just a little less new. When I appeared on my first day, of course, I did not have PeerHub. I voted by going to the Table and asking for my name to be written on a scrap of paper; I took it that that would be sufficient to have my vote recorded.
Pass readers are clearly a matter of great convenience, as my noble friend Lord Hunt said. I was never one of those who welcomed the speakers’ list, even when I arrived and was new, but the noble Lord, Lord Cormack, is quite right to say that we are talking about something that will change for ever, so it is an important point to discuss.
On my noble friend’s amendment, I take the view that change in your Lordships’ House is very small and incremental. This is one of the smallest and most incremental that I have come across but, if it is pushed to a vote, my small and incremental vote will be in favour of it.
I want to raise one question with the noble Lord, the Senior Deputy Speaker. Paragraph 5 of the report says that pass readers will be the authoritative figure for a vote. Although we will restore the role of Tellers, I must gently ask: what would happen if there was a discrepancy between the two? I hope that is not a frivolous question. With the “Hear, hears” ringing in my ears, I will sit down. I will be grateful for an answer.
Viscount Hailsham (Con)
My Lords, I have nothing against pass readers. There is a great deal to be said for them. However, my noble friend Lord Forsyth is utterly right. What happens if people do not have a pass or have forgotten it? In those circumstances, it would be extremely helpful if there could be a default position by which noble Lords could vote in the Table Office to meet that circumstance.
Baroness Fox of Buckley (Non-Afl)
My Lords, I speak tentatively, as a new Member, particularly in relation to the amendment tabled by the noble Lord, Lord Cormack.
I shivered when I heard the justification for the changes to voting, and that “It was time to move with the times.” As a relatively new Member, I think that there is quite a lot that could change if that was the guiding principle of this House. One of the things that I have struggled with is learning the variety of rules and traditions. I am not criticising or complaining, but simply asking whether “move with the times” is a new slogan. If so, the pass readers are the least of the problems that this House is likely to encounter.
Also, I do not like, inside or outside this House, the way that technology can be used to suggest more profound changes as though they were a fait accompli. The way it runs is, “It’s just technology: there’s nothing to see here; don’t worry about it; we’re just collecting your data; show your papers or your pass”, wherever it may be, including outside of here, but it is often presented as though anyone who objects is a bit of a Luddite who does not get modern times. There is a point about this change that is political, and not simply one of technology, of which I am sure that we are all supportive. I need clarification on whether it would become permanent. Trials are one thing, but there is a broader point that the Covid period has led to us having to accept the new normal because we are not going back to the status quo. My view on this, and regarding the rest of society as well, is that we go back to the old normal, and if we want to change to the new normal, we have a democratic vote, either in here or outside of here, to decide whether that is what we want, rather than being told, “It is all too late for that: we’ve lived through Covid; put up with it—this is the new normal.” I do not like that.
Also, in relation to the pass readers in particular, the justification that it is convenient does not seem justifiable. I do not understand why noble Lords want to change it anyway, to be frank, but it surely should not be changed for convenience. There are lots of things in this House which are inconvenient to me all the time, as I am sure that there are to other people, but that is because it is a different place. That is the point, is it not? It has different rules and conventions. I am concerned that we are being bumped into it— steamrollered into it. If there is to be a change, I would not mind it being trialled, piloted or whatever it is, but the idea that something becomes permanent as a fait accompli I find disconcerting. Even in an undemocratic House, there must be some democratic spirit remaining, surely.
Lord Taylor of Holbeach (Con)
My Lords, I am pleased to speak in this debate. It arises, really, from a debate on 25 October in which I played a part. I understand a lot of what is being said. I am a traditionalist by instinct. I thank my noble friend, and I hope I can be forgiven the solecism of calling the Senior Deputy Speaker my noble friend, because I think he is a friend of the House in the way he is trying to get some viable arrangement for us to conduct our affairs. I thank him very much.
There was a ridiculously short time between the publication of proposals and our first debate on 25 October, and my noble friend immediately listened to what we were saying and withdrew the report. Within a matter of days, the pass readers had disappeared out of the Prince’s Chamber, the Pugin tables were back and we felt we had been listened to. Sometimes, I feel the concern of Members of this House is that they are not being listened to and decisions are being made without the consultation they would like to be a part of.
We have had some good speeches today. We have had quite good points made. I, personally, am of the view that we ought to give the proposals now before us in this report a try. But I am concerned that it may work out more difficult in practice than we suppose. The technology is fine, but we do not want to be hamstrung by a decision we make to approve this report and find ourselves going through the Lobbies with pass readers. I think we are unanimously agreed on Tellers within the House, but we are not quite sure how they are going to coexist with pass readers.
I suggest to my noble friend that he acknowledges that there is some concern about the way we will be proceeding in practice and perhaps agree that, if we accept the report before us today, we should have an opportunity, and he himself would be prepared, to initiate procedural change to match the terms of the report he has presented to us.
Lord Berkeley (Lab)
My Lords, I rise very briefly to support the amendment of my noble friend Lord Foulkes and also to speak about what I see as a creeping managerial control that the authorities sometimes seem to put on us when we come here. The noble Lord, Lord Forsyth, said that we have a Writ of Summons and we come here with our security passes, but Peers’ Entrance is the only way you can get in without showing one. Everywhere else, you have to have one. If you have not got yours, you can show your driving licence or something and you can get in. I saw about a year ago that we were encouraged to put our pass on the reader just inside the Peers’ Entrance. I thought that was the creeping control that was going to stop us coming in completely if we did not have our pass.
I had another example two weeks ago—I am very grateful to the Senior Deputy Speaker for the help he has given me on this—to do with electric bikes, of which I have one. One Sunday, I and maybe other colleagues got an email from the fire and safety people here saying I could not bring lithium-ion batteries into the building on my bike—maybe on wheelchairs or scooters—because they might set the building on fire. I am sure they had some good advice, because they took the advice from London Underground—and misinterpreted it, I think, but that is beside the point.
There were a couple of policemen outside who told me that they commute here by electric bike. They come on the train, cycle across London and park their bikes here. I got given a grant to buy one of these expensive bikes, and I cannot use it any more, because I cannot bring it here. I thought, “Who has made the decision that we are not allowed to bring the bikes here?” The Senior Deputy Speaker is going to arrange a meeting for me to talk about this later in the week, but it is just another example. My question is: who is in charge? Anything like that, I would have suggested, should have come before the relevant committee and then, if necessary, been discussed in the House.
Lord Stoneham of Droxford (LD)
My Lords, I apologise for detaining the House. I will not apologise to the noble Lord, Lord Forsyth, for intervening while I was seated; I know that he does it himself. The point I was trying to make is that Peers should not come into this House without a security pass and they should wear their security pass whenever they are here, for security reasons. This proposal assumes that, whenever we are in the House, there will be a facility to get another pass if we lose ours; that is important. In fact, if noble Lords go and look at the exhibition in the Royal Gallery, they will find a proposal that they will not be able to get in through Peers’ Entrance without a pass—quite right too, in my view, but that is another argument for another day.
Viscount Hailsham (Con)
Is the noble Lord aware that the Pass Office has limited hours? It opens early but also closes early. If he wants to get a pass after 4 pm, he may not be able to.
Lord Stoneham of Droxford (LD)
If the noble Lord feels that way, we control this House so we should get it changed. It is as simple as that. Of course, if we are to have this procedure, we will have to change it.
Lord Forsyth of Drumlean (Con)
Does the noble Lord not realise, in saying, “You can’t come into this House unless you have a security pass”, that that is the very reason why some of us are concerned about this issue? This is a House of Parliament. It is not an office building.
Lord Stoneham of Droxford (LD)
I thought we had this argument some time ago. You can go to Black Rod’s Garden Entrance and get a temporary pass if you need it. There should be a rule for everybody that you cannot get into this building without a pass, but that is an argument for another day; I thought that we had this argument some time ago and won it, but let us move on to the debate now.
I am a member of the Procedure Committee. I support the committee’s proposals in the report, as far as they go, but I have a point of dissent because the commission made the original decision to have pass readers. I have never agreed with that as such but, if we are to have pass readers, I agree with the rules and procedures that have been agreed. In my view, the reason for having pass readers is that it will speed up the process of voting. I cannot tell noble Lords how many times, with my name—Lord Stoneham—I have been confused with the noble Lord, Lord Stone, in the Lobby when I give my name to the clerk. We have had similar problems when the name of the noble Baroness, Lady Bakewell, is given to the clerk because there are two Lady Bakewells. It happens; we get mistakes. I have no doubt that the process will be quicker. I am happy that, if we have pass readers instead of Tellers, as we agreed in the procedures, it will be fine. It will increase the speed of voting in time, I am sure, once everybody gets used to it.
However, I want to make another point. At every meeting of the usual channels that I go to, what is normally being discussed is a complaint that the Government do not have enough time to get their legislation through this House and we are having far too many late nights. I just want to make the argument—the last stand, if you like—for virtual voting because it has worked amazingly well. We are talking about problems with pass readers but look what we have been through over the past two years with virtual voting. It has worked incredibly well. A minority are still having difficulties with phones, but I am sure that this could be dealt with if we put our minds to it.
I hope that we will look at the possibility of virtual voting because, if we did, it would enable us to go back to shorter times for votes. We could do them in seven or eight minutes, whereas when we go through the Lobbies, the long votes take 20 to 25 minutes. There should be a real drive to get everybody involved in the virtual voting system through their mobile phones. It is incredibly convenient. Noble Lords can vote anywhere they like in this building: in the Chamber, even in the Lobbies if they want to, but anywhere in the parliamentary building. It means that noble Lords can vote in Millbank House as well, so it overcomes the argument that we should have a post there. It also involves minimal interruption to Select Committees; indeed, it is convenient for attendance at all the other meetings we have to have in Parliament.
I therefore think that, if we put our minds to it, we would find that it is a much quicker and more convenient way of voting, and one that we have already proved can work. It will involve the actual votes being much quicker. If we are not going to have a vote before we make the final decision on the posts, I hope that in time we will at least look at this for the future, because we already have two years of experience when it has, I think, worked remarkably well and improved the convenience of the House.
I obviously do not support the amendment from the noble Lord, Lord Cormack, but I would like to say a little about the amendment from the noble Lord, Lord Foulkes. I have tremendous admiration for the noble Lord and am normally on his side on every single argument; I am certainly on his side in terms of giving the Lord Speaker greater powers for calling Members at Questions. But there is a practical difficulty. If you allow the Government Front Bench, either the Leader or the Chief Whip, to decide and adjudicate when there is a dispute as to whose turn it is to ask a question, you cannot then leave to the Lord Speaker the decision on calling somebody virtually. It would add tremendous confusion, I am afraid.
Lord Foulkes of Cumnock (Lab Co-op)
I may be misled, but my understanding is that this would not be making a decision; it would be carrying out a decision that has already been made, and that is better done by the Speaker than by someone on the Front Bench.
Lord Stoneham of Droxford (LD)
Well, I accept that there is an argument there, because introducing the virtual speaker is done by the Lord Speaker in other proceedings. But this is a particular difficulty in Questions, with the pace of Question Time. You have a decision being made on the Front Bench—I do not agree with that; I think it should be made by the Lord Speaker—and then another decision being made by the Lord Speaker on the Woolsack. There is a distance between them, so there is a practical problem.
I think we should look at it and I certainly support the view expressed by the noble Lord, Lord Hunt, that we should look at this in the round and look at the powers of the Lord Speaker. We actually had a vote on it; that is the only difficulty we have had. Maybe we should look at it again and have another vote—but I think there are difficulties with this particular proposal. Apart from that, having made my point in favour of the virtual voting system, I am supportive of the report as to where we are.
The Senior Deputy Speaker (Lord Gardiner of Kimble)
My Lords, this has certainly been an intriguing debate, and I am not surprised. One of the things that I consider is that it is impossible to satisfy all your Lordships. I could go from A to Z with the perfectly respectable arguments that have been deployed, but I think the best I can seek to do is try to answer some of the conundrums raised, as I am indeed in the House’s hands.
First, I want to be very clear that I stand here on behalf of your Lordships. There was a question about the administration. The undoubtedly important and essential work it does on our behalf is absolutely clear to me, but it is this House, this Chamber and the work of your Lordships that is the raison d’être for us all. I am very clear that these proposals are all designed to help your Lordships flourish; that is their purpose.
I also agree with the noble Lord, Lord Foulkes, that we want a fair system. One of the points raised relates to the intricacies of this. The noble Baroness, Lady McIntosh, can of course—as do all exemplary Deputy Speakers—get up when the virtual eligible speaker is the very first Member to contribute and always the very first; it is a very easy option to get up at the very beginning and call whoever it may be. What this part of the report before your Lordships seeks to do is precisely to bring Statements and Urgent Questions in line with other aspects where the eligible Member is not automatically the first Peer to have the opportunity to contribute. I have to say that some eligible Peers have expressed to me that they feel uncomfortable being asked to be the first noble Lord to speak. In the intricacy of the proposal before your Lordships, that is precisely the point.
I want also to say something about permanent change. I understand there has been a good knockabout in terms of the speed with which your Lordships and this House propose change. I do not see that what is proposed here is always about permanent change. I said in my opening remarks, particularly in the case of the pass readers, that the committee has a responsibility, as with everything, to keep these matters under review. If this does not work and if there are problems, I will be the very first to want to come back to your Lordships and say, with the deepest of regret, that I do not think this is working for the House. I put that on record, as I did at the beginning, and say it now. I can give the absolute assurance that the committee will be looking to see how this prospers if your Lordships wish it to proceed. I should also say, just to correct the record, that proxy voting in the other place has not operated since pass readers were introduced there.
I very much hope that noble Lords who have arrived here will see the House pre pandemic in so many respects in terms of that dynamic and that discourse. We are proposing changing an iPad to a pass reader. We were giving our names to a clerk with an iPad, but one of the problems that the clerks have all mentioned to me privately is that, in their experience, there has been what I would call “rider error” with the iPads. Indeed, when I was a Whip I could not work out how one of my flock who I knew simply never came to the House suddenly appeared. It was because there had been rider error in terms of the Division. Lord Hayhoe and Baroness Heyhoe Flint both had a hey-ho about them, but they did not have anything else in common. All of these things relate to the accuracy and the speed that the noble Lord referred to.
I think we have all done remarkably in terms of using PeerHub and all of those matters. I am not a great machine man myself, but nearly 30 Peers will often appear in the Table Office having difficulty in using PeerHub. That is one of the reasons why many Divisions actually take longer and why the result does take and has taken longer. So all our proposals have been designed to create accuracy and speed; it has not been about cost. It has been about seeing whether there are ways in which we can assist the House. That is the background to it.
On the issue that the noble Lord, Lord Foulkes, and other noble Lords spoke about—indeed, the noble Lord, Lord Grocott, raised this—my recall is that on 13 July last year the House divided on the matter of the regulation by the Woolsack. The House voted 376 to 112. That is not 17 years. As I say, we have had this discourse on three occasions in this Session. I do not think that that suggests that these matters have not been aired and put to your Lordships.
The other point raised by the noble Lord, Lord Grocott, was that the same person would be on the Woolsack. Well, we all know that we have a roster. The Lord Speaker will not be on the Woolsack for all Statements—quite rightly when one has exemplary Deputy Speakers. There was a slight suggestion that I used a strange word in mentioning the “configuration” of the usual channels. However, compared with the other place we have a very isolated person on the Woolsack and part of the dynamic is ensuring going round the House in this self-regulation. It is the dynamic of, as we have all noticed, noble Lords and Baronesses in this part of the House. So when I use the word “configuration” I mean that none of these things are impossible, but they are some of the practical issues that I raised in my opening remarks but perhaps did not explain so carefully or fully.
Lord Grocott (Lab)
As a matter of fact, the amendment my noble friend Lord Foulkes put forward relates to the circumstances during Oral Questions, in that the job can be done from the Woolsack and not the Front Bench. I think I was right, rather than the noble Lord, in referring to the fact that the Lord Speaker is there during that period, with very rare exceptions, and not a Deputy Speaker.
The Senior Deputy Speaker (Lord Gardiner of Kimble)
My Lords, we have before us the consideration of Statements. Yes, the noble Lord refers in his amendment to Questions as well, but the change in the report relates to Statements. That is included in the amendment. My point is that, although the noble Lord, Lord Grocott, said that it is the same person, that is not strictly the case—whoever is on the Woolsack will have the task of deciding when to call the eligible Member and from which part of the House in the rotation of taking turns. That is why, although I am in the hands of the House, I think it is more intricate than saying that the Lord Speaker or whoever is on the Woolsack could easily do this. I do not think it is quite as straightforward as that.
The noble Lord, Lord Grocott, asked me about sitting times. I assure him that I have just seen the paper that will come before the Procedure Committee at its next meeting. We will give it very thorough consideration, because it is a very important point which has been made to me by noble Lords.
On the point made by the noble Lord, Lord Hunt of Kings Heath, and others about administration members, I reaffirm what I said at the beginning. I genuinely think we have responsibilities here; it is really important. I emphasise that my task is to support your Lordships, working with the administration, for the best interests of the House.
On the importance of having Tellers and recording the numbers passing, I say to the noble Viscount, Lord Stansgate, that that is part of the essential proposal that came forward following the 25 October debate, when so many of your Lordships, on all sides of the House, said that, to have the probity of Divisions that many wanted, we must have Tellers. The committee took that fully on board. I know that some hold the view that Tellers are unnecessary, but it was understood from that debate, looking as I did across the House, that this belief was strongly held because Divisions are a key part of making the laws of the land and we need, in my view and that of the House, the rigour of coming together in passing those laws.
The point about the pass reader and its authority is that it will clearly identify every single Member who has voted, by name; as is important, we will know with speed how noble Lords have voted, but also the Teller will come back with the number and it will be presented at the Table alongside what is on the readers. It will be for the Teller to go up to whichever noble Lord is on the Woolsack to present the result. The whole essence of the pass reader is to ensure that we get it absolutely correct for all noble Lords, which I think everyone would want, for the reasons I have described. Occasionally we have had a problem, with the wrong names being ascribed to varying noble Lords.
On the very important issue of forgetting the pass or the changing of a suit, which the noble Viscount, Lord Hailsham, raised, a key feature was added precisely so that, if and when the Pass Office is closed, at Peers’ Entrance there will be passes available which will immediately be activated to enable a noble Lord to vote if they have come in without one.
Lord Forsyth of Drumlean (Con)
I apologise to my noble friend, but I think he is rather trivialising this issue. It is not about whether we wear a pass or not but whether having a pass enables us to vote or not.
I will give an example: it is perfectly possible, if you keep your mobile phone and credit cards together, for you to find that your credit card has been wiped out. You could be in the Lobby and find that your pass was not actually activating the reader. I have had this experience at the pass reader as you come in from the Underground. What would we do in those circumstances? I asked my noble friend specifically. I said I would support him and his recommendations, provided there was an opportunity for someone who had a problem to be able to go to the Tellers and say, “Look, my pass didn’t work and I tried to get a pass downstairs; there is a fault”. You would not get 30 people in that situation, as in the Table Office. So could he give an undertaking that there will be a failsafe arrangement in those exceptional circumstances?
The Senior Deputy Speaker (Lord Gardiner of Kimble)
That is a very reasonable point. If, for any reason, any noble Lord’s pass did not work, I can put the assurance that clearly that would need to be addressed by going to the Teller and saying, “I can’t work this”. We would need to look into it, but the Peer would be recorded by the Teller if that was the case. It is perfectly possible that there may be a problem with the system. As I say, there has not been a problem in the other place, but if there were, we would have to undertake a manuscript arrangement, as it were. We would need to do that if the system failed. So far as the practicalities of it, I think it is reasonable to ask noble Lords to use the pass which can be obtained at the Pass Office or at Peers’ Entrance. This is not in any way offensive to the importance of either the Writ of Summons or access to the Palace.
Obviously, I am in the hands of noble Lords. I hope that, following 25 October, I have taken back the points raised and the suggestion that Statements should be under the same arrangement that we have. In my view, everything should be kept under review. We should see how these matters go and flourish. Interestingly, I have been told that Question Time has flowed much better. In point of fact, quite a lot more noble Lords—I do not have the statistics in front of me—have been able to pose questions because of the dynamic of this flow. Those are the sorts of things that I am tuned into to see how it is going.
I ask noble Lords is to support the report, mindful that the committee and I will always want to keep anything under review. If noble Lords are unhappy about something, then we will need to look at it and come back to your Lordships. With all those remarks, I am in the hands of the House.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, we have had a very good debate on both topics. I am grateful again to the Senior Deputy Speaker. However, I do not think we are dealing with whether the person coming in remotely is first. As I understand it, there is usually an understanding within the usual channels about which of the relatively small number of seriously disabled people should be allowed in remotely. Who should come in and when is usually accepted; all I am talking about is who should call them. I think implementing the decision to call them is better coming from the Chair.
As a number of noble Lords will confirm, I have been asked, again and again, whether I will press this to a vote. I said, “I have not made up my mind; I am going to consult with as many people as possible”. I have discussed it. My noble friend the shadow Chief Whip has been very helpful, I had a chat with the noble Lord, Lord Fowler, the former Lord Speaker, and I have taken advice about it from others. The general advice was to listen to the debate and then decide. I have very much listened to the debate and what was said by the noble Lords, Lord Berkeley, Lord Hunt and Lord Grocott, the noble Viscount, Lord Stansgate, and particularly—I hope this does not sound patronising, in any way—the noble Baroness, Lady Hayman, with her extensive experience as Lord Speaker. She said it has been quite a while since she did it, so she is impartial as a result. On the basis of what they said, I would like to test the House in relation to what I was going to describe as a modest amendment, but others have described as minuscule.
Lord Mackay of Clashfern (Con)
Before the noble Lord sits down, can I ask him if he has ascertained whether the Lord Speaker is willing to take on the responsibility of receiving these communications from eligible Members.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, I assure my noble and learned friend—I think I can call him that, as we have known each other for many decades—that I would not have moved it if the Lord Speaker had not been willing.
Lord Cormack (Con)
My Lords, what an exciting note on which to get up, and how tempting it is. I thank all of those who spoke favourably to my amendment. I also thank those colleagues—a dozen or so—who sent me notes or texts to say that if I put this to a Division they would be voting for it. But I listened extremely carefully to what my noble friend Lord Gardiner said, and I would like to ask him for clarification: would he consider that a reasonable time would be six months before reviewing this? Could he give me some idea of when he expects the experiment to start, and what measures he is putting in place to make it as carefully monitored as possible?
The Senior Deputy Speaker (Lord Gardiner of Kimble)
I am most grateful to the noble Lord for giving me this opportunity because, as stated in the report, the recommendation is:
“To mandate the House of Lords Commission, once the pass-reader system is ready”.
We need to get the passes system up and running and, as I said, be absolutely clear with a number of trials, not only for your Lordships, but for the doorkeepers and the Administration, so that all will flow well. I cannot give a precise date because we obviously also need to take into account any prevailing public health situation issues. What I can say is that six months from the time of operation of a voting system beginning is a very reasonable time, during which we would consider as a committee how it is working. I hope that is helpful to the noble Lord and your Lordships.
Lord Cormack (Con)
I am most grateful to my noble friend because that is helpful. There is an air of suspicion in the House at the moment; one has only to look at the exhibition of what is proposed of our entrance. I urge all colleagues to do that—it is an architectural abomination. Everything that my noble friend is doing to win and reinforce the trust of the House can only be to the benefit of us all. On the basis of what he has just said, I intend not to move my amendment.
The Senior Deputy Speaker (Lord Gardiner of Kimble)
I beg to move the Motion, as amended, standing in my name on the Order Paper.
The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)
The Question is that this Motion be agreed to—however, I am slightly concerned about the effect of the last vote on this Motion.
The Senior Deputy Speaker (Lord Gardiner of Kimble)
That is why I specifically said “as amended”.
The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)
In which case, I will read out the wording I have: “The Question is that this Motion be agreed to, only insofar as it relates to Standing Order 63, and excluding the reference to Standing Orders 52 to 54”—no?
The Senior Deputy Speaker (Lord Gardiner of Kimble)
I think the Standing Order issues would relate to the situation if the noble Lord, Lord Cormack, had moved his amendment.
The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)
My Lords, I am very grateful to the Chief Whip for making to help me, but I realise that I have failed to notice that it was only in respect of the amendment in the name of the noble Lord, Lord Cormack. That is entirely my mistake, and I apologise. Therefore, the Question is that this Motion, as amended, be agreed to.
Standing Orders (Public Business)
The Senior Deputy Speaker
That the standing orders relating to public business be amended as follows:
Standing Order 52 (Divisions)
Leave out Standing Order 52 and insert:
“52 (1) When, on the Question being put, a division is called for, the member on the Woolsack or in the Chair shall order the Bar to be cleared, and the Clerk will start the division by activating the pass-readers in the division lobbies and the electronic voting system.
(2) Two Tellers shall be appointed by the Contents and two by the Not-contents. Of these, one Teller for the Contents and one for the Not-contents shall be appointed for each division lobby.
(3) After the lapse of three minutes from the time when the Bar is ordered to be cleared, the member on the Woolsack or in the Chair shall again put the Question. If, at this point, Tellers have not been appointed either for the Contents or for the Not-contents, a division cannot take place. The member on the Woolsack or in the Chair shall declare the Question decided in favour of the side which has appointed Tellers.
(4) To cast a vote, a member must present a valid security pass to one of the pass-readers located in the division lobbies, except as otherwise provided for in Standing Orders 24A and 53. Having voted, a member should pass the Tellers as they leave the lobby.
(5) After the lapse of eight minutes from the time when the Bar is ordered to be cleared, or longer at the discretion of the member on the Woolsack or in the Chair, the doors of the Chamber shall be locked, and the member on the Woolsack or in the Chair shall inform the House or the committee of the Question which is the subject of the division.
(6) A member may vote in a division although they did not hear the Question put.”
Standing Order 53 (Votes counted in the House)
Leave out Standing Order 53 and insert:
“53 Any member may, on the ground of infirmity, have the privilege of voting in their place; and the votes of such members and of the member on the Woolsack or in the Chair shall be taken first by the Clerk.”
Standing Order 54 (Voting in wrong lobby)
Leave out Standing Order 54 and insert:
“54 If any member has by mistake voted either Content or Not-content, having intended to vote on the other side, they may go to the Clerk at the Table before the end of the division and request to change their vote. The Clerk will inform the Tellers of the change before the result of the division is announced. Members may not vote in both lobbies.”
Standing Order 63 (Sessional Committees)
Leave out “European Union Committee” and insert the following at the appropriate points in the alphabetical list of sessional committees:
“Built Environment Committee
Environment and Climate Change Committee
European Affairs Committee
Industry and Regulators Committee
Justice and Home Affairs Committee”
Standing Orders (Private Bills) Committee
The Senior Deputy Speaker
That Baroness Finlay of Llandaff, Lord Jones and Baroness Thomas of Winchester be appointed members of the Select Committee, in place of Lord Rodgers of Quarry Bank.
National Insurance Contributions Bill
Viscount Younger of Leckie (Con)
My Lords, in moving the Motion that this Bill do now pass, I take the opportunity to thank noble Lords from all sides of the House for their interest and contributions to the progress of the Bill. In particular, my thanks go to the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Kramer, for their constructive engagement, thoughtful contributions and thorough consideration of this piece of legislation.
As ever, I am grateful to the House authorities and parliamentary staff for their hard work behind the scenes. I acknowledge the work of the officials who have worked so hard on the Bill for many months: the Bill team; the policy teams at HMRC and Her Majesty’s Treasury; the lawyers in both departments; the Office of the Parliamentary Counsel; the clerks in this place; and, finally, my noble friend Lady Scott.
I take this opportunity very briefly to recap the importance of this Bill. It introduces new measures to unleash the potential of our ports and regenerate left-behind communities by encouraging businesses from around the world to invest in our regions, spreading jobs and investment opportunities across the country. Specifically, it introduces two employer national insurance reliefs for workers in free ports and organisations that recruit Armed Forces veterans. In doing so, it supports the delivery of the Government’s free ports programme and boosts regional growth and the employment prospects of our extraordinary veterans. The Bill also provides an exemption from self-employed NICs for test and trace support payments, which will apply retrospectively from the 2020-21 tax year. Finally, the Bill introduces changes to the disclosure of tax avoidance schemes regime. I beg to move.
Lord Tunnicliffe (Lab)
My Lords, I join the Minister in his thanks, particularly to the Minister himself and his team. I commend their availability to interested parties and the many interesting Zoom meetings we have had. I also thank all Members who were involved in this Bill, particularly the noble Baroness, Lady Kramer. Between us, I think we produced an excellent speed-through and we have done the Bill a total service. Finally on the thanks side, I thank my team, which is one half of Dan Stevens, without whom I could not have carried this burden.
On the substance of the Bill, I note what the Minister has said. I hope that he shows equal enthusiasm for the two rather gentler amendments that we are sending to the Commons, and I hope that we see this Bill no more.
Lord Davies of Brixton (Lab)
My Lords, I have participated in the progress of this Bill and I have always appreciated the stated objectives. I know that I have disappointed the Minister with my pessimism about its likely effects, but I thank him for his unfailing courtesy during the Bill’s progress.
Baroness Kramer (LD)
My Lords, it is very nice to have an opportunity to say thank you, and I really want to say thank you to the Minister and his office. Not only were his staff always courteous, but their willingness to meet us, to answer questions and provide a great deal of detail, was very helpful—certainly for me, but also for anyone not sitting on the Government Benches. We really appreciated that flow of information.
For my part I thank Sarah Pughe and Katherine Ginty, who gave me a great deal of support—and were sitting alone on my Benches for most of this Bill. It is always excellent, too, to work with the noble Lord, Lord Tunnicliffe. We found a good way, I think, to pursue the primary interest of the Official Opposition while also giving space to the views coming from these Benches, and often to find common ground.
I particularly appreciated the amendments that the Minister brought forward which reflected the concerns of the Delegated Powers Committee. From a constitutional perspective, it is important that he took those on board and made change that is exceedingly sensible and constructive. I thank him very much for that.
The two gentle amendments—as the noble Lord, Lord Tunnicliffe, described them—are actually rather important. One was on veterans. I hope that it will be well received when it heads back to the Commons. Our amendment, on a public—rather than non-public—register of beneficial ownership of businesses in the free ports, could hardly be more pertinent today, as we look to bring in economic sanctions against henchmen of Putin. Once again, the Prime Minister has talked very publicly about the importance of the public nature of registers, so it would have been sad not to ensure that this register started life in that way. So I hope that that amendment, too, will be very warmly received by the Commons.
It often feels as if there is an inner circle of three from across our three Benches on some of the less dramatic finance and economy-related Bills, and it has been very good to work with everyone again. I thank also the staff of the House, who are always so supportive.
Viscount Younger of Leckie (Con)
I just want to thank the three noble Lords for their comments. With that, I shall go quickly to moving this Motion.
Finance (No. 2) Bill
Tuesday 22nd February 2022
(2 years, 2 months ago)
Lords ChamberRead Full debate Finance Act 2022 View all Finance Act 2022 Debates Read Hansard Text Amendment Paper: Consideration of Bill Amendments as at 2 February 2022 - large print - (2 Feb 2022)
Baroness Penn (Con)
My Lords, we are here to debate the annual Finance Bill, introduced in the House of Commons following the Budget on 27 October last year. My right honourable friend the Chancellor of the Exchequer outlined then a Budget to build a stronger economy: an economy of higher wages, higher skills and rising productivity, with more investment in infrastructure, innovation and skills; stronger growth, with the UK recovering faster than our major counter- parts; a stronger labour market, with falling unemployment and record numbers of payrolled employees; and stronger public finances, with a simpler, fairer and more sustainable tax system to support businesses and consumers. That is the Government’s vision for the future of this country, and this Finance Bill will help to deliver that vision for the tax system.
It may be helpful to noble Lords to start with a little of the context behind the Bill. Our country’s economic situation has significantly improved in the past year. The UK’s real GDP growth was the highest in the G7 in 2021, at 7.5%, and the IMF is now forecasting that we will have the highest growth in the G7 again in 2022, at 4.7%. GDP remained at pre-pandemic levels in December, despite the impact of the omicron variant and plan B measures. The labour market is also performing extremely well, with the total number of employees on payrolls above pre-pandemic levels, redundancies at an all-time low and record numbers of vacancies. However, there are challenges ahead, with global supply chain disruption and high energy prices adding to inflation around the world and helping to explain the rise in inflation above the 2% target in the UK in recent months.
These are global problems, neither unique to the UK nor possible for us to fully address on our own, but the Government are committed to working with international partners to monitor global supply chain pressures and strengthen the resilience of our critical global supply chains. We are also providing support worth over £20 billion this financial year and next to help families with the cost of living. In 2021, we moved away from providing emergency economic support to focusing on our economic recovery. This is a transition from a period where the Government rightly provided unprecedented support, to a promising future.
Credit for this recovery must, of course, go to our vaccination programme, including the outstanding booster programme, but equally we must not overlook the steps that this Government have recently taken to support families and businesses, including through measures contained in the last Finance Bill. This action has boosted public finances, allowing the Government to invest at scale through the Budget and the spending review, with significant increases for government departments in overall spending.
But debt is still at a historically high level. It is set to pass £2.3 trillion and is currently at its highest level as a percentage of GDP since the early 1960s. While the level of debt is currently affordable, there are significant risks associated with elevated levels of debt. Although the fiscal outlook has been improving, new fiscal rules will help to ensure that public finances remain on a sustainable path. This approach will ensure that the Government can continue to invest in first-class public services, support people and businesses through the next stage of our economic recovery and lay the foundations for future economic growth. This is also a responsible approach to our public finances that allows the Government to respond to global challenges where needed, including the recent package of support to help households with rising energy bills, worth £9.1 billion this year.
I now turn to the content of the Finance Bill itself. The Bill contains several measures that will help build a stronger economy and help businesses to invest in the UK’s future growth and prosperity. Noble Lords will be aware that productivity in this country has long lagged behind that of our international counterparts. The Government are determined to rectify this and to help businesses to reach their full potential by making it easier for them to invest and grow. That is why, in March 2021, the Government introduced the new super-deduction. As the Chancellor noted at the Budget, now is not the time to remove tax breaks on investment. The Bill therefore extends the temporary £1 million limit of the annual investment allowance again until the end of March 2023, instead of allowing it to revert to £200,000, as planned, from the start of 2022. This higher AIA level provides businesses with more upfront support and encourages them to bring forward investment.
Measures in the Bill will also help to protect our unique culture and heritage, by making our creative tax reliefs more generous. Social distancing and wider restrictions have had a particular impact on companies relying on live performances and exhibitions to generate their core revenue, such as theatres, orchestras, museums and galleries. It is therefore right that the Government support charitable companies to put on high-quality museum and gallery exhibitions. That is why the Bill extends the tax relief for museums and galleries by another two years, to March 2024. It also doubles the tax reliefs for theatres, orchestras, museums and galleries until April 2023; they then revert to their normal rate only in April 2024. This is a tax relief for culture worth almost £0.25 billion, which will enable our creative industries to continue to flourish.
I turn now to another sector that makes an important contribution to our economic well-being, namely the maritime industry, which is responsible for 95% of our trade in goods. The UK has always been a seafaring nation and we must continue to help our shipping industry to succeed. First, that means removing any requirements for ships in the UK tonnage tax regime to fly the flag of any EU country. We will focus instead on boosting the use of the UK’s merchant shipping flag, the Red Ensign. Our flag has a well-deserved reputation for maintaining the highest international standards, and we want more ships to benefit from this by registering in the UK. Secondly, the Bill will make it easier for shipping companies to move to the UK from April this year, bringing jobs and investment to nations and regions around the UK. These measures will support our thriving shipping industry, helping to drive jobs in our coastal communities and boosting our world-renowned maritime services industry.
In March last year, the Government committed to reviewing the bank surcharge, in light of the decision to increase the corporation tax rate to 25% from 2023. As outlined in the Bill, the surcharge will be set at 3%. From 2023, this means that the overall tax rate on banks’ profits will increase from 27% to 28%, a rate that is higher than that of most other companies. This will ensure that banks continue to pay their fair share of tax, while maintaining the UK’s financial services competitiveness and safeguarding tax revenue. The Bill also raises the annual allowance to £100 million to ensure that the tax system is supportive of growth for smaller retail and challenger banks.
The economic recovery is under way, and we are investing record amounts in our public services. However, we must still take a prudent and responsible approach to our national finances, and this can mean tough choices. As the House will know, the Government are introducing a new ring-fenced health and social care levy, based on national insurance contributions. This will be supported by increasing the tax rates on dividends by 1.25 percentage points in the Bill, ensuring that those with dividend income make a contribution in line with that made by employees and the self-employed. But our generous allowances mean that everyday investors will be entirely unaffected. Around 60% of individuals with dividend income will pay no dividend tax in 2022-23.
I now turn to the new residential property developer tax. This is a 4% tax on the profits made by the largest developers carrying out residential property development activity in the UK. It forms part of the Government’s building safety package, aiming to bring an end to unsafe cladding. It will help to ensure that developers pay a fair contribution to help fund this package, and it will apply from April.
The Bill also contains measures that will help tackle economic crime, tax avoidance and tax evasion, all of which undermine our efforts to strengthen the country’s finances and build a stronger economy. The new economic crime anti-money laundering levy will help to fund new and uplifted anti-money laundering measures, including the ambitious reforms the Government announced in their 2019 Economic Crime Plan. The Bill will implement the levy on entities that are regulated for anti-money laundering purposes. These firms will benefit, both directly and indirectly, from the new and uplifted measures funded through the levy. It will impact an estimated 4,000 businesses, which will be liable to pay the levy. The amount payable will be determined by reference to the business’s size, based on its UK revenue.
I turn to tax avoidance. We know that the vast majority of tax advisers adhere to high professional standards and are an important source of support for taxpayers. However, promoters of tax avoidance schemes who use every opportunity to sidestep the rules to sell their wares fall into a very different category. The Government have taken action to clamp down on these promoters. Indeed, as a result of this action, the tax gap attributed to marketed tax avoidance has already steadily declined from its peak of £1.5 billion in 2005-06 to £0.5 billion in 2019-20—a fall from 0.4% to just 0.1% of total tax liabilities.
But we have not stopped there. We have developed, through continued engagement and consultation with stakeholders, further powers to disrupt avoidance. Measures in this Finance Bill will reduce the scope for promoters to market tax avoidance schemes. They will allow HMRC to clamp down on these schemes by giving it the power to impose penalties on UK entities that enable offshore promoters, freeze promoters’ assets to ensure that penalties they are liable for are paid, and shut down promoters which continue to sidestep the rules.
The Bill introduces tougher sanctions to tackle tobacco duty evasion, which is estimated to have cost the Exchequer £2.3 billion in 2019-20. Electronic sales suppression will also be tackled by the Bill. This is a form of tax evasion whereby a business deliberately manipulates its electronic sales records to reduce the recorded turnover of the business and corresponding tax liabilities. The Bill will make those facilitating ESS liable to a penalty fine of up to £50,000.
The Bill also helps to deliver a simpler and more sustainable tax system; for example, by simplifying the rules around basis periods. These rules determine how profits are split between tax years. The Bill will create a simpler, fairer and more transparent set of rules for the allocation of trading income to tax years. Currently, small businesses that choose an accounting date other than the dates between 31 March and 5 April face complex rules. They also face double taxation in the early years of trade and the need to maintain accurate records of overlap relief, which is often lost and not used by taxpayers. These reforms will remove this double taxation and the existing requirements of the basis period rules, creating a simpler tax environment for many small businesses.
Finally, noble Lords may also have noted that the Government brought forward a new tax during the Bill’s passage through the House of Commons. This is the new public interest business protection tax, a temporary measure aimed at protecting taxpayers and energy consumers. It is, in principle, possible for an energy business to derive value from a valuable financial asset, such as a forward purchase contract, for its own benefit and the benefit of its shareholders, while leaving its energy supply business to fail or increasing the costs of a failure. The costs of that failure would then be picked up by the taxpayer or consumers, because it would trigger a special government-funded administration regime.
Ofgem is now consulting on a range of regulatory actions that it proposes to take to ensure that the right protections are in place in these circumstances. However, it will take some time for these changes to come into effect. It would be unacceptable for the Government to allow business owners to profit from engineering this kind of outcome in the interim period, at great and direct expense to the UK taxpayer. That is why we are introducing this temporary tax. It is our hope and expectation that no business will undertake this course of action and that the tax will therefore not be charged.
There is no doubt that the pandemic has cast a long shadow over this country and our finances, but now is the time to open a new chapter in this country’s story, characterised by economic growth and renewal. We will invest in people, businesses and public services, but we will also never forget our responsibility to strengthen the public finances. A simpler, fairer and more sustainable tax system will help us achieve this. The measures in the Bill support these goals, while also continuing our long-standing efforts to tackle fraud, avoidance and evasion. For these reasons, I commend the Bill to the House and beg to move.
Lord Sikka (Lab)
My Lords, I draw attention to my entry in the register of interests. I am an unpaid senior adviser to the Tax Justice Network. I too thank the Minister for her very eloquent speech, but it cannot hide the fact that the Budget does not really do anything at all for the average person. It is regressive, the word “redistribution” is missing altogether, and taxes are piled upon the poorest. On tax avoidance, all we need to do is look for evidence. I once again ask the Minister to name any big accounting firm that has been investigated, disciplined and fined after the courts declared that the tax-avoiding schemes that it marketed were unlawful. I am still yet to hear any name at all.
In the time available, I will raise three questions about the Bill. They relate to an area that I have not really seen debated either in this House or the other House. The first follows on from the Minister’s speech, relating to the tax rate on dividends. From April, it will be in the range of 8.75% to 39.35%. That is still less than the marginal rate of income tax on earned income. Earned income is taxed at 20%, 40% and 45%. Because the two rates are different, that opens the floodgates for the tax avoidance industry. Numerous schemes designed by accountants and lawyers enable clients to convert income into dividends, so that the beneficiaries pay tax at a lower rate and national insurance contributions at a zero rate. Nobody pays any national insurance on unearned income, and that includes dividends, even though those who are not paying can use the National Health Service and receive the benefit of social care.
The Government’s approach is clearly distorting taxpayer behaviour because taxpayers will try to minimise their duty. The Government are fuelling the tax avoidance industry and then expecting HMRC to go and chase down the avoidance schemes. This is an exercise in futility, and it has gone on for years and years. The Government could take a leaf out of the book of the former Conservative Chancellor, the noble Lord, Lord Lawson, who recognised that there is no difference between earned and unearned income—both augment somebody’s wealth and purchasing power. In 1988, the Government decided that earned income needed to be taxed at exactly the same rate as unearned income; both were taxed at the same rate—at least, that was applied to capital gains, which were taxed at the same marginal rate. So the Government at that time ended a whole variety of tax avoidance schemes. The current Government are fuelling the demand for them.
In respect of this, I ask the Minister two questions. First, why do the Government aid the tax avoidance industry by taxing unearned income at a lower rate than earned income? Secondly, what is the cost of chasing the tax avoidance schemes facilitated by the Government’s own policies? I hope that the Minister will be able to give me some numbers, and then we will see where to go.
The second issue I wish to raise relates to tax reliefs. Under this Government, and other Governments since 2010, the number of tax reliefs have vastly increased. The Office of Tax Simplification, which published its final report in November 2021, had previously identified some 1,140 tax reliefs—that is how many tax reliefs we give. The cost of principal tax reliefs is published, but the disclosures by HMRC do not cover all the tax reliefs. Even worse, little is known about the macroeconomic benefits of handing out vast numbers of tax reliefs, or the amount of tax concessions—the actual amounts that people do not pay.
Following on from this, the related question is about the anomalies and abuses of tax reliefs. Let me give one or two illustrations. The first relates to something called video games tax relief, which the Government created in 2014. It was thought that this tax relief would come to about £35 million a year. By the end of March 2020, 1,000 games had received the kitemark that they need—it is called “culturally British accreditation” and is given by the British Film Institute—as a prerequisite for getting video games tax relief. However, anything seems to go; it is nothing to do with being British. Some of the games that received this accreditation are called “Batman”—I did not know that Batman lived in Downing Street—“Goat Simulator” and “Sonic the Hedgehog” are just some examples of games that have been given this culturally British accreditation and millions in tax relief. The real truth is that this culturally British fig leaf was really designed to get around the EU Commission’s rules on state aid and, in reality, it is costing the taxpayer millions of pounds.
Two of the 1,000 games that have been accredited were published by a company called Rockstar: “Grand Theft Auto V”, which received the accreditation in 2015, and “Red Dead Redemption 2”, which received it in 2019. In 2020, Rockstar claimed £56.6 million in video games tax relief. According to its accounts, it has claimed £136.6 million in total in tax relief over the years. It has paid no corporation tax at all but has paid £67.5 million in dividends. Where exactly did those dividends come from? They came from picking the pockets of the British taxpayer. There is no other explanation for this. It does not seem to me that these kinds of tax reliefs are monitored. No evidence is provided by any government department to show what exactly the benefit to the UK economy is of this American company receiving all these tax reliefs.
I will give noble Lords another example, which relates to the James Bond films. James Bond is a quintessentially British fictional hero, but the enterprise is also very lucrative for minimising the UK tax liabilities of the foreign companies behind it. In recent years, the company known as EON, which controls the Bond movies and is behind the films, has declared pre-tax losses while simultaneously receiving a total of about £120 million in tax credits via the UK’s creative industry tax relief schemes. “Spectre”, a Bond film, received £30 million, with £47 million given to “No Time to Die”. “Skyfall” received £24 million. “Quantum of Solace” received around £21 million. The James Bond films are made and marketed through a complex labyrinth of opaque offshore entities. The upshot is that, despite receiving £120 million of subsidy, EON has been paying less than £500,000 a year in UK corporation tax. So where exactly is the benefit of these things?
I would like to talk a little more about these things. A good example concerns R&D—research and development —tax credits or reliefs. For 2019-20, 85,900 claims were made for this tax relief. Some £7.4 billion of tax reliefs were claimed on an expenditure of £47.5 billion. But the Office for National Statistics data for the UK’s total R&D spend is only £25.9 billion. How come the Government have given relief on £47.5 billion?
One explanation is that, when companies conduct research and development—there is a big issue about what that means and, as an accountant, I can tell you that you can classify almost anything as R&D and claim tax relief on it—it appears that foreign companies can also claim. A company may operate and have a subsidiary here but do its R&D in the Bahamas; it can also claim these tax reliefs. So there is a discrepancy of £21.6 billion between the HMRC and ONS data. No explanation has ever been provided by the Government of why these numbers differ and why foreign entities that have little or no economic link with the UK are able to claim these things. The tax reliefs are clearly being abused, yet there is no urgency from the Government to investigate.
I will ask the Minister to do a number of things. First, at every Budget, can we have a complete list of the tax credits? Tell us exactly what their tax cost is and what the abuses might be. Tell us whether the economic benefits that are claimed actually materialise. Have they been audited? At the moment, we get very little or almost no data.
The last issue I would like to talk about is the impending global minimum tax rate of 15%, which the Government support. While the Government are handing out 1,140-plus tax reliefs, what is the impact of these reliefs on the commitment to a 15% global minimum corporation tax rate? The Government say that they are increasing the corporation tax rate but, at the same time, they are giving so many tax reliefs and allowances—at 130% of the cost and so on—that the effective tax rate is incredibly low, and the Government are reducing it even further by handing out more and more tax reliefs. So can we also see some reconciliation from the Government on the relationship between handing out these tax reliefs and a commitment to a global minimum tax rate of 15%?
Lord Razzall (LD)
My Lords, since 1911 the House of Lords, quite rightly, has not been able to amend or reject a Finance Bill, but, in recent years, we have been given the opportunity to debate them. This enables us to range somewhat more widely over government economic policy. As the Minister realises, this Finance Bill comes at a time of unprecedented financial turbulence that is affecting so many. She will be aware of fuel price increases; oil and gas prices continue to rise, affecting everybody’s bills, and recent events in Ukraine will not help that. As she will be aware, inflation is now at its highest level for 30 years. As she indicated in her remarks, government debt as a proportion of GDP, although falling, is at record levels.
Against this background, although the Minister made a brave attempt to defend the Government’s economic policy, does she not agree that this Budget and Finance Bill are a missed opportunity for the Government? To me, and I suspect to other noble Lords, it is not entirely clear what government economic policy is today. In the light of the problems faced by ordinary families, does the Minister really think that now is the time to raise national insurance? This is ostensibly to fund social care although we know that, in the medium term, it will go towards propping up the National Health Service. Does she really think the Chancellor’s plan to reduce fuel bills is the correct way to help hard-pressed families? Does she also believe that the recent cut in universal credit was fair, just and necessary?
What is the Government’s overall strategy? The Chancellor says in public that he is a tax cutter—but how? It is clear from Mr Gove’s White Paper on levelling up that there is a split at the heart of government. The White Paper contains wonderful aspirations but no details of costs, payments or how levelling up will be funded. There is no commitment to building up business and infrastructure banks to support local enterprise. Where is the financial commitment to serious transport investment so that journey times and frequencies match those of London? Where is the serious investment in social infrastructure that is promised in the White Paper? Do the Chancellor and the Minister really believe in creating one globally competitive city in each of our regions? More particularly, will the Government let him and her do that? There is surely no point in promising a gain of £2.5 trillion, as the Government have done with levelling up to the economy, if they do not provide the resources to achieve it.
I fear that the Government hope that a Brexit dividend will save them, but this is a chimera. The £350 million paid to the NHS from Europe, promised on the side of a bus during the Brexit referendum, was a lie then and is a lie now, as the cartoonist Peter Brookes demonstrated so well in his cartoon last week, with Jacob Rees-Mogg in his favourite position, lying on top of a bus.
Great play was made by the Minister of the highest growth rate in the G7 as a result of Brexit. But, first, after 2022, there is no forecaster who thinks this will last. Secondly, it is a statement of the obvious that it is easiest to be the fastest if you start from the lowest point. Thirdly, and most worryingly, growth has come primarily from a one-off increase in public expenditure as a result of the pandemic, and the private sector has been noticeably flat. It remains the case, as the Office for Budget Responsibility said last year, that our economy will be 4% smaller each year as a result of Brexit, contrasted with only 1% as a result of the pandemic. As the chair of the Public Accounts Committee in the other place said recently, all Brexit has given our industries is
“increased costs, paperwork and border delays.”
The Government cannot say they were not warned.
Lord Bilimoria (CB)
My Lords, in May last year, I chaired the B7 before the G7 in my role as president of the CBI. One of our speakers was Gita Gopinath, chief economist of the IMF. She said that an economy like the UK would have a V-shaped recovery because of our £400 billion of spend to save businesses, jobs and the economy—which is one of the highest in the world per capita, and for which businesses are very grateful—and because of our world-beating vaccination programme. But what has happened since then? We have had labour shortages, supply chain problems, energy prices soaring, with inflation predicted now to go up to 8% and interest rates rising. We have a very fragile recovery. The noble Baroness, Lady Penn, mentioned productivity: productivity has been flatlining since the financial crisis of 2008-09.
On 3 February this year, our director-general of the CBI made an excellent speech on growth. It was very well received all round. He said—the noble Lord, Lord Razzall, just mentioned this—that the Government say we are the fastest-growing economy in the G7 but that V-shaped recoveries around black swan events are not the time for credit or blame. The downward nosedive is not an accurate judgment of economic performance, and nor is the climb back up. He went on to point out that the OBR is forecasting the UK’s economic trajectory, after the rebound is complete in the next 18 months, to grow at 1.3% to 1.7%.
As a country, historically we have grown at between 2% and 2.5%. Between 1993 and 2008, before the financial crisis, we grew at an average of 3%. Are the Government willing to accept a forward growth rate of 1.3% to 1.7%—such a low level of growth? A Government should have low taxes but also fiscal discipline and dynamic regulation. Do the Government agree? Today we have high spending, high taxes and low growth—a vicious cycle. We have a record 6 million people in England on waiting lists for routine hospital appointments. Sajid Javid, Secretary of State for Health, at one stage said that the waiting lists might go up to 13 million people. We have backlogs in courts, schoolchildren who have lost out on learning, transport funding models that are under pressure and, on top of all this, an ageing population. The CBI has worked out that by 2030, we may need to find an additional £40 billion to £50 billion per year to cover the costs of an ageing society. Do the Government accept this?
How do we pay for this? Is it by turning to taxation? Is it by raising taxes? We are already facing the highest tax burden in 17 years. On corporation tax, analysis by the CPS and the Tax Foundation demonstrates that we are currently the 11th most competitive country in the OECD. A lot of that is to do with the super-deduction that the Minister mentioned. However, when this ends in April 2023, and corporation tax increases from 19% to 25% in one swoop, we will fall to 31st place. Will the Minister and the Government accept that?
Our property tax is eyewatering, one of the highest in the OECD. I will come to business rates later. We know that raising taxes reduces growth and cutting taxes drives growth up. Look at the examples just now. We remove road tax to stimulate the buying of electric vehicles and sales are rocketing. We reduce VAT to stimulate consumption. We reduced VAT during the pandemic from 20% to 5% in hospitality. We put that up to 12.5% but the Government are now putting it back to 20% in April. Why are they doing that? I ask them to keep it at 12.5% for a while longer. UK Hospitality and the British Beer and Pub Association are saying that they need help for longer. What is the point in a VAT relief when for the past two years, restaurants, pubs and hotels have been shut? They cannot avail themselves of a relief when they are shut, only when they are open. What is the point, when there is guidance to work from home in December and January and their outlets are empty because of it? They need the help when their outlets are full, which is starting to happen now. Give more help and let it carry on.
We will not pay down todays debt or extend the public services and reduce taxes on a growth rate of 1.3% to 1.7%. We need sustainable long-term growth based on investment, innovation, and productivity. Tony Danker, the director-general of the CBI, where I am president, says:
“Now it has been the Treasury’s job as an institution since the stone age to be sceptics of this kind of talk. But economic policy and fiscal policy are not the same thing. No CEO… puts the Finance Department in charge of sales. Or lets them alone determine strategy. Companies can’t afford not to invest in growth. And nor can countries.”
We have seen this before. The growth rate that I spoke about, at an average of 3% per year between 1993 and 2008, was twice the rate of the last decade, and three-quarters of that growth was driven by investment, technology, and innovation—double what they have contributed over the past decade.
Let us look at other countries and take an example. Tony Danker took the example of Singapore, which reduced its operating costs, cut corporation tax by 10%, incentivised investment, spent on infrastructure, and had new venture capital services, low-interest loans, and tax incentives. The result of all those measures is 6% growth per year.
There is talk of Singapore-on-Thames: the three forces of Brexit, the race to net zero and the end of the pandemic give us a huge opportunity. During the pandemic, we have proven what a powerhouse of innovation and life sciences we are, with Oxford/AstraZeneca and the collaboration with the Serum Institute of India. Three-quarters of companies adopted new technologies. In 2020 alone, 700,000 new businesses were created. In offshore wind, we have shown with contracts for difference that the Government can use the balance sheet to unlock high-growth markets. The Budget mentioned skills bootcamps—this is just the sort of thing we need to do.
The CBI has recommended that, when the super-deduction ends in March 2023, we should replace it with a permanent investment deduction—a 100% tax deduction for capital spending. I will come to that later. Would the Government also agree that it is time to turn the apprenticeship levy into something far more flexible, which would allow businesses, for example, to buy training modules and have greater flexibility in types of training, and to incentivise and reward firms that go the extra mile to train their people, with an upside kicker for any businesses that spend more than their levy?
We must incentivise green growth. We need an extra £3 billion a year to properly retrofit our homes and businesses to bring down energy bills. Hydrogen is the future. The University of Birmingham, of which I am chancellor, was proud to demonstrate at COP 26 the world’s first retrofitted hydrogen-powered train, designed by the university and built in collaboration with Porterbrook, the rolling stock company, and 20 other companies, including Siemens and the Government’s Innovate UK—universities, business and government all working together for a world first. This is the sort of thing we should be doing.
We at the CBI have recommended that the Prime Minister should set up a new office for future regulation. Labour shortages are an acute problem across all sectors; the Government did not listen when we brought up the issue of drivers and butchers last June—sadly, pigs have been unnecessarily culled. We suggest that there should be, in effect, a revamped Migration Advisory Committee, an independent council for future skills; as the Monetary Policy Committee sets interest rates that the Bank of England has to follow and the Low Pay Commission sets a minimum wage which the Government have to follow, this body would from time to time say “We need so many thousand jobs—open up the shortage occupation list and provide a one or two-year visa.” Do the Government agree that this is required to address the labour shortages?
Growth is the only real answer to our cost-of-living crisis, with rising energy prices and high inflation. Better growth ensures that we will not be imprisoned in a cycle in which we cannot afford what we need or raise taxes to pay for it. The noble Baroness, Lady Penn, spoke about the super-deduction; the day before yesterday, the CBI released our survey. A super-deduction successor, which I spoke of, could trigger a £40 billion a year boost for UK business investment. According to our survey, 22% of investment qualifying for the super-deduction would not have taken place in the UK without it; another 19% of investment qualifying for it has been brought forward to take advantage of the relief. The Government announcing a permanent successor now could increase annual capital investment by 17% by 2026—worth £40 billion a year. Will the Government acknowledge this and listen to this recommendation?
We need to incentivise investment much further. It is not just about taxes going up to the highest level in 70 years; we need to reduce taxes. We have seen research time and again which shows that, if you reduce taxes, growth increases. The most famous example is the Laffer curve—in the growth that took place in the 1980s, you had low levels of inflation, a steep rise in private investment and rising incomes. Between 1982 and 1990, the foundations of the Laffer curve enabled the second-longest peacetime economic expansion in the history of the United States—of course, Laffer was an adviser to both President Reagan and Margaret Thatcher. Yet here we are with the highest tax burden in 70 years.
We now really need to focus on investment. Are the Government aware that the UK has been seriously underpowered when it comes to investment? It has deteriorated from 14.7% of GDP in 1989, to as low as 10% at the end of 2019. Of course, we have had the pandemic, but we are still 5% below our pre-Covid levels by the end of 2022. We must do everything we can to increase investment. Between 2021 and 2025, the UK Government were projecting to invest an average of 3.4% of GDP, versus 3.9% in America, 4.1% in Canada, and 5.9% in Japan—let alone 9% in China. Green spending represents 3.8% in the US and 1.8% in the EU, compared with just 0.55% here in the UK. Our business rates, which I mentioned earlier, are four times higher than Germany and three times higher than the OECD average. We invest 1.7% of our GDP in innovation and R&D, compared with 3.2% in Germany and 3.1% in the United States of America.
Instead, we have: a freezing of the income tax thresholds; National Insurance increases of 1.25% for employers and 1.25% for employees; corporation tax going up from 19% to 25%; the super-deduction of 130% being removed in 2023; VAT, having gone down from 20% to 5% and then up to 12.5%, is being put back up to 20%; and dividend tax being increased. On top of that, we were just informed yesterday by the Prime Minister that lateral flow tests will be removed from 1 April. Could the noble Baroness, Lady Penn, tell us that this has surely been penny-wise and pound-foolish? How much of the £2 billion that was spent in January on testing, which the Government speak about, was for lateral flow testing or for PCR testing? What is the bet that a small proportion was for lateral flow testing and the Government are trying to cut-back cost when they should be making that available to people who need it—whether they have symptoms, are visiting vulnerable people or need to test to get the antivirals which the Government have just ordered? People are now used to taking these tests. It has taken a year of people using them regularly to feel comfortable with them.
Finally, debt to GDP went up to 250% after the Second World War—arguably the last major global crisis before the pandemic. We have gone up to 100%. Now is not the time to give up. With the fragile recovery that we have, we need to ensure that we are like India, which did not put up its taxes in the February budgets of either last year or this year, because it did not want to stifle its recovery or for businesses to suffer. What is the result? The IMF has forecast India to be the fastest growing major economy, with a 9% growth rate.
With £400 billion, let us not stop at the last mile; let us keep giving help to businesses. Then we will have the investment, the growth and the jobs that will pay the taxes and pay down the debt.
Baroness Bennett of Manor Castle (GP)
My Lords, it is a pleasure to follow the noble Lord, Lord Bilimoria, and I will pick up some of the points he raised as I reach the end of my contribution. It is also a great pleasure to listen to the rich, informative speech from the noble Lord, Lord Sikka. Many people outside this Chamber would be interested to learn that the James Bond films enjoy a government subsidy. It does not seem like that, does it? When you consider the amount of money they must make from product placement, you really would not think that they also need to get a subsidy from the taxpayer to be able to make these films. Often, they look more like an advertisement than any sort of creative endeavour.
I want to begin by looking at the formal language behind this Bill—something I am continually informing myself on as I get to grips with the archaic, often incomprehensible, language of the governance of the UK. This is a language which reflects the distance of our Government from the life of the people of these islands. This is a Bill, I learn, of aid and supplies—aid, in this context, means taxation. It provokes the question: who is being aided by this Bill and who is not being aided by this Bill? First, the group I would identify as being aided by this Bill, by an act of omission—which is an action every bit as much as a provision is—are the oil and gas companies. As we heard earlier from the noble Lord, Lord Sikka, in Oral Questions, oil and gas companies are benefiting hugely from the rise in the global price of their product, while the cost of its production remains static.
That is the very definition of a windfall—wealth falling into your lap without effort—yet we do not see an oil and gas windfall tax in the Bill before us. That is despite the fact that the Chancellor, repute suggests, is a fervent disciple of Margaret Thatcher, and it was Margaret Thatcher who in 1981 introduced the first windfall tax on the banks, whose profits had leapt following a rise in interest rates. In her memoirs, Margaret Thatcher said that it was because the increased income was not because of increased efficiency or better services to customers but purely by economic accident that she brought the tax in. Can the Minister perhaps explain to me how the situation now with oil and gas companies is different from that of the banks in 1981?
Of course, there have been very widespread calls for an oil and gas windfall tax, going back to the Green Party leaders who called for it in the autumn. Some of the arguments we heard from the Government and the Benches opposite during the Oral Question from the noble Lord, Lord Sikka, just do not stack up. Investment in the North Sea contributes very little to the UK’s energy security—80% of its oil and gas is exported and the price is decided by the global market. Conversely, if we, say, had that windfall tax and spent it on a massive programme of energy-efficiency measures, particularly for private homes, that is something that could not be exported, could not be lost and could be directed towards the poorest in society.
It is worth noting that we do not hear the Government often talking—in that phrase they like to use—about “windfalls” when it comes to their oil and gas tax regime. This is not surprising, because it is one of the least effective regimes in the world. The Government pull in an average of $2 a barrel from production, whereas Norway, by contrast, collects $21 a barrel. As the noble Baroness, Lady Sheehan, pointed out on the Oral Question, our oil and gas majors are contributing only a derisory amount to investment in renewables. Where is the aid going? To the oil and gas companies. Who is losing out? Energy consumers and the general society.
Secondly, I come to another group being aided by this Bill, again by omission. We saw efforts in the other place to introduce reports on the progress of establishing a register of overseas beneficial owners of UK property and a review of HMRC’s publication of tax avoidance schemes. Opposition amendments to introduce such simple and moderate measures were defeated on party lines. Who does this aid? It is clear who the US and EU allies think it aids: Russian dirty money, much of it closely associated with the regime of President Putin, whose dangerous, aggressive actions we will be discussing later in this Chamber.
On 10 February, the Government laid legislation to allow the sanctioning of entities and businesses of economic and strategic significance to the Russian Government and their owners, directors and trustees. But to impose a sanction, you first have to be able to find the sanctionee. The highly respected NGO Transparency International reports that more than 85,000 properties in the UK are owned anonymously by entities registered abroad. It estimates that £1.5 billion of property is owned by Russians accused of corruption or of links to the Kremlin.
We have been promised this register of beneficial ownership in London since 2016. Provision was included in the 2019 Queen’s Speech, but despite the flood of Bills we are now seeing in your Lordships’ House—a Bill to attack some of the most vulnerable people on this planet: refugees seeking asylum on these shores; a Bill to suppress the turnout of voters least likely to support the Government; a Bill to reduce the capacity of our courts to defend the rule of law—the Government have not found time in the parliamentary agenda for this register to be created. Who is being aided here? I am afraid it is very obvious. Who is losing out? We are all losing out through insecurity for the people of the UK and damage to the security of the world.
Thirdly, I come to something that is apparently being aided by this Bill, social care, for this is the legislative mechanism by which the Government are bringing in the health and care levy. But is it really for social care? What is it doing to address the acute staff shortage or the extreme exploitation by hedge fund owners taking 16% of every pound paid for care? What will be its impact? The first two questions are very easy to answer: nothing. On the third, the Commons Treasury Committee points out that, with this levy being announced outside a fiscal event, Parliament has not been provided with important information that would usually accompany a decision of this kind, such as an independent impact assessment from the Office for Budget Responsibility or a distributional analysis. Who is being aided here? Not the overworked, underpaid care worker or the clients she is trying to serve.
Finally, I shall move away from the question of who benefits to an even bigger one: who decides? This morning, I was at a debate held by UK in a Changing Europe which reflected on the extreme centralisation of power and resources in the UK. Our local councils are left without the funds to provide essential services, simply delivering the statutory requirements decided by Westminster and unable to make the decisions they want to for their local communities. Of course, the centralisation is even tighter than Westminster dominating our councils and, as we often see in this House, resisting the devolved power that is supposed to have been handed to the nations of the UK. Power is in fact concentrated in one address in Westminster, and that is not the Prime Minister’s.
We are all familiar with a Minister apologising from the Dispatch Box opposite for some departmental failing, explaining that there is no money to fix it and rolling their eyes to the heavens, muttering “Treasury”. It is a gesture that is almost guaranteed to get a sympathetic laugh from all sides of your Lordships’ House. I have been delving again into the history of this. The Chancellor of the Exchequer is a post that predates that of Prime Minister by several centuries. The Treasury’s structure, like so much of our governance, was created in early medieval times. Interestingly, the department is the only one that has two Ministers in Cabinet. It has also been said that Prime Ministers govern via the Treasury.
We are aware that the Treasury sees its role as governing for the economy, maintaining economic stability and promoting growth. This is where I get to a bit of a response to the noble Lord, Lord Bilimoria. What is the Treasury operating for? It is operating for the economy and growth. The noble Lord talked about the period he obviously saw as a golden age, when we had regular annual growth rates of 3%. That was a period when we had 15%-plus of pensioners living in poverty. It was a period when we saw increased casualisation of the economy, with the gig economy growing and young people in particular finding it harder and harder to get a steady job. Fewer and fewer people were able to afford to buy or rent a home. We had growth and we had a society of poverty, inequality and very poor public health. The fact is that we have a situation in which people are working for the economy instead of the economy working for people. It is this dedication to growth—the Treasury’s chasing of growth —that has given us this situation.
There are other ways of doing things. I will point, as I have before in your Lordships’ House, to New Zealand—a system based originally on our Westminster model. Its Treasury is guided by the living standards framework. It looks at a balanced set of measures about the economy, yes, but also about poverty, inequality, public health and the state of the environment and says that we need to keep all these at a decent level when managing for people.
Lest noble Lords think that I am standing out here with something just the Greens are saying, I point to a report called The Tragedy of Growth, which was co-authored by, among others, Caroline Lucas, the Green MP, Clive Lewis from Labour and the noble Lord, Lord Deben, from the Conservative Benches. It points out that growth does not enhance living standards, alleviate poverty or protect the environment. To quote the report:
“To protect human wellbeing and avoid environmental disaster, we must escape the growth paradigm once and for all.”
I would say that we need to go further than simply escaping the growth paradigm; we need to see and escape from the dictatorship of the Treasury. There might be quite a number of Ministers and former Ministers in your Lordships’ House who will quietly agree with me.
Lord Butler of Brockwell (CB)
My Lords, as an old Treasury man I cannot go all the way with the noble Baroness, Lady Bennett. It is regrettable that we do not have more speakers in this evening’s debate because it is not, as the contributions so far have made clear, as though there is a lack of important economic and, indeed, social issues arising from the Finance Bill.
Unlike the contributions so far, I will concentrate my remarks on two rather technical aspects of the Finance Bill which were the subject of a report by the Finance Bill Sub-Committee of your Lordships’ House. I was privileged to serve on that sub-committee, as was the noble Baroness, Lady Kramer. One of the aspects covered by the report was—the Minister referred to this—tax basis reform, the effect of which is that self-employed individuals and partnerships are to be taxed on profits arising in a financial year rather than on their own accounting years. The second is uncertain tax treatment, under which large companies will be statutorily required to report to HMRC instances where the company’s view of the likely tax treatment may be different from that of HMRC. I do not need to weary the House by going through the technicalities that these provisions throw up. They are set out clearly in the sub-committee’s report and the government response. I want to just make some general points.
I particularly wanted to speak in this debate because I did not want the report of the sub-committee to go unnoticed by the House. I believe that the sub-committee provides a useful service, excellently chaired by the noble Lord, Lord Bridges, who could not be here tonight because he is on jury service, and expertly supported by the sub-committee’s clerks and advisers. The sub-committee, in effect, provides an additional channel of communication between representative taxpayer associations and HMRC. That is the basis of an objective assessment by the sub-committee. I say an “additional” channel of communication because there are, and certainly should be, close communications already between HMRC and representative taxpayer associations. I hope that the sub-committee’s work, through the process of taking evidence from both sides, supports this process and provides an independent assessment of the position of both sides.
Although inevitably the Government have not accepted all the sub-committee’s recommendations, their response has shown some helpful movement on some of them. On the substance of the provisions, I merely want to say that my main concern with both sets of provisions is that their complexity for both HMRC and taxpayers did not seem to have been properly thought through in the first place. Their introduction was not given sufficient time. In fact, the implementation of both sets of proposals has had to be postponed for a year. Even now doubts remain about their practicability and the resources needed to successfully implement them. An additional complication has been Covid, which must have interfered with the preparations for these changes on both the HMRC and taxpayer sides. I am reminded of Denis Healey’s mot that the best time for removing a man’s appendix is not when he is carrying a piano upstairs.
However, that is not the only cause of difficulty. Some of these proposals could have been surfaced with more notice and been subject to earlier consultation. For example, the proposals for simplifying the tax basis period were first made some eight years ago, yet proposals for implementing it were brought forward at the same time as the changes involved in making tax digital, when they were going to have to be implemented. Also, when the proposals for requiring large companies to report uncertain tax treatment—whatever that may be—were first introduced, those proposals were half-baked, and they are not fully baked even now at the time of their introduction in this Finance Bill.
We know that the resources of HMRC are already under great pressure and these reforms will add to that pressure, at least in the short term. They will also add costs to the taxpayers affected by them. There is a question mark over whether the return in terms of extra revenue will be worth the resources devoted to them. I hope that all goes well but I have to say that, despite the Government’s response to the sub-committee’s report, I remain uneasy about the ability of both HMRC and businesses to cope.
The Minister referred to the Government’s aim of achieving a simpler and fairer tax system. That is a worthwhile objective and I have no doubt that they are sincere about it, but I am afraid I do doubt whether, in the shorter term, this will be the result of these measures in the Finance Bill. The difficulties have been exacerbated by the manner in which the Government, in their zeal to close the tax gap, have introduced them with such little notice and consultation. I hope that HMRC will give serious consideration to the general lessons set out in the sub-committee’s report.
Lord Sharpe of Epsom (Con)
My Lords, I believe that it would be convenient to adjourn the debate and break briefly before the Statement on Ukraine.
Ukraine Update
(2 years, 2 months ago)
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The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)
My Lords, with the leave of the House, I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:
“Mr Speaker, with permission I will make a Statement about the situation in Ukraine.
Last night President Putin flagrantly violated the Minsk peace agreements by recognising the supposed independence of the so-called people’s republics of Donetsk and Luhansk in eastern Ukraine. In a single inflammatory speech, he denied that Ukraine had any ‘tradition of genuine statehood’, claimed that it posed a ‘direct threat to the security of Russia’ and hurled numerous other false accusations and aspersions.
Soon afterwards, the Kremlin announced that Russian troops would enter the breakaway regions under the guise of ‘peacekeepers’, and Russian tanks and armoured personnel carriers have since been spotted. The House should be in no doubt that the deployment of these forces in sovereign Ukrainian territory amounts to a renewed invasion of that country. By denying Ukraine’s legitimacy as a state—and presenting its very existence as a mortal threat to Russia—Putin is establishing the pretext for a full-scale offensive.
Honourable Members will struggle to understand how, in the year 2022, a national leader might calmly and deliberately plot the destruction of a peaceful neighbour, yet the evidence of his own words suggests that is exactly what Putin is doing. When I said on Saturday that his scheme to subvert and invade Ukraine was already in motion before our eyes, the events of the last 24 hours have, sadly, shown this to be true.
We must now brace ourselves for the next possible stages of Putin’s plan: the violent subversion of areas of eastern Ukraine by Russian operatives and their hirelings, followed by a general offensive by the nearly 200,000 Russian troops gathered on the frontiers, at peak readiness to attack. If the worst happens, then a European nation of 44 million men, women and children would become the target of a full-scale war of aggression, waged without a shred of justification, for the absurd—even mystical—reasons that Putin described last night. Unless the situation changes, the best efforts of the United States, this country, France, Germany and other allies to avoid conflict through patient diplomacy may be in vain.
From the beginning, we have all tried our utmost to find a peaceful way through this crisis. On 11 February, my right honourable friend the Defence Secretary and the Chief of the Defence Staff, Admiral Radakin, paid the first joint visit to Moscow by the holders of their offices since Churchill—who was also Defence Minister at the time—travelled to Russia with General Alanbrooke in 1944. They held over three hours of frank discussions with the Russian Defence Minister, General Shoigu, and the chief of staff, General Gerasimov, demonstrating how seriously we take Russia’s security concerns, how much we respect her history and how hard we are prepared to work to ensure peaceful coexistence.
My right honourable friend the Foreign Secretary delivered the same messages when she met her Russian counterpart in Moscow on 10 February. I have spoken on a number of occasions to President Putin since this crisis began and so has President Biden, while President Macron and Chancellor Scholz have both visited Moscow. Together we have explored every avenue and given Putin every opportunity to pursue his aims by negotiation and diplomacy.
I tell the House that we will not give up: we will continue to seek a diplomatic solution until the last possible second, but we have to face the possibility that none of our messages has been heeded and Putin is implacably determined to go further in subjugating and tormenting Ukraine. It is because we suspected as much that the UK and our allies repeatedly sounded the alarm about a possible new invasion, and we disclosed much of what we knew about Russia’s military build-up.
Britain has done everything possible to help Ukraine to prepare for another onslaught, training 22,000 soldiers, supplying 2,000 anti-tank missiles and providing £100 million for economic reform and energy independence. We stand ready to guarantee up to $500 million of development bank financing. I travelled to Kyiv to meet President Zelensky on 1 February, and I saw him again in Munich at the weekend. I spoke to him last night, soon after Putin’s speech, to assure him—I am sure that the whole House will agree that it was the right thing to do—of Britain’s unwavering support for Ukraine’s sovereignty and territorial integrity.
Now the UK and our allies will begin to impose the sanctions on Russia that we have already prepared, using the new and unprecedented powers granted by this House to sanction Russian individuals and entities of strategic importance to the Kremlin. Today, the UK is sanctioning the following five Russian banks: Rossiya, IS Bank, General Bank, Promsvyazbank and Black Sea Bank. We are sanctioning three very high-net-worth individuals: Gennady Timchenko, Boris Rotenberg and Igor Rotenberg. Any assets they hold in the UK will be frozen, the individuals concerned will be banned from travelling here and we will prohibit all UK individuals and entities having any dealings with them.
This is the first tranche—the first barrage—of what we are prepared to do. We will hold further sanctions at readiness, to be deployed alongside the United States and the European Union if the situation escalates still further. Last night, our diplomats joined an emergency meeting of the UN Security Council, and we will raise the situation at the Organization for Security and Co-operation in Europe.
Let me emphasise what I believe unites every Member of this House with equal determination: the resolve of the United Kingdom to defend our NATO allies is absolute and immovable. We have already doubled the size of our deployment in Estonia, where the British Army leads NATO’s battle group, and when I met President Levits of Latvia and Prime Minister Kallas of Estonia in Munich on Saturday, I told them that we would be willing to send more British forces to help protect our allies if NATO made such a request.
We cannot tell what will happen in the days ahead but we should steel ourselves for a protracted crisis. The United Kingdom will meet this challenge side by side with our allies, determined that we will not allow Putin to drag our continent back into a Hobbesian state of nature, where aggression pays and might is right. It is precisely because the stakes are so high that Putin’s venture in Ukraine must ultimately fail—and be seen to fail. That will require the perseverance, unity and resolve of the entire western alliance; Britain will do everything possible to ensure that this is maintained.
Now, our thoughts should turn to our valiant Ukrainian friends, who threaten no one and ask for nothing except to live in peace and freedom. We will keep faith with them in the critical days that lie ahead and, whatever happens, Britain will not waver in our resolve. I commend this Statement to the House.”
Baroness Smith of Basildon (Lab)
My Lords, I begin by thanking the noble Baroness for repeating the Statement. I also want to put on record my appreciation for the Privy Council briefings that I have had from the Government.
As we have watched events unfold and diplomatic efforts intensify, we have moved between hope that those efforts will succeed and despair that this could end in war. We should not underestimate that this is a moment of huge gravity. At this stage, we do not know how the next few days, or even the next few hours, will play out, but it is clear that this is a dangerous time for Ukraine and, in the longer term, for stability and security across Europe. It is no exaggeration to say that this marks a significant moment in global politics that will have far-reaching implications for future interaction with Putin’s Russia. So let us call this out for what it is: the Russian President has rejected the rule of law and Ukraine’s right of sovereignty and territorial integrity.
The Government have our full support in holding Russia to account. As we heard in the Statement, Putin has sought to create false justification for his actions. Russia faces no threat from NATO or Ukraine. Even at this 11th hour, efforts for a diplomatic solution must continue, but Putin has to know that our values mean that we have no other course but to stand shoulder to shoulder, united with NATO and our allies across the world, in support of the people of Ukraine. Let us be absolutely clear: we will not be divided in that support.
We welcome the military support that has been given to the rightful Government of Ukraine. The pressure they are under in their daily lives and at all times now is absolutely enormous. We can only admire their courage in the face of the threats and the hostile actions. As regional stability weakens, our friends and allies in eastern Europe will feel the closest threat, and we welcome the Government’s engagement with the Baltic states. The UK must always remain committed to the principle of collective defence and that an attack against one NATO ally will always be considered an attack against all. Can the noble Baroness the Leader of the House say anything further today about discussions to strengthen the military assistance provided to our NATO allies in eastern Europe?
On sanctions, regardless of the direction that Putin now takes, a red line has already been crossed. We welcome and support the sanctions announced by the Prime Minister and will fully co-operate in getting this legislation through. But the Government have to go further. Putin needs to understand that his actions carry a huge cost, and that we stand firm with our allies in opposing them. Looking at what more can be done, can the noble Baroness say whether the Government will also consider excluding Russia from SWIFT and other financial mechanisms, and a ban on trading in Russian sovereign debt? We welcome the decision to sanction the five Russian banks, but they apparently represent only a fraction of those which, it has been reported, could be included. Further banks with links to the Kremlin remain active in London and across the West. I do not know how much more the noble Baroness is able to say today, but can she confirm whether work is continuing to prepare for further designations?
Again, as welcome as sanctions on the three named individuals are, we have to recognise that these individuals have already been designated by the United States for over four years. The noble Baroness may not know why we have been so much slower in taking action, but is she able to confirm today that in tackling this issue the Government understand the need to improve co-ordinated action with our allies? Also, what assessment has been made of the impact on Russia’s trading relationship with the rest of the world?
The invasion of Ukraine should represent a turning point for how we interact with Russia, but it is also an opportunity to look at the effects of Putin’s regime in the UK. The Kremlin’s misinformation campaign continues to target the West, with outlets such as Russia Today still able to broadcast its propaganda across the world. Will the Government now take steps to ban RT from operating in the UK?
Similarly, allies of Putin are still able to use the UK to launder dirty money, so why are the Government still failing to act on the recommendations of the Russia report? And, with the Elections Bill introducing new loopholes to allow foreign donations to UK political parties, Ministers have to wake up to the creeping influence of Russian money in our politics. I should notify the noble Baroness that we will seek to amend the Elections Bill to remove these new loopholes, but, in the light of Russia’s recent actions, will she commit today to speaking to the Prime Minister and her Cabinet colleagues about removing these provisions from the Bill, and report back to your Lordships’ House? Failing that, there will be an amendment in this House to remove those loopholes.
The most recent escalation looks set to trigger a prolonged conflict. No one will benefit from that, including the Russian people. We did not seek this conflict, and we always sought peaceful coexistence. But the UK and our allies must ensure that Russia will now feel the consequences of Putin’s aggression, so our sanctions have to be tougher and targeted. We in this Parliament must be as united as we are with our international allies in support of the Ukrainian people.
Lord Newby (LD)
My Lords, this has been a very sombre 24 hours. President Putin yesterday set out his view that Ukraine had no legitimacy as a state, and said he was sending so-called peacekeepers—in reality an invading army—into Donetsk and Luhansk. Today, and even since the Prime Minister made his Statement, he has announced that he is recognising the whole of the Donetsk and Luhansk regions, and not just those parts of them already under de facto Russian control. Against this flagrant aggression and breach of international law, how well does the Government’s response match up?
We support the broad stance that the Government are taking in opposing the Russian aggression and the measures they have so far taken to provide Ukraine with training, anti-tank weapons and other support. We agree with the Statement that the UK Government—and, indeed, all western Governments—have given Putin every opportunity to pursue his aims by negotiations and diplomacy. However, I am a bit bemused by the assertion in the Statement that
“we will continue to seek a diplomatic solution until the last possible second.”
It seems to me that the last possible second expired last night. Can the Minister explain what more Putin would have to do to make the Government believe that there really was no diplomatic solution on offer any more? Surely, that boat has most definitely sailed.
Earlier in the month, the Prime Minister made it clear that, as soon as the first Russian toecap entered Ukrainian territory, the West would impose sanctions that would really hurt Russia. I know that the situation is far from clear, but Putin has already committed to sending in troops, and there are reports that the first have already been deployed. Germany, by announcing today the suspension of the Nord Stream pipeline, has already acted in line with the Prime Minister’s injunction.
What, then, are the Government proposing? They sanctioned four banks, most of which are minnows. They sanctioned a mere three individuals who, as the noble Baroness has already said, have already been the subject of American sanctions for a number of years. We are told:
“This is the first tranche of what we are prepared to do: we will hold further sanctions at readiness.”
Why are we holding further sanctions at readiness? What are we waiting to happen? What more does Putin now need to do? The truth is that the sanctions announced in this Statement are pitifully insignificant. Putin, if he hears of them at all, will simply be smirking at them.
The noble Baroness has set out a number of things that the Government could do, which I agree with. I would like to set out a number of things that I think the Government should do, and I invite the Leader of the House to explain whether the Government have these measures in contemplation—and if not, why not. They should revoke the golden visas of those Russian nationals who have known links to the Russian regime. They should impose a windfall tax on energy company profits, which is desirable in itself, but would hit Gazprom, which channels its trading revenues through London. They should freeze the assets of Russian companies in London and introduce the register of beneficial ownership Bill, which would shine a light on dirty Russian money in London. The Government could surely get this oven-ready Bill through the Commons in a day: tomorrow springs to mind. I am sure that your Lordships’ House would pass it with alacrity. Certainly, from these Benches, we would facilitate its passage as a matter of urgency.
We know that, in addition to London, there are very large amounts of Russian dirty money in Switzerland and Monaco. We could call on the Swiss Government and the Monegasque authorities to do the same as we might do in shining a light on this money. Perhaps we could ask President Macron to have a word with his colleagues in Monaco. So far, there is no evidence that the Government plan to do any of this—or, indeed, anything of any substance.
When Putin invaded Crimea, he got away with it at no discernible cost. When he undertook the Salisbury poisonings, there was no significant response. He has now committed his latest outrage. If we are to have any influence at all in persuading him and the Russian elite that these illegal, aggressive policies are not simply to be met by little more than a shrug of the shoulders, we need to see much more action contained in this Statement, and soon.
The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)
I thank the noble Lord and noble Baroness for their comments and their support for our standing together with Ukraine and the approach that we are taking.
As both noble Lords rightly said, with his actions in the Donbass region overnight, and the further developments today, President Putin has flagrantly violated Ukrainian sovereignty: he has sent troops in, broken international law, repudiated the Minsk agreement and torn up the understanding from Budapest that Ukraine’s territorial integrity was to be respected. We are working tirelessly to co-ordinate our response with our allies, and will not allow Russia’s violation of its international commitments to go unpunished.
NATO allies remain committed to a dual-track approach to Russia: strong deterrence and defence combined with meaningful dialogue. The noble Baroness asked what other actions we had taken. A small number of marines have already deployed to Poland from the UK, and more will travel next week. These personnel were originally due to deploy on Exercise Cold Response in Norway but have been reassigned to Poland. We are also preparing to reinforce the British-led NATO group in Estonia; that will include deploying RAF Typhoon fighters and Royal Navy warships to protect south-eastern Europe. Further details will be provided as things develop.
We are also working with international partners on options for further economic and defence support for Ukraine, but, as noble Lords will know, we have supported the development of the Ukrainian army. Last month, as I mentioned in the Statement, we sent 2,000 anti-tank missiles to Ukraine alongside a package of training by our troops, and last week we provided more equipment. Over the last eight years, under Operation Orbital, we have trained more than 22,000 members of the Ukrainian armed forces.
Both the noble Lord and the noble Baroness talked about sanctions. The ones announced today are only the first tranche, and are targeted at people and financial institutions who have supported Putin’s violation. We will step up sanctions if Russian aggression continues, and we have been clear that in that regard nothing is off the table.
Our toughened sanctions regime will enable us to sanction oligarchs and companies of strategic importance to the Kremlin: this is the toughest sanctions regime against Russia that the UK has seen. The five Russian banks that the noble Baroness referred to are all active in bankrolling the Russian occupation, and Bank Rossiya in particular is close to the Kremlin. We will also look at sanctioning those Russian parliamentarians who supported the recognition decision taken last night.
The noble Lord rightly mentioned today’s announcement by Chancellor Scholz of Germany, which we very much welcome, that he has instructed his economic ministry to withdraw its earlier security of supply report on Nord Stream 2, with the consequence that it will not be certified for operation. Again, that is something that we have been talking to the German Government about, and we are grateful for and pleased by this morning’s news.
The noble Baroness asked about disinformation, which we take extremely seriously. We are working collaboratively with our allies to build a better understanding of the different techniques that can be used as part of malicious information operations, and our counter-disinformation unit in DCMS brings together monitoring, expert analysis and capabilities across government. We will continue to see what further action we can take in this area.
The noble Baroness also mentioned the ISC’s Russia report. As noble Lords will know, we published our response immediately on its publication. Many of the recommendations are already in train and we will continue to work on further implementation.
The noble Lord asked about the register of beneficial owners. We have set out plans to establish a register of beneficial owners of overseas entities that own UK property, in order to combat money laundering, and we have been clear about our intentions to significantly reform Companies House to strengthen our ability to combat economic crime. We will be taking that forward.
Last week the Home Secretary announced that she was closing down the tier 1 investor visa route to all applicants with immediate effect. That route has been under constant review and has given rise to security concerns, and we will be making reforms to the innovator route as part of the new points-based immigration system. Closing this route is just the start of a renewed crackdown on fraud and illicit finance. We are soon to publish a fraud action plan, while the forthcoming economic crime Bill will crack down on people abusing our institutions.
Finally, the noble Baroness talked about the Elections Bill, which is having its Second Reading tomorrow. I am sure my noble friend Lord True will listen very carefully to the concerns raised during that debate and we will have discussions as we go forward.
The Deputy Speaker (Baroness Finlay of Llandaff) (CB)
My Lords, this is a convenient moment to hear from the noble Lord, Lord Campbell-Savours, who is taking part remotely.
Lord Campbell-Savours (Lab) [V]
My Lords, instead of threatening alienation, conflict and isolation, can we not seek, even now, to negotiate the agreed-timeframe non-NATO Ukraine that I have been calling for in this House in recent months, in return for buffer state protectorate status under Ukraine for Donetsk and Luhansk? With China wooing Russia and prolonged tension in Europe, undermining economic development and cybersecurity, we do not need turmoil in these volatile times. We are humiliating Russia. German humiliation led to Versailles and war.
Baroness Evans of Bowes Park (Con)
I am afraid I do not agree with the noble Lord’s comments. The action President Putin has taken represents a further attack on Ukraine’s sovereignty and territorial integrity. It signals an end to the Minsk process and is a violation of the UN charter. Unfortunately, it demonstrates Russia’s decision to choose a path of confrontation over dialogue. We remain willing to talk, but it must de-escalate its aggression towards Ukraine.
Lord Robathan (Con)
My Lords, I first applaud both the Prime Minister and the Government in their resolve. Putin has tested the resolve and unity of the West and he has found it wanting. Like all bullies, he senses weakness. I am afraid that the Government’s reduction of our Armed Forces—the Army by 11%, and the number of our Royal Navy ships and RAF airplanes—will also be seen by him as weakness. Will my noble friend take back this plea? Action in increasing our defences—in rearmament, if you like—will speak louder than sanctioning three individuals.
Baroness Evans of Bowes Park (Con)
I thank my noble friend. As he knows, we are one of the biggest contributors to NATO. We are looking at investing in our Armed Forces. We have major investments in ground-based air defence, cyber and electronic warfare, a modernised tank fleet and accelerated procurement. We are committed to ensuring that our brave military has the equipment and training it needs.
Lord Alton of Liverpool (CB)
My Lords, has the Leader had a chance to reflect on the request I made to her some weeks ago that there should be a full-scale parliamentary debate, in your Lordships’ House, about the situation in Ukraine? Can she tell us anything about the position of UK nationals in Ukraine? Will she answer the question put to her by the noble Baroness, Lady Smith of Basildon, about the SWIFT financial system? I do not think she referred to it in her response. Does she not agree that, under the cover of this darkness, other authoritarian regimes will take their opportunistic chances? I think particularly of the situation in Taiwan. Was Churchill not right when he said that, if you go on feeding the crocodile, one day, the crocodile will feed on you?
Baroness Evans of Bowes Park (Con)
Our advice to British nationals is that they should leave Ukraine now. In the event of any military incursion, commercial routes out of Ukraine are likely to be severely disrupted and roads across Ukraine closed. British nationals should leave while commercial travel options remain open, as they are likely to close or become severely limited if an incursion takes place. In addition to any Statements, Questions, debates on statutory instruments and other things we will be doing over the coming weeks—including, no doubt, on Ukraine—we will make time available for a general debate on progress by the middle of March. That will take place in Grand Committee.
Lord Robertson of Port Ellen (Lab)
My Lords, I fully support—we should all fully support—the Government and the resolution of the West against this unprovoked attack on an individual nation state. It is outrageous, and we are at a very dangerous point in European history. But I suggest to the Government that we need to do much more to answer some of the disinformation now being put out by the Russians. For example, President Putin tries to pretend that he has had nothing to do with agreements regarding the sovereignty of Ukraine, but in 2002 Vladimir Putin signed the Rome declaration; I actually have his signature with me here today. The declaration said that the participating states
“respect … sovereignty, independence and territorial integrity of all states and their inherent right to choose the means to ensure their own security, the inviolability of borders”.
That was signed up to by Vladimir Putin 20 years ago, and now he seems to pretend that Ukraine does not exist. Surely we need to do much more—the Government need to do much more—to counter some of the lies that are coming out, because the battle of the narratives is going to matter just as much as the battle of the military on the ground.
Baroness Evans of Bowes Park (Con)
I entirely agree with the noble Lord. We will continue to expose Russia’s false flag operations, disinformation and cyberattacks. Russia is using disinformation to falsely cast Ukraine as a threat, to justify its aggressive stance. That was one of the reasons why we released intelligence to expose its attempts to install a puppet regime in Kyiv and to fabricate a pretext for invasion. We will absolutely continue to focus on this area and call out Russia where we have evidence and can do so.
Lord Campbell of Pittenweem (LD)
My Lords, judging by the content and delivery of Mr Putin’s speech last evening, it is very unlikely that he will be satisfied. Indeed, using the Russian exclave of Kaliningrad, where he has deployed nuclear-capable missiles, he may well turn his malevolent intentions to Lithuania, Latvia and Estonia. I welcome the extra deployments to which reference has been made by the Minister but, if he does, we will require professionalism, strong leadership and unity of purpose in NATO, perhaps to a greater extent than has ever been the case. Can we be confident that Her Majesty’s Government will make a proper contribution if that is necessary?
Baroness Evans of Bowes Park (Con)
I cannot remember whether it was mentioned in the Statement or in my response to the noble Baroness, but when the Prime Minister was in Munich he made it clear that, if we were asked for further contributions to NATO, we would provide them. We have been working very closely with NATO allies in this area and within the broader region, and we are absolutely committed to defending and supporting Ukraine; we certainly will be playing our part.
Lord Lea of Crondall (Non-Afl)
My Lords, will the Minister tell us what she thinks are the pros and cons of maintaining a stance of ambiguity on Ukrainian membership of NATO?
Baroness Evans of Bowes Park (Con)
It is obviously up to Ukraine whether it wishes to apply to join NATO. Under NATO’s open-door policy, all European democracies are entitled to pursue membership; the decision over whether to seek membership is for the people of Ukraine.
Lord Garnier (Con)
My Lords, does my noble friend agree that kleptocrats, like drug dealers, do not like having their money—their ill-gotten gains—removed from them? We have sanctioned three individuals and five banks. That really is not enough. President Putin has vast sums squirrelled away in the West, held by nominees. The Government must know who these nominees are; I suggest to my noble friend that they speedily sanction all those whom they know to be doing President Putin’s work.
Baroness Evans of Bowes Park (Con)
As I said, the sanctions announced today are only the first tranche, and we will step up sanctions if Russian aggression continues.
Lord McDonald of Salford (CB)
My Lords, the Leader has made clear that sanctions will be the cornerstone of the UK’s response. To be effective, sanctions have to be international and co-ordinated. The country that is sanctioning suffers along with the country that is sanctioned. So if Germany is to do everything we need on energy—not just Nord Stream 2 but Nord Stream 1, which provides 55 billion cubic metres of gas per year for Germany—and all of that has to be in place, so must everything that the UK can contribute via the City of London. This needs to be an international effort. It would usually be co-ordinated through the United Nations, but the Security Council is clearly not available as the Russians have a veto, so in what international forum will HMG co-ordinate the necessary sanctions effort?
Baroness Evans of Bowes Park (Con)
We have been working with partners through NATO, the UN, the OSCE and the G7—we are anticipating a further G7 call later this week—and obviously we have been having bilateral meetings with countries around the world. Ministers have talked to our allies in Kraków, Kyiv, Brussels, Tallinn, Munich and New York. We are working internationally and are co-ordinating our response with our allies and partners, for exactly the reasons the noble Lord gave.
Baroness Ludford (LD)
My Lords, I share the puzzlement of those who wonder what else President Putin has to do to get the full barrage of UK sanctions fired at him. The Statement says that he has
“flagrantly violated the Minsk peace agreements”.
The noble Baroness said that he has flagrantly violated Ukrainian sovereignty and the Statement says that
“the deployment of these forces in sovereign Ukrainian territory amounts to a renewed invasion of that country.”
What are the Government waiting for as a further threshold before there is a full barrage of sanctions? The Statement also says that, when the Defence Secretary and the Chief of the Defence Staff visited Moscow and talked to their counterparts, they demonstrated
“how seriously we take Russia’s security concerns”.
What are Russia’s valid security concerns? NATO is not going to invade it, so why are we taking its so-called security concerns at all seriously?
Baroness Evans of Bowes Park (Con)
What we have said, with our NATO allies, is that a dialogue would cover what Russia says it wants, from strategic nuclear weapons and force posture to exercises and incidents at sea. It is a serious offer which would improve European security for Russia and NATO, but we have been very clear that these talks must be based on de-escalation and an end to aggression against Ukraine.
Lord West of Spithead (Lab)
My Lords, we must not delude ourselves: Russia has invaded Ukraine. There is an element here which is almost as if it has not done so. It has invaded Ukraine. Putin has weighed up that this is what he wants to do. Let us face it: he said he wanted to do it and we knew he wanted to. He has weighed up against that the pain he will suffer from doing it and has made a calculation that the pain is not that much. I have to say that, at the moment, I would rather agree with him; he is not getting that much pain.
The other area we must not delude ourselves on is defence. I share the views of the noble Lord, Lord Robathan: since 2010 we have reduced our military by a third, and that has not gone unnoticed. Are we now putting money into our factories to fill the gaps? There are many gaps; again, we must not fool ourselves when we make statements about how wonderful our equipment is and how many forces we have. There are huge gaps in terms of missiles, capability and renovating equipment. We should be calling up reserves. There is a lot that should be being done there, as well as all the other things that people have talked about. Otherwise, Putin is not going to feel pain and will think he can move on and go further.
In terms of combating him in the war of words, my noble friend Lord Robertson is absolutely right. With GCHQ and the NSA, we have far better resources and can run rings around the Russians if we really want to. We should be getting ready to do that with the NSA to really make his eyes water, so that he knows what he has done.
Baroness Evans of Bowes Park (Con)
We have specialist teams of cyber experts and intelligence analysts working around the clock to detect, decipher and deter Russian threats beyond physical borders. This cell, as I mentioned in an earlier answer, is focused on fighting disinformation and ensuring that the UK can combat warfare threats. We have introduced a new autonomous cyber sanctions regime, set out a national cyber strategy and announced new legislation to provide security services and law enforcement with additional tools to tackle evolving state threats. As I said, we are strong supporters of NATO. We set out last year our integrated review and set out plans and investment in defence. We take it extremely seriously, and that work continues.
The Lord Bishop of Coventry
My Lords, these are dark days indeed for Europe, but unlike the noble Lord, Lord Newby, I welcome the commitment in the Statement to unrelenting diplomacy. Does the Leader agree that the stronger the sanctions, the better placed that diplomatic work will be? Is there a particular contribution that Britain can make in the diplomatic engagement even now?
Baroness Evans of Bowes Park (Con)
We are continuing to work with our allies in diplomatic terms. As I said, the Prime Minister spoke to President Zelensky yesterday evening and President Macron this afternoon. We are anticipating a G7 call this week. We will be working through all the channels that we can with our international allies. As I have set out, we have introduced the first tranche of sanctions, which is a strong, tough sanctions regime, but we will increase and step up sanctions if we continue to see Russian aggression.
Lord Skidelsky (CB)
My Lords, I thank the Minister for her Statement. I regret I am going to disturb the unanimity of the Front Benches, and, in fact, all previous speakers, but I am very disturbed about the trend of events. I very much welcome the assurance given to my noble friend Lord Alton that we will have an early opportunity to debate this. My first question is: can the Government give us an assurance that no British troops will be deployed in Ukraine? Secondly, coincident with the economic sanctions, will the Government urgently and imaginatively search for a diplomatic agreement on the Ukraine problem? I say “imaginatively”; I am sure there has been some urgency, but the lack of imagination and the lack of understanding of Russia’s position is absolutely appalling, in my view, and very depressing. The atmosphere of the House reminds me very much of 2003 prior to the invasion of Iraq.
Baroness Evans of Bowes Park (Con)
I am afraid, again, I cannot agree with the noble Lord. Russia has been falsely accusing NATO of provocation and nothing could be further from the truth. NATO has always been a defensive alliance and poses no threat to Russia. As I have also said, NATO allies remain committed to a dual track approach: strong deterrence and defence combined with meaningful dialogue. But Russia has to stop its aggression towards Ukraine.
Lord Cormack (Con)
My Lords, could I suggest to my noble friend that we—global Britain—convene an international conference here in London with all our European friends and allies, with whom we must get closer and closer, because if we do not have a united front we have a defeated front? When we come to debate this issue in the House, could it please be on the Floor of the House and not, as my noble friend suggested, in Grand Committee?
Baroness Evans of Bowes Park (Con)
I have set out what we will be able to do in terms of a debate, and we are delighted to be able to give the House the opportunity to discuss such an important issue. Of course we are consistently meeting our European allies both at home and abroad. I mentioned all the travel, and I am sure noble Lords will have seen the Defence Secretary and Foreign Secretary travelling around talking to allies. I am sure they will be convening meetings across Europe, and indeed, more widely globally, in which these important issues can be discussed, and we can continue our co-ordinated approach.
Lord Lee of Trafford (LD)
My Lords, in the event of serious conflict, has consideration been given to offering medical treatment in this country to seriously wounded Ukrainians?
Baroness Evans of Bowes Park (Con)
We are working closely with partners to ensure that we can quickly provide emergency humanitarian assistance. We have also announced 1,000 more British troops will be put in readiness in the UK to support the humanitarian response in the region, should it be needed. I cannot go into huge specific details, but we are working with international partners because we recognise that there may be a need in the area.
Lord Browne of Ladyton (Lab)
My Lords, we can impose sanctions on the three people who have been identified in the Statement, but we cannot guarantee that we can freeze and seize their assets, because we will not know where they are. They will be hidden behind all sorts of complexities of shell companies and transactions. My right honourable friend Keir Starmer in the other place asked the right questions. He said:
“We need to draw a line under Companies House providing easy cover for shell companies. We need to ensure that our anti-money-laundering laws are enforced … and we have to ensure that money is not pouring into UK politics from abroad.”
When will we be able to say that we have that assurance?
Baroness Evans of Bowes Park (Con)
As I have said, we have set out plans for a register of beneficial owners of overseas entities and we have set out our intentions to reform Companies House. Extensive criminal and civil powers are available to the NCA, including seizure of the proceeds of crime and the ability to deny serious criminals and corrupt elites access to their assets. The NCA has increased its investigations into corrupt assets. The Registration of Overseas Entities Bill will ensure transparency for foreign-owned land in the UK, which is currently easily disguised through offshore companies. A lot of work is going on; as I have already mentioned, we will introduce a new economic crime Bill to take further action in this area.
Lord Sterling of Plaistow (Con)
My Lords, I first went to Kyiv with Margaret Thatcher some years ago. I was very concerned later on with the port of Odessa, which has been blocked by warships, which will cause trouble for granary movement throughout the world—so it goes far beyond that. A great deal of that grain goes to the Sudan, Libya and Yemen; they badly need it, because they have starving people. It goes much further abroad. Does my noble friend know whether they will continue to block that port, which is the key port for everything that moves into and out of Ukraine?
Baroness Evans of Bowes Park (Con)
I am afraid I do not know the answer to my noble friend’s question.
Finance (No. 2) Bill
Tuesday 22nd February 2022
(2 years, 2 months ago)
Lords ChamberRead Full debate Finance Act 2022 View all Finance Act 2022 Debates Read Hansard Text Amendment Paper: Consideration of Bill Amendments as at 2 February 2022 - large print - (2 Feb 2022)
Baroness Kramer (LD)
My Lords, this almost feels rather an anti-climax—in a sense, I feel privileged to have been able to sit through that crucial, important debate. This is a very technical Bill. Normally at Second Reading I would take the opportunity to discuss the broader economic issues, but we have done that again and again in this House.
I will pick up on the comments made by the noble Lord, Lord Bilimoria, in particular; I agree with so much of his analysis of the condition, although I do not necessarily agree with his solutions. However, the point he made that crystallises the problems we face is the forecast growth rate of 1.3%, with a rate the following year of 1.2%. At that level of economic growth, we cannot sustain the public services and general living style of our population today. Will the Minister go back and try to get somebody in the Treasury to truly take seriously some of the economic issues we are facing? They are not just a series of small, isolated issues; they add up to a critical problem that the Government will have to grapple with. Nothing we have seen grapples with the extent and depth of that problem. I will focus on a few particular points in this Bill; as I say, it is highly technical, but sometimes those technical pieces have consequences.
I start with the reduction in the bank levy from 8% to 3% from 1 April 2023. Taxpayers’ contribution in the form of CBILS, BBLS and bounce-back loans amounted to some £80 billion of support for businesses during Covid; it was vital, but that same money also cushioned the banks. This week, Britain’s four major high street banks are anticipated to report some £34 billion between them in full-year profits and to follow that with payments of huge bonus pots to senior bankers. To quote the FT,
“banks are unveiling the sort of payouts that prompt a run on champagne”.
This is against the background of a rise in NICs of 1.25% for some of the lowest-paid workers and a cost of energy and living crisis for much of the population, who are now facing a choice of “heat or eat”. The Governor of the Bank of England encouraged workers not to ask for pay rises to limit inflation, but his words have clearly not discouraged bank bonuses on the back of some of the highest windfall years that our major banks have experienced. How on earth in that situation do the Government justify a cut in the levy for the banks?
I move on to the issue of freeports, primarily because it directly reflects on the issues we discussed on the Floor a few moments ago. I have raised this issue in the context of the National Insurance Contributions Bill, to which this House was good enough to pass an amendment. The amendment required that for businesses operating in a freeport, there has to be a public—I stress “public”—register of beneficial ownership. We know that freeports are a lure for criminal activity and money laundering because the normal disclosures which are made through customs and tax are not available. We know now that the Government have asked the freeports to have registers of beneficial ownership, but they have declined to make those public, even though they lecture virtually the entire world on the importance of public registers, because then civil society, activists, journalists and others can shine a light on wrongdoing, and only then does it become effective.
Will the Minister go back and say that, when the National Insurance Contributions Bill reaches the Commons again, the Government will change their approach and provide a public register? Otherwise, we are taking a step backwards and providing yet more mechanisms for people who want to launder money. Indeed, in the freeports, since we make them tax attractive, we are basically offering not only money laundering but tax-enhanced money laundering. That is absolutely the wrong message, and we should not believe for a second that Putin’s henchmen and autocrats have not noticed and are not planning to take advantage.
This leads me to ask why the provisions to make a public register of the beneficial ownership of property in the UK—which has been promised over and over—have not been included in this Bill. We know that that legislation has been written and has been sitting on the stocks for weeks now, if not months, and the Government have chosen not to bring it forward. I think we need to understand why the Government are holding back.
I think the noble Lord, Lord Butler, referred to the Economic Affairs Finance Bill Sub-Committee report— I have the privilege, as he does, of sitting on that committee—which looked at the issue of basis period reform. I will not pre-empt speeches which I hope the noble Lord, Lord Bridges, will have the opportunity to make at a later date. He was unable to be here today. But when we as a committee reviewed the case for basis period reform, which now sets the fiscal year for all businesses in the UK as between 31 March and 5 April, I have to say that we were not impressed, to put it mildly. The noble Lord, Lord Butler, addressed many of the reasons why: flawed consultation, rushed proposals, and the fact that a compelling case was not made that this was either simplification or a prerequisite for making tax digital.
There are two things that absolutely stuck in the gullet with this. During the transition period, some companies will be paying tax on profits made over 23 months rather than over a single year. I know the Government are going to allow them five years to make those payments, but a whole lot more flexibility would have been extremely welcome, and I do not understand why it has not been given. The Minister herself mentioned overlap relief—the problem that start-up businesses often have more than one year’s-worth of profits falling into a particular tax year—and that as we go through the transition period, companies will be able to offset any excess profits by subtracting or by qualifying for overlap relief. But, as she said, so many of those companies do not have the records. HMRC has the wretched records, but it is not committed to delve into its resources and provide them, or else reconstruct them from the data that it holds. Will she please go back to HMRC and tell it that it has to act in the interests of taxpayers and make that effort?
However, I have a particular issue that concerns me far more than the transition issues. It is the permanent impact of requiring a significant number of companies in the UK to use a tax year end that makes no sense for their business cycle. Some of this applies to large international partnerships that will now have a different tax year end for their operations in the UK and in other parts of the world—but they can afford all the expensive lawyers and accountants. However, I am concerned about the farmers for whom a March/April year end is entirely inappropriate. They depend on a summer growing season and have no control over weather and prices. I look at the hospitality sector, and again it is highly volatile and highly seasonal and a 31 March to 5 April year end is completely wrong. This applies also to a lot of small seasonal retailers. Those entities will now have to estimate—and given the volatility it is basically “guesstimate”—what profits they will make during that season in order to report their taxes. At the very least, these little companies will need to hire some very expensive accountants and lawyers, and at worst they will constantly be filing tax forms that contain significant and wide-ranging errors.
I just do not understand why, at a time when technology would allow us to deal easily with variable tax year ends, the Government have made the decision to push everybody into this very narrow 31 March to 5 April band. For years, when we dealt with taxes by pen and paper, we accepted the importance of variability, but now that we have programs that can deal with it, the Government have decided not to. The only thing I can think is that they hope through these various measures to up-front a whole series of tax payments because of that transitional year to give them a buffer ahead of the next election. It makes absolutely no sense otherwise and, as we say, it has nothing to do with making tax digital: in fact, making tax digital should enable you to deal with the variability.
On the issue of uncertain tax treatments, mentioned by the noble Lord, Lord Butler, let me just say this. This is a notification of uncertain tax treatments issue and is absolutely classic. Companies that are determined to do the right thing and not take any risks on tax and make sure that they think through everything will spend a fortune trying to comply with the new notification requirements, and the companies that intend to take risks will make very little effort and will probably get away with it. Again, I cannot see why on earth the Government have brought this in.
Because of the time I just want to say something very quickly about a letter that the FBSC has written to the Financial Secretary on off-payroll working. It raised a lot of questions about the CEST—check employment status for tax—tool to determine whether contractors fall inside or outside IR35. The Government really are not taking seriously, I think, the 20% of requests to the CEST system that come back with the result that says “unable to determine”. It is a tool that needs to be refined to deal with that big 20% number and also to reflect the other issue missing from the test that undermines confidence in it, which is that it needs to reflect the mutuality of obligation test for whether one falls inside or outside IR35.
However, underlying all of this is the concern that the Government are still not implementing the Taylor review, which could provide a holistic framework for self-employment. We are moving into a nonsense where we will have people paying tax as if they are employed but having few of the rights of being employed. I think everyone can recognise that that is both unfair and inequitable. Perhaps the Minister will give us an update on what is happening with the Taylor review.
The Finance Bill was also remarkable for what it did not do, and here I am picking up some of the points made by other noble Lords, including the noble Baroness, Lady Bennett. It did not set up a windfall tax on fossil fuel producers with record profits. That could have raised £5 billion to £10 billion. It did not rectify the injustice done to the 5 million excluded self-employed people who got no Covid help. It did not reform the unfair business rates system, rather than just provide short-term relief.
There is one particular issue which small businesses had really hoped would be caught at the time of this Bill—and it was not. As the Minister will know, big businesses are very successful in the recruiting market, stripping people away from small businesses because they can afford to pay joining bonuses and higher wages. As a consequence, small businesses are suffering disproportionately from the labour shortages we are now experiencing. This could be combated by significantly increasing the small business employment allowance. I notice that the Federation of Small Businesses is calling for this. It seems like a small measure—not even an expensive one—but it would make a huge difference by at least providing small businesses with something of a level playing field through the recovery.
There is so much more to say about the economy and about this Bill, but I think I have exercised the patience of the House enough.
Lord Tunnicliffe (Lab)
My Lords, I am grateful to the Minister for introducing this Finance Bill, and to other noble Lords for the contributions they have made.
I am particularly grateful to the noble Lord, Lord Butler of Brockwell, for presenting the work of the Finance Bill Sub-Committee. While the sub-committee’s report focused on just two measures in the Bill, its observations were all too familiar: this is a Government who rush ahead, irrespective of evidence base and without regard to reputational impact.
The work of the Finance Bill Sub-Committee always creates an almost democratic dilemma. An enormous amount of effort goes into the presentation of these reports, and the depth they go into is really powerful, yet it has so little impact on what actually happens. Indeed, I am committing this sin by the fact that I am no longer going to talk about it, other than by talking about the general economic situation. Somehow or other, we must find a way of engaging these talents, especially as so much of the control of the financial services in the future is going to be generated by regulation which will not come before the House. However, the institutions involved in generating this regulation want engagement with parliamentarians and we must find a better way of making that happen.
This has been a very interesting debate, although it must be noted that the Finance Bill seems to attract less interest with each iteration. Today, we have had no Conservative Back-Bench speakers. I am sure there are many reasons, but perhaps one is a growing frustration with the Chancellor’s handling of the economy. If so, who could possibly blame them? The Prime Minister continues to insist that the UK has the strongest economic performance in the G7. This was true over the past year—for reasons I will come on to—but it is no longer the case. Indeed, if we look at the last quarter, the UK ranks fifth out of seven—much closer to the last place than the first. Just over a week ago, the Chancellor said that the fastest annual growth rate since the Second World War amounted to proof that the Treasury was
“making the right calls at the right time.”
Based on their experience of the last two years, I am sure that many creative freelancers and hospitality businesses would vehemently disagree. Given the nature of his resignation, so would the noble Lord, Lord Agnew.
What Mr Johnson seems less keen to stress each week at Prime Minister’s Questions is that the UK experienced one of the largest contractions of any economy when GDP fell by 9.4% during 2020. Annual growth of 7.5% in 2021 may look flattering, but that headline hides several other pieces of bad news. In its latest release, the ONS revised down its initial estimate for Q3. It also noted that, when studying quarterly GDP figures, the economy remained 0.4% below its pre-pandemic level. Looking at monthly figures, it appears that the economy may now match its pre-pandemic level, but that achievement was marginal when considering that GDP fell by 0.2% in December. The Office for Budget Responsibility and other forecasters expect GDP growth to be sluggish in the coming years —just as it has been for the bulk of the last decade. The rate of quarterly growth which puts us fifth in the G7 is far more typical of this Government’s economic performance than the annual growth witnessed last year.
I do not want to labour the point, but in honour of the Deputy Chief Medical Officer, who will shortly move on from his role, there is room for a sporting analogy. The current political and economic situation in this country is akin to a football team on the brink of relegation. The manager, knowing that his job is on the line, is keen to talk up any minor victory. In this case, despite conceding an early, embarrassing own goal, a late equaliser is presented as the result of a tactical masterstroke. In truth, the team’s form remains unchanged; there is no sign of an upturn in its fortunes. The manager’s head is still very much on the chopping block and, despite their attempts to paint a positive picture, the supporters see right through it.
Budgets and Finance Bills are the ultimate expression of an Administration’s priorities. There are some items in this Finance Bill which make sense but, taken as a whole, it fails to address the many fundamental problems which are holding back the British economy. With the Chancellor’s recent economic statements having done little to help working families, there can be no surprise that this Bill does nothing to ease the mounting pressures of the cost of living crisis.
It also does nothing to make the tax system fairer. It facilitates tax reliefs for experimental freeports and lowers the banking surcharge at the same time as the tax burden is due to hit its highest level in 70 years. The hit to family finances comes alongside inflation that has hit 5.5%. Worryingly, it is expected to rise further still, far exceeding the predictions published late last year.
While the measure is not contained in this Bill, on energy prices, the Chancellor has offered only a glorified buy now, pay later scheme. Why, as we discussed during an earlier Oral Question, has he not imposed a windfall tax on the very energy companies which have recently announced billions in profits, share buybacks and dividend payments?
The Government may have capped rail fare increases but many household bills are due to go through the roof. Many essential costs, including broadband and phone subscriptions, will rise by 10% or more from April. Ordinary people are suffering, in some cases having to choose between heating and eating, at the same time that HMRC systematically fails to act on fraud and economic crime.
The Bill establishes an economic crime levy, which we welcome in principle, but monitoring and enforcement agencies have been warning central government for years that they are being outrun and outwitted by criminal gangs. The lack of action over many years means that criminals have been allowed to operate not one but several steps ahead of the bodies tasked with chasing them down. The levy may help address that in years to come, but in many senses the horses have already bolted.
The Commons Public Accounts Committee noted that HMRC has effectively written off £4 billion-worth of fraud. The Treasury continues to dispute that figure but cannot name a more accurate one. Can the Minister provide one today? The PAC has labelled the Government’s plans to recover money as “unambitious”. It says that HMRC’s customer service has collapsed, and that there is a lack of concerted action to tackle tax avoidance. In the words of Dame Meg Hillier:
“Every taxpayers’ pound lost to a fraudster will lead to honest ordinary people feeling the post-pandemic pinch harder and harder.”
It seems that the Chancellor’s Eat Out to Help Out scheme also attracted fraudulent claims, meaning that potentially it spread not only Covid but a perception that fleecing the taxpayer will come without punishment. This is all the more baffling as successive Conservative Administrations have talked tough on benefit fraud. While individuals clearly should not seek to exploit the social security system, many thousands have faced severe financial sanctions for innocent mistakes. Why is it one rule for benefits claimants and another for businesses and criminals?
The Prime Minister talks tough on fraud but is failing to act over Russia. He has recently warned that an escalation in Russian aggression against Ukraine could lead to steps to expose Russian beneficial ownership of firms in the UK. We have been waiting for—indeed, we were promised—public registers of beneficial ownership for years. However, at every opportunity, the Treasury has ducked the challenge. Why are the Government using this threat as a diplomatic tactic? Is it not in the public interest to address money laundering, regardless of the state of international affairs? Why has not a single unexplained wealth order been issued during Boris Johnson’s premiership? The Foreign Secretary recently identified these as the main tool in the fight against corruption. Have the Government thrown in the towel?
We will not oppose the Bill, but we do not see it as credible. It is yet another example of the Government’s failure to adequately address the cost of living crisis, economic crime and other pressing issues. It increasingly feels like the Chancellor is simply going through the motions, rather than steering the economy in the right direction. He may well be biding his time for a leadership bid, but that should not be so apparent to the rest of us. While he holds that great office of state, he has a responsibility to the people of this country. They are assiduous in paying their taxes and following the rules, and they elected this Government to spend that money wisely. It is hard to believe the Chancellor is living up to that duty when one looks at the Bill before us.
Baroness Penn (Con)
My Lords, I thank all noble Lords for their contributions to this debate. In closing, I will focus on responding as far as possible to the many and varied points raised.
The noble Lord, Lord Sikka, asked about the different tax treatment of earned and unearned income. The measure in the Bill increasing dividend tax rates by 1.25 percentage points for all bands is precisely to ensure that those with dividend income contribute to the health and social care spending settlement, as well as those with earned income. This measure supports the Government’s objective of raising revenue to fund our national priorities while also helping to limit the incentive for individuals to work through an incorporated company and remunerate themselves via dividends rather than wages to reduce their tax bill. I also point out that dividend income is paid out of corporate profits, which are usually also subject to corporation tax.
The noble Lord also raised various tax reliefs, specifically for video games, films and TV. They are available only to productions that pass the British cultural test. The production is considered against a range of criteria—not just where it is set but where it is made, and the nationality of the personnel involved in making it. The Government recognise the valuable economic and cultural contribution of the video games industry and other cultural industries. The video games tax relief has supported £4.4 billion of UK expenditure on 1,640 games since its introduction in 2014. I reassure the noble Lord that HMRC keeps these reliefs under review. An external evaluation of the video games tax relief was published in 2017, and a review of the film and TV reliefs is currently under way.
I also noted the request by the noble Lord, Lord Sikka, for information about tax reliefs to be set out at each Budget. I will take his suggestions back to the Treasury. He also asked how the global minimum tax rate will be assessed. The UK is proud that, in October 2021, more than 130 countries signed up to a new global minimum tax framework that built on a deal brokered in principle by the G7 during the UK’s presidency of that grouping. The OECD has published the model rules for pillar 2, which will help to ensure that multinational groups pay a minimum level of tax in each jurisdiction in which they operate, and the UK Government have now published a consultation on how those rules will be implemented in UK domestic legislation.
The noble Lord, Lord Razzall, asked about the timing of the health and social care levy, given pressures on household budgets, and the noble Lord, Lord Bilimoria, spoke more generally about the impact of high tax burden in the UK. I would say to noble Lords that the Government are committed to responsible management of public finances, and the plan for health and social care will lead to a permanent increase in spending. It is important, therefore, that that spending is fully funded, particularly in the context of record borrowing and debt to fund the economic response to Covid.
The health and social care levy will allow the Government to implement necessary adult social care reform, tackle the elective backlog in the NHS as it recovers from coronavirus, develop our pandemic response and preparedness, and ensure that the NHS has the resources it needs through this Parliament. These are things I hear noble Lords call for time and again in debates in this House, and the decision to implement the health and social care levy is the mechanism that means we can afford to do them. I would also point out that the highest earning 15% will pay over half the revenues, and 6.1 million people earning less than the primary threshold and lower profits limit will not pay the levy. The levy also applies to businesses; as those businesses benefit from having a healthy workforce, it is only fair that they contribute.
On the more general point made by the noble Lord, Lord Bilimoria, the fact is that the Government remain committed to fiscal responsibility and funding excellent public services. It is vital not just to borrow to fund those services but to fund them fairly, with both businesses and individuals contributing. That is why the Government have had to make difficult choices, but those choices mean we are now bringing debt under control and investing in public services.
The noble Lord, Lord Bilimoria, and the noble Baroness, Lady Kramer, raised the question of economic growth. I would say to noble Lords that this Government are absolutely seized of the need to drive up productivity, which is why there is such a focus on investment in recent budgets and in the measures in this Finance Bill.
The noble Lord, Lord Razzall, also asked about universal credit. The Government have reduced the universal credit taper rate from 63% to 55% and increased universal credit work allowances by £500 per annum to make work pay. This is essentially a tax cut for the lowest paid in society, worth around £2.2 billion in 2022-23. The change also means that 1.9 million households will, on average, keep an extra £1,000 on an annual basis. That will be combined with the national living wage increase of 6.6% to £9.50 per hour in April 2022 for those aged 23 and over, which will benefit over 2 million workers. Since its introduction in 2016, the national living wage has increased the pre-tax earnings of a full-time worker by over £5,000 a year. That increase is consistent with the Government’s target to go even further and raise the national living wage to two-thirds of median earnings for over-21s by 2024, provided economic conditions allow. That is an ambition to abolish low pay in this country altogether, which I hope will be welcomed across this House.
The noble Baroness, Lady Bennett, the noble Lord, Lord Tunnicliffe, and others raised the issue of the windfall tax. The noble Lord, Lord Razzall, and others also asked whether our approach to support households with the cost of their energy bills is the right one. I do not want to go over all the ground we covered in Oral Questions earlier today, but I would say to noble Lords that the UK Government do place additional taxes on the extraction of oil and gas. Indeed, the headline tax rate charged on the profits from UK oil and gas production at 40% is currently more than double that charged on company profits in most other areas of the economy. To date, the sector has paid more than £375 billion in production taxes.
Noble Lords expressed scepticism about ensuring that there is adequate investment in this sector to secure ongoing energy security and the feed-through that that will have on people’s household bills. In 2020-21, investment in the sector was at an all-time low; that is part of the context in which we need to think about the arguments for a windfall tax on those producers. An abrupt tax change would create uncertainty and potentially deter significant investment opportunities.
As I said earlier, the Government have set out a significant programme of support for households with their energy bills, worth more than £9 billion. I must disagree with the characterisation of the noble Lord, Lord Tunnicliffe, of that support as “buy now, pay later”. A large part of that support is a £150 rebate on council tax bills for all homes in bands A to D. This is a more targeted approach than the VAT cut proposed by the Benches opposite; it also gets support to households faster because the rebate will be available from April, whereas a VAT cut would be spread across the course of the next year.
The noble Lords, Lord Butler and Lord Tunnicliffe, and the noble Baroness, Lady Kramer, touched on the work of the sub-committee that is looking at the Bill. I thank it for its incredibly detailed work. It is an incredibly important part of the system that we have and the contribution that this House makes to these processes, even though we do not amend or vote on Finance Bills. Speaking from the Treasury’s point of view, I know that that work is taken incredibly seriously, is looked at in detail and provides a contribution to the process.
The Treasury’s assessment is that basis period reform creates an ongoing administrative burden saving of £1.1 million a year for business, but the Government are planning further engagement to explore whether and how to introduce easements to reduce possible associated administrative burdens. In agreement with the committee’s recommendation, the Government will reassess the administrative burdens and savings of basis period reform in the course of exploring these options for easements. The Government have delayed basis period reform in response to consultation feedback, giving businesses and accountants more time to prepare. The transition to the new tax year basis needs to take place before Making Tax Digital is introduced, to avoid hard-coding complexity into the new Making Tax Digital systems.
Noble Lords also asked about HMRC’s resources for the Making Tax Digital income tax self-assessment. The spending review process between HM Treasury and HMRC considers demands on the department, including on both customer service and policy development, to arrive at an agreed spending settlement that ensures that HMRC has sufficient resources and capacity to deliver its commitments and service levels. HMRC is confident that it has the resources it needs.
Many noble Lords raised the Government’s efforts to tackle economic crime. Indeed, we heard some discussion of that in the Statement repeat we just had. The Government are absolutely clear that we will not tolerate criminals profiting from dirty money, and that we will do whatever is necessary to bring such criminals to justice. The economic crime plan of three years ago was a landmark piece of work that brought together government, law enforcement and the private sector in close co-operation. I will not repeat all the measures that we have taken under that plan, but we have undertaken around 7,900 investigations, 2,000 prosecutions and 1,400 convictions annually for stand-alone money laundering or cases where money laundering is the principal offence. We have restrained £1.3 billion and recovered £1 billion since 2014 using the Proceeds of Crime Act, civil recovery and agency-specific disgorgement mechanisms.
The Government are bringing forward significant investment to tackle these crimes, including through, in this Bill, legislating for the economic crime anti-money laundering levy. I reiterate to noble Lords the Government’s commitment to reforming Companies House and the register of overseas entities’ beneficial ownership. As we heard from the Prime Minister earlier this month, the Government are committed to bringing forward an economic crime Bill to deliver those reforms.
The noble Baroness, Lady Kramer, and the noble Lord, Lord Tunnicliffe, raised the issue of the bank surcharge and, in particular, pointed out the support that the Government provided to business during the pandemic through bounce-back loans, CBILS and so on. That is exactly why we are asking business to contribute to the costs of the recovery. The combination of the corporation tax increase and the new bank surcharge rate means that banks will have a higher rate of tax under the new regime than currently.
The noble Lord, Lord Tunnicliffe, asked a specific question about the Commons Public Accounts Committee’s claim that HMRC has effectively written off £4 billion of fraud and what the Treasury’s assessment of that is. We do not recognise any claims that we have written off any money. We definitively have not and do not intend to do so. Over the course of this financial year and the next, HMRC expects to recover another £800 million to £1 billion of overclaimed grants on top of the £500 million already recovered to date. Beyond that, we are not giving up on this. We continue to seek to recover everything we can. These overclaimed grants result from error as well as fraud and, where individuals have made genuine mistakes, HMRC will help them to put things right.
The Finance Bill comes before us in a significantly improved economic situation. The Government are rightly focused on economic recovery. In 2020, this country experienced the deepest recession on record, but thanks to the actions this Government have taken, including the vaccination programme, we have recovered fast.
Lord Bilimoria (CB)
I thank the noble Baroness for giving way and appreciate her efforts to answer many of the questions I raised in my speech. I would be grateful if I could have a written response to the ones she was not able to answer. In particular, I specifically asked about the £2 billion that the Government say they spent on testing in January. They are withdrawing lateral flow testing from 1 April, which will be an additional burden on consumers and businesses. I asked for the breakdown of that £2 billion between PCR tests and lateral flow tests. I was attacked in the Chamber earlier for saying that £2 billion is a lot of money, but it could be a small proportion of that. If the noble Baroness could give the figures, it would clarify the situation for the House, the public and business.
Baroness Penn (Con)
I always admire the noble Lord’s ability to cram in the most questions or points in his contributions to these debates. I make an effort to address as many as I can—this one strayed slightly beyond the brief I had on the Bill, but I undertake to take that question back and provide a written answer if I can.
I was nearly the conclusion of my response. We are focused on recovery from the recession that we experienced. I spoke about the vaccination programme and the tribute we should pay to its role in our recovery. However, we still have historically high levels of debt. New fiscal rules will help to ensure that the public finances remain on a sustainable path despite this, a sustainable path that this Bill also helps to chart. It is a Bill that supports our businesses and our economy as we recover from the pandemic. It supports stronger public finances through these exceptional times. It helps to tackle tax avoidance and evasion and contributes to a simpler and more sustainable tax system. For these reasons, I commend it to the House.