All 16 Parliamentary debates in the Lords on 23rd Mar 2023

Grand Committee

Thursday 23rd March 2023

(1 year, 3 months ago)

Grand Committee
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Thursday 23 March 2023
Committee (10th Day)
Relevant document: 23rd Report from the Delegated Powers Committee
13:03
Baroness Garden of Frognal Portrait The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)
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My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.

Amendment 241FC

Moved by
241FC: After Clause 71, insert the following new Clause—
“Climate and nature offsets
In Schedule 2 to FSMA 2000 (regulated activities) after paragraph 9 insert—“Climate and nature offsets(9ZA) Selling, or offering or agreeing to sell, climate and nature offsets.””
Baroness Worthington Portrait Baroness Worthington (CB)
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My Lords, I am grateful to the noble Baroness, Lady Sheehan, for lending her name to this amendment. I am not at all wedded to the exact wording of it. I would welcome discussions with the Government about approaches to this issue; however, I stress that this is a really important issue that needs regulatory approaches.

Currently, my amendment would add these activities to Schedule 2 to the Financial Services and Markets Act 2000:

“Selling, or offering or agreeing to sell, climate and nature offsets”.


This would make them regulated activities and enable the setting of minimum standards by the FCA, the regulator. By “off-sets”, I have in mind the voluntary carbon market and the nascent market in biodiversity, where an entity voluntarily seeks to compensate for the greenhouse gas emissions or loss of biodiversity arising from its activities by reporting an equivalent amount of emissions reduction or removal, or biodiversity gains, outside of its boundary that it has purchased through a credit or a financial mechanism.

There are more formal markets, particularly in carbon, where participants are required to participate. These are compliance markets. It is not my intention to focus on those, although there have been incidents in such markets, where there may well also be a need for more oversight. Despite the mandatory nature of the market, there have been examples of fraud and mis-selling. There is a lack of transparency even in these markets.

I return to the voluntary market. By making the trade in climate and nature off-sets a regulated activity, the FCA could make rules setting out principles, standards or regulated guidance that off-sets must then meet. I am not seeking to tie the FCA’s hands by setting out what rules it should make; it is a complex issue. It will need to invest in relevant expertise and be led by evidence, but it does need to invest in that expertise.

This amendment is supported by financial market participants. I put on record my thanks to Scottish Widows; Railpen—the Railways Pension Scheme; the Brunel Pension Partnership, which manages the assets for local government pension schemes in the south-west; and employees of the Environment Agency and the Church of England Pensions Board. These organisations collectively are responsible for more than £250 billion in assets; they have written to me in support of this amendment, and I am sure would welcome a meeting with government to discuss it further. They tell me that it is widely known that this market is not functioning well at the moment, and that the voluntary certifications and quality codes are not delivering the transparency, reliability and quality of off-sets for financing to flow freely into projects that could make a real difference in the fight against climate change and nature loss.

Given that, to achieve net zero, the majority of firms will have to rely on some form of tradable off-set or tradable credits for their residual emissions, which could be impossible to eliminate through actual investments, regulation of this market would serve the purpose of building trust for firms to allocate finance in this area—and I agree with them. Currently the market is relatively small, but it is growing and has increased fivefold since 2018, and many have called for it to scale further, including the former Bank of England Governor, Mark Carney. The Climate Change Committee estimates it to be a $2 billion a year market, accounting for 300 megatonnes of carbon dioxide per year—around 1% of global emissions and not far from the total contribution of the UK to the climate change problem, so it is not insignificant.

However, this market in climate mitigation or activities will not scale or endure without better regulated standards that can underpin confidence in the market. As the need to demonstrate a response to the growing climate risks increases, more and more companies and individuals will be tempted to buy their way to a cleaner carbon footprint or a cleaner reputation. Already, one-third of FTSE 350 companies include off-sets in their emissions reduction plans. Off-sets account for between 35% and 80% of their pledged emissions reductions—so it is a significant piece of financial architecture that people are relying on to get to net zero.

Companies will want to be seen to do the right thing, but this will be challenging. It is extremely difficult to assess whether emissions reductions being purchased are both real and durable. This offers an opportunity to unscrupulous providers to market poor-quality products to unsuspecting companies and investors. As I said, even the regulated carbon markets have seen examples of fraud and poor-quality off-sets entering markets. In the EU Emissions Trading Scheme, the Europe-wide carbon market, the market had to be closed to overseas investments in credits, partly in response to an oversupplied market but also partly due to persistent questions about the quality of the credits entering the market.

The potential for mis-selling in this market is high. Some noble Lords may remember that, in 2011, a listed company on the Canadian stock exchange, the Sino-Forest Corporation, went bankrupt after an investigation revealed that the company’s claims were vastly out of line with reality on the ground. The case related to a standard forestry offering; it is far easier to verify whether the land has been purchased and the trees are there than it is to verify whether those forests are actually absorbing or storing carbon—an invisible commodity that we are essentially turning into a tradeable commodity. Similarly, how much biodiversity the forest may hold is a far harder thing to verify.

The difficulties of verifying this market make it very attractive for unscrupulous actors and, as excitement and financial flows increase in this market, that attractiveness to potentially rogue actors will only grow. One UK-based carbon market ratings agency has already reported that it believes that only 30% of offsets on the market are high quality, and 25%—one-quarter—could effectively be classed as having junk status. The Swiss-registered offset provider, South Pole, one of the largest in the market, had the integrity of its offering called into question by an article in Tages-Anzeiger in February this year. This sent shock waves through the industry, and a lot of attention has now been placed on the question of integrity.

Most of the focus of the carbon market quality checks is on credits generated in the biosphere—so-called nature-based solutions. Trees are the most common product to which you will find financial instruments attached, but carbon is stored in other ways, too, and it is even more difficult to verify some of those other sources of carbon store because they are far harder to count and track. Below-ground carbon in soils is one example: it is notoriously difficult to get a handle on exactly what is happening in the carbon cycle in soils. It is even harder with below-water carbon—blue carbon—stored in sea grasses and other marine ecosystems, where you cannot even see the commodity being sold. These difficulties are pronounced.

The Minister may say, “Don’t worry; normal regulations against fraud and corruption will be sufficient to protect against outright fraud and corruption”, but these markets are uniquely complex. Often the problem is not that actors are wilfully seeking to do wrong but rather that there is an unhelpful lack of independent standards in the market to help determine what constitutes an additional or biodiversity benefit. In that uncertainty, it is not just investors who will potentially find that their investments are not delivering what they expected; the whole planet is being short-changed. This is because the sale of an offset permits the continued emission of greenhouse gases, minus the guilt; and, if the offset purchase is not genuine, atmospheric concentrations, already at dangerously high levels, will continue to rise. As we saw in the latest assessment report from the IPCC, this is starting to imperil us all.

Independent observers of the integrity of this market have highlighted concerns. A report published on this topic by IOSCO, the International Organization of Securities Commissions—the global standard-setter for investment securities—explains in detail the issues with the quality of carbon credits and the lack of a uniform definition of what constitutes high quality. I will not run through them; there are at least 10 reasons why this market is complicated.

At the top line, there are questions about additionality—whether this action is genuinely additional to what would have happened anyway—and about permanence and the risk of reversal. There are risks of leakage: you may be protecting something in one area, but that activity is just displaced to somewhere else and the emissions still occur. There are concerns about double counting, registry and transparency. There are potential conflicts in the market, and there is a lack of legal clarity, no standardisation, poor data and, overwhelmingly, a very large risk of greenwashing and, from that, legal risks and potential litigation cases. We are not in a good situation today. The market is small now, but it will grow, and it is really timely to be considering whether the Government should take powers now to regulate it.

This is a volatile market, as you can imagine, such is the uncertainty, with the mis-selling of fraud and the mistaken assumptions. There have been plenty of studies into why that might be the case. I will touch on an example of why regulations are needed: pension funds. In the UK, they are now investing in forest carbon offsets for the long term. This relates to both defined benefit offerings, where there are some protections for savers, but defined contribution schemes are increasingly entering this market too.

The long-term future of the biosphere in a changed climate is deeply uncertain and pension fund advisers and managers need better guidance. They simply should not have to determine whether something they are being sold is correct with no guidance from government and no regulation. There could be risks from litigation, as I mentioned: should vendors of these products be hit with legal claims or go bankrupt, savers will be hit by that outcome.

13:15
In the absence of regulatory oversight and clear standards, voluntary initiatives to try to address these issues have been proposed but these are relatively underresourced, their recommendations are voluntary and their funding is uncertain, coming primarily from the philanthropic sector. These are absolutely no substitute for the Government taking action to create a regulatory framework that can build confidence in these markets. The chair of one such initiative, the Integrity Council for the Voluntary Carbon Market, Annette Nazareth, has gone on record calling for government regulation, saying that while the best place for these rules is Governments, until Governments step up,
“we’re doing our level best to mimic what a government authority could do”.
The law firm Simmons & Simmons, Natural Carbon Solutions and many other commentators have also said that regulators will want to rapidly create their own regulations to govern this market and the participants in it.
My amendment is intended to achieve that. I fully recognise that much of the Bill is deregulatory and seeks to bring financial activity to the UK with an attractive regulatory regime. I am not proposing red tape for the sake of it—I understand the Government’s desires—but I hope I have shown that the lack of any regulatory regime for offsets undermines investor confidence, creates environmental risk and suppresses a market that has the potential to deliver both economic and environmental benefit.
The fact that we are able and willing to take new powers is evidenced in the Bill: Clause 65 gives His Majesty’s Treasury the power to regulate cryptocurrencies, as we have discussed, and recently HMT gave the FCA powers to regulate funeral plans, so we are not seeing a completely deregulatory agenda. Here, we are talking about a possible funeral plan for the whole planet: it is definitely appropriate to enable regulation in this market. A world-first, smart regulatory regime for voluntary offsets has the potential to bring investors to the UK and build confidence in a product that has all too often been perceived as the wild west of greenwashing. I am open to alternative drafting suggestions, but I ask the Minister to take note of the ask from insurers, pension funds, voluntary market participants and other financial operators and commit to taking a power to create a form of regulated market as a mark of robust quality. This could be a game-changer and the UK could lead in this area. I beg to move.
Baroness Sheehan Portrait Baroness Sheehan (LD)
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My Lords, I thank the noble Baroness, Lady Worthington, for tabling this amendment. I totally agree with its necessity, which is why I have added my name to it. If we are to meet our statutory net-zero targets, carbon offsetting will become ever more important as we decarbonise and reach those emissions that are so hard to abate and the residual emissions that the noble Baroness spoke about.

Let me say at the outset, however, that carbon offsetting is not a solution to climate change. There is only one way to avoid catastrophic climate change, and that is to stop adding to the blanket of greenhouse gases in the upper atmosphere that is already at a higher concentration than at any time since records began. Just for the record, the May peak of carbon dioxide in 2022 was a record 421 parts per million. The highest recorded over the previous 800,000 years for which we have records was just under 300 parts per million. This increase has happened in a blink of a geological eye, over just the last 150 years since the start of the Industrial Revolution. This Committee is not the time or place to go into the impact on our planet, save to say that catastrophic events are happening at a faster pace than even the most pessimistic predictions by scientists.

As we know, the biggest contributor to greenhouse gases is the burning of fossil fuels. The second biggest is deforestation. Putting an end to both these practices is well under way but is not going fast enough. I hope that more will be done through this Bill before it becomes an Act, because it deals with the money that fuels the release of those greenhouse gas emissions.

Until decarbonisation measures bite—and resistance to them is strong; we have seen that in some of the contributions to this Committee—carbon off-sets are one tool we have to mitigate the harm of climate chaos and the destruction of nature. The market demand for off-sets is exponential and the scope for fraud in the voluntary carbon market is massive. Greenwashing is rife. I will give one example: the recent chastisement of HSBC by the Advertising Standards Authority for misleading people with some of its claims to be carbon neutral. However, we need a functioning market to off-set hard-to-eliminate sources of greenhouse gases, which will leave residual emissions. It is the role of government to enable regulators to act, which is why this amendment is necessary and why I added my name to it.

Industry is also asking government to play its part. I will quote a substantial part of the recent report by Scottish Widows, Nature and Biodiversity: the Pensions Imperative, because it says it far better than I can:

“With companies potentially needing to put billions of pounds into offsets to meet their net zero commitments, the biggest barrier to date is the opacity of the voluntary carbon market. This breeds mistrust, particularly as a number of bad actors have been exposed in the past. What could really shift the dial here is the establishment of a UK regulator for carbon offsets. This could set quality standards that corporations looking to do the right thing could trust, enabling them to allocate money with confidence in these offsets having additionality and really delivering on those climate and nature goals”.


Finally, when I was a member of the Lords Select Committee on Science and Technology, we produced a report entitled Nature-Based Solutions. The committee heard evidence from a cross-section of practitioners in the carbon credits sector, from both the science and financial communities. As the noble Baroness, Lady Worthington, said, we heard from the science community how difficult it is to quantify and monetise nature-based solutions. From the financial community, we heard that it needs a regulatory framework so that everyone can work on a level playing field and so that the market is less like the wild west—which it currently is.

I will conclude by quoting a conclusion of that report:

“We recommend that the Government provides clear regulatory standards for emerging carbon markets to ensure that any off-sets that are claimed are genuine”.


However,

“these markets will only deliver the desired results if they are properly regulated and verified to prevent inaccurate claims of carbon off-setting. Carbon and nature credits must be for benefits that are additional, measurable, and permanent”.

For carbon credits to have the impact we all want, they must have good governance backed by government.

Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (GP)
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My Lords, it is a pleasure to follow the noble Baronesses, Lady Worthington and Lady Sheehan, and to offer Green support for this amendment, which is obviously urgently needed. I essentially agree with everything that the two noble Baronesses said, particularly the point made by the noble Baroness, Lady Sheehan, that off-sets are essentially a con that should not be used to trade off against continuing fossil fuel emissions. None the less, we are where we are and they are certainly going to happen.

The complexity is really well illustrated by a recent report by HSBC, which found that $246 billion-worth of hydroelectricity depends on water provided by threatened tropical cloud forests. We think about where the funding, support and credits should go, but to maintain that electricity supply, surely the people producing the electricity should fund that. This is also a carbon store. It is a real demonstration of the way that, as the Treasury’s own Dasgupta report illustrated, the economy is a complete subset of and entirely dependent on the environment, which we are fast trashing.

The problems with the current “wild west” system have been clearly demonstrated already. In a paper this week in the journal, Frontiers in Forests and Global Change, the Berkeley Carbon Trading Project presented a study of nearly 300 carbon off-set projects, representing nearly 11% of global carbon off-set projects to date. It found that the projects were systematically overcrediting their results and delivering extremely dubious carbon off-sets. Apparently respected registries did not follow standards to make sure that projects were having a real and tangible impact on carbon levels. A particular area of difficulty was whether the projects would have happened anyway, whether or not the extra carbon credit was claimed.

I will make one final point. The noble Baroness, Lady Worthington, sought ways in which the Government might see this as an advantage. In this wild west, there is a need for extensive due diligence for any financial body to be able to claim that it has genuine, honest carbon credits that will deliver over the long term—because the climate emergency is of course a long-term project and not just for one year or five years. There is a significant cost for any company going into this and wishing to protect its reputation. If it is a regulated sector, that will make it a great deal easier for people to do due diligence and to rely on it, and not to have to do the work themselves at considerable cost, facing considerable complexity and carrying considerable risk.

The need for this amendment is obvious. The problems with off-setting both carbon and biodiversity are very clear. We should not be where we are, but we are where we are, and the amendment offers one way forward that would be good for the financial sector as well as for the planet.

Lord Tunnicliffe Portrait Lord Tunnicliffe (Lab)
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We do not have a fixed view on this proposal and therefore will listen to the response of the Government. At an individual level, when invited to pay my off-sets to British Airways, I am deeply suspicious of them making any useful contribution. My general view on this Bill is that good regulation is important, because the problem with the financial services industry is that any areas of weakness can escalate into a significant wider impact. I take the point that this area of activity will almost certainly expand and there is a good prima facie case that it should be regulated.

Baroness Penn Portrait The Parliamentary Secretary, HM Treasury (Baroness Penn) (Con)
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My Lords, the Government recognise the potential for off-setting to enable businesses to address emissions that cannot be reduced through decarbonisation strategies. As the Climate Change Committee has set out, they can play an important role in the transition to net zero.

Done well, and centred around high integrity, climate and nature off-sets through voluntary carbon credits can increase climate ambition, help mobilise finance to developing countries and provide a credible tool for the 1.5 degree transition. Done badly, and without integrity at their core, the potential for “greenwashing” clearly exists. Therefore, it is important that the voluntary carbon credits used by companies reflect genuinely additional removal of or reduction in greenhouse gas emissions.

The Government recognise that it is important to ensure the integrity of these markets if they are to play a role in mobilising investment. Concerns around the integrity of carbon and nature markets, from the supply of voluntary credits, their trading and green claims made by buyers through offsetting, must be addressed.

13:30
The standards for what make a high-quality credit and what would ensure integrity in this market are still under development. This is a global challenge that needs a global solution that goes beyond the UK or the financial sector alone. That is why the Government are so supportive of work to improve the integrity of voluntary carbon markets internationally. We have been a major supporter, including financially, of both the Integrity Council for the Voluntary Carbon Market and the Voluntary Carbon Markets Integrity Initiative. These are multi-stakeholder international initiatives launched under the UK’s COP 26 presidency. Both will launch their final outputs later this year, which will set out proposals for good practice in both the generation of high-quality credits and the use of such credits by organisations purchasing them in meeting their environmental targets.
The appropriate time to consider bringing this sector into regulation would be once these standards have been published and the Government have had the chance to consider and endorse them, in whole or in part. Any potential regulation can build on them. When considering any future regulations, it is also important to note that the selling or offering of climate and nature credits goes far beyond financial firms and intermediaries that could be appropriately regulated through financial services regulation. If the Government decide that this sector needs to be further regulated, we already have powers that we can use to bring the relevant financial actors under regulation through either the regulated activities order or the designated activities regime. Any new regulation must consider the end-users in the real economy who buy these off-sets and the producers of the off-sets themselves, many of which are outside the UK. It not simply a question of financial regulation.
The Government will set out our position shortly in the updated green finance strategy on both nature markets and voluntary carbon markets, including how we will build on the work of these international initiatives and decide where further action on market integrity is needed. We will also respond to the recommendations in this area from the House of Lords Science and Technology Committee, as noted by the noble Baroness, Lady Sheehan, the net zero review and the Climate Change Committee. This amendment pre-empts that wider work. Although I note that the Government have powers to regulate in this area should we wish to, I hope that the noble Baroness withdraws her amendment for now.
Baroness Worthington Portrait Baroness Worthington (CB)
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I thank the Minister for her response and I am encouraged and reassured to know that those powers already exist. I will go away and consider that.

I am going to come back on a couple of points. It is true that some initiatives have been launched—I was involved in one—but they have no statutory basis at all. It is a group of individuals—business leaders and some academics—fighting it out with no governance or democratic representation. It will come out with standards, but the quality control over that process is not being led by sovereign nations. It was launched at COP 26, but there was absolutely no involvement of negotiators, member states or anything with public sector status. Although we look forward to their outcomes, something in that process may lead to less than favourable outcomes.

I ask the Minister: if we are to proceed internationally, which part of the architecture of the UN or any multilateral fora does she see acting as the holder of this important set of regulations? It cannot be left to industry to mark its own homework, nor to the voluntary sector, with its general lack of resources or certainty of funding. It needs to be led truly internationally, through member states and a multilateral process.

Perhaps the Minister would agree to write to me, because I am interested to understand how this can be done internationally. Individual member states have to lead; one or two progressive countries have to start the process, as we have seen with the green taxonomy: Europe started and now the UK has done ours. You do not always have to wait for a UN or international process, but can move forward and take leadership, especially if you are trying to make the City of London the centre of green finance.

Although I am encouraged, there are still some large questions to be answered about how we ensure quality, get the right standards, and involve democratic processes and member states—but I am pleased to withdraw my amendment.

Amendment 241FC withdrawn.
Amendment 241FD not moved.
Clauses 72 to 75 agreed.
Clause 76: Regulations
Amendment 241G
Moved by
241G: Clause 76, page 89, line 32, at end insert—
“(3A) For each statutory instrument laid before Parliament in draft under this Act, if each House of Parliament passes a resolution that the regulations have effect with a specified amendment, the regulations have effect as amended.”Member’s explanatory statement
This would allow affirmative SIs generated by this Act to be amended by agreement of both Houses.
Lord Sharkey Portrait Lord Sharkey (LD)
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My Lords, in moving Amendment 241G, I will also speak to Amendments 243A and 243B. The noble Baroness, Lady Noakes, has added her name to the last two; I am grateful for her support. I will speak first to Amendments 243A and 243B, then to Amendment 241G.

At Second Reading, I estimated—as did the noble Lord, Lord Hodgson of Astley Abbotts—that this Bill would generate at least 250 SIs. Many, if not all, of them would bring or have the potential to bring significant policy changes to the regulatory structures of our financial services industries. They would be able to do this without any significant scrutiny by Parliament. The parent Bill—this Bill—rarely sets out explicit policy changes; rather, it gives the Treasury powers to make policy changes when it has decided what those policies might be. Of course, this bypasses parliamentary scrutiny; it also, yet again, ignores the proper purpose and province of delegated legislation.

Amendments 243A and 243B propose a partial remedy. They would allow either House to insist on an enhanced form of scrutiny for SIs that it deems likely to benefit from more detailed examination and debate, as well as from recommendations to Ministers for revision. The usual SI procedures do not allow this. I think we would all accept—perhaps with the dutiful exception of the Minister—that neither the negative nor the affirmative procedure allows for proper and effective scrutiny. This is obviously true for the negative procedure but is also obviously true for the affirmative procedure. We cannot amend them and we do not vote them down.

The super-affirmative SI procedure, as set out in Amendment 243B, would allow a measure of real, detailed scrutiny; a means of hearing evidence; and a means of making recommendations to Ministers for revision. I should emphasise that the super-affirmative procedure does not produce a power to amend SIs; that remains exclusively with the Government. Paragraph 31.14 in part 4 of Erskine May characterises the procedure as follows:

“The super-affirmative procedure provides both Houses with opportunities to comment on proposals for secondary legislation and to recommend amendments before orders for affirmative approval are brought forward in their final form … the power to amend the proposed instrument remains with the Minister: the two Houses and their committees can only recommend changes, not make them.”


During the recent passage of the Medicines and Medical Devices Bill, the noble Baroness, Lady Penn, helpfully summarised the super-affirmative procedure, saying that

“that procedure would require an initial draft of the regulations to be laid before Parliament alongside an explanatory statement and that a committee must be convened to report on those draft regulations within 30 days of publication. Only after a minimum of 30 days following the publication of the initial draft regulations may the Secretary of State lay regulations, accompanied by a further published statement on any changes to the regulations. They must then be debated as normal in both Houses and approved by resolution.”—[Official Report, 19/10/20; col. GC 376.]

That is quite a good précis but it omits reference to the requirement to take account of any representations or recommendations made by a committee and of any resolution of either House. It also omits the requirement to say what these representations, resolutions or recommendations were and explain any changes made in any revised draft of the regulations.

It was during the passage of that Bill—the Medicines and Medical Devices Bill—that this House last voted to insert a super-affirmative procedure. Prior to that, according to the Library, the last recorded insertion was by the Government themselves in October 2017 in what became the Financial Guidance and Claims Act.

When not doing it themselves, the Government traditionally put forward any or all of three routine objections to the use of the super-affirmative procedure. The first is that it is unnecessary because the affirmative procedure provides sufficient parliamentary scrutiny. That is obviously not the case. The second is that the super-affirmative procedure is cumbersome. I take this to mean only that it is more elaborate than the affirmative procedure but that is precisely the point of it: it is necessarily more elaborate because it provides for actual scrutiny where the affirmative procedure does not. The third is that it all takes too long. This has force only if there is some imminent and necessary deadline but there is none in this case.

In a debate on the then UK Infrastructure Bank Bill, speaking about the super-affirmative procedure, the noble Baroness, Lady Penn, said:

“This procedure has rarely been considered the appropriate one to prescribe in primary legislation; where it has, the relevant instances have tended to be of a particularly substantive and wide-ranging sort.”—[Official Report, 4/7/22; col. 905.]


I am not sure that I entirely understand the Minister’s first point about prescribing in primary legislation, because that is the only place it can be prescribed, but I understand her second point. However, “particularly substantive and wide-ranging” exactly characterises the changes that SIs could produce in our financial services regime. That is why we propose the super-affirmative procedure.

Amendment 243B sets out the procedure for a super-affirmative SI. Amendment 243A simply says that either House may by resolution require any provision that may be made by the affirmative procedure to be made instead by the super-affirmative procedure. It is left to Parliament to decide which SIs merit the additional scrutiny.

On my Amendment 241G, 18 months ago, the SLSC and the DPRRC published simultaneous and powerful reports setting out in detail concerns that the balance of power has moved significantly from Parliament to the Executive. Part of the reason for this shift has been the abuse of delegated legislation. Cabinet Office guidance explicitly states that delegated legislation is not to be used for policy-making but is to be reserved for detailed proposals about how policy agreed in Parliament can in fact be made to work. This is not what happens. Skeleton Bills, their dependent SIs and Henry VIII provisions all essentially bypass parliamentary scrutiny.

The best current example of this kind of abuse of secondary legislation is probably the REUL Bill, which has been described as “hyper-skeletal”. It allows Ministers, via SIs and other mechanisms, to make, change or revoke policy without any meaningful parliamentary scrutiny. The Bill is a direct assault on Parliament’s interests and its constitutional role.

How could Parliament regain at least some element of effective scrutiny? Absolute rejection of SIs would probably not be desirable or workable but the ability to amend them in critical circumstances, where at issue was the whole notion of parliamentary sovereignty and effective scrutiny, may well be desirable. The SLSC report of February this year, Losing Control?: The Implications for Parliament of the Retained EU Law (Revocation and Reform) Bill, has this to say in its executive summary:

“We call for the Bill to contain an enhanced scrutiny mechanism that enables Parliament to decide that an instrument makes changes of such policy significance that the usual ‘take it or leave it’ procedures—even if affirmative—relating to statutory instruments should not apply but that a further option should be available, namely a procedure by which the Houses can either amend, or recommend amendments to, the instrument.”


What applies in the case of the REUL Bill applies to this Bill, too.

Amendments 243A and 243B, which I have discussed, would provide the powers to recommend amendments to the SIs generated by this Bill. The question of the ability to amend SIs is a bit more complicated. I asked the Library why it is that SIs are not currently amendable. There are two reasons. The first is that almost all Acts that provide for secondary legislation-making powers do not contain provisions that would enable associated instruments to be amended. In other words, to amend SIs, you would have to have the power to amend written into the parent Act. The House of Commons Information Office publication Statutory Instruments, revised in May 2008, explains this on page 5 in some detail.

The second reason is the absence of relevant parliamentary procedures that could enable amendment to take place. It is clear that it would be a nonsense to replicate all or any of the procedures used in amending primary legislation to amend secondary legislation. However, there is already a simple method for amending SIs that avoids this problem. It is set out in Section 27(3) of the Civil Contingencies Act 2004, which states:

“If each House of Parliament passes a resolution that emergency regulations shall have effect with a specified amendment, the regulations shall have effect as amended”.


Amendment 241G takes its text from the language of that Act. It simply says:

“For each statutory instrument laid before Parliament in draft under this Act, if each House … passes a resolution that the regulations have effect with a specified amendment, the regulations have effect as amended.”


The noble Lords, Lord Bridges and Lord Forsyth, used almost identical language in their Amendment 241F, which we debated on, I think, day 9.

13:45
Amendment 241G would not require elaborate or new procedural rules in order to amend SIs. It would simply require both Houses to agree an amendment by resolution. I do not imagine that there will be many occasions when this provision will be necessary or available in practice; that is a good thing. It would prevent abuse and would be reserved for only those cases that Parliament saw as vital and the most important to intervene on. The amendment seems to me quite likely to deter the most egregious abuses of the SI system and to restore a measure of real scrutiny to Parliament, as the SLSC has recommended.
I beg to move.
Baroness Noakes Portrait Baroness Noakes (Con)
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My Lords, I have put my name to two of the amendments tabled by the noble Lord, Lord Sharkey, in this group: Amendments 243A and 243B, which would require the super-affirmative procedure to be used. I have not added my name to Amendment 241G. I am in complete sympathy with the call for Parliament to be able to amend statutory instruments; I pay tribute to the work done by the committees chaired by my noble friends Lord Blencathra and Lord Hodgson of Astley Abbotts. They have highlighted the dangerous shift to skeleton legislation with the resultant reliance on secondary legislation, which has inflicted great harm on Parliament’s ability to scrutinise and hold the Executive to account.

On the other hand, I recognise that this is a large issue that needs to be taken forward at a high level within both Houses of Parliament, and also of course with the Government. I do not believe that this Bill is the right place to start that process, although I do believe that we need to find a way of progressing the dialogue to find a way forward. I am of course concerned about the parliamentary processes around the many statutory instruments that will come under the powers in this Bill. The super-affirmative procedure is certainly better than the ordinary affirmative procedure, which is why it has my support.

In adding my name to these amendments, I am in fact hitching a ride on them in order to raise some wider issues about the statutory instruments that will come forward once this Bill is made law. This is an issue that should probably have been debated earlier in Committee but I have only recently been made aware of it. I have given my noble friend the Minister only a very small amount of notice of the nature of my concerns; I accept that she may not be able fully to answer at the Dispatch Box today.

The amendments focus on parliamentary oversight of legislation being brought in by statutory instrument. What I think we have not focused on is whether there will be adequate consultation by the Treasury before the statutory instruments are laid in Parliament. Many of the statutory instruments will of course be uncontroversial in the sense that they will merely recreate the EU law in a UK-based framework for the rules that will then be made by regulators.

However, it is entirely possible, as the noble Lord, Lord Sharkey, said, that the statutory instruments will contain significant changes from EU law. Clause 4, which allows the restatement of EU law, can be used to incorporate changes to the law within the huge range of possibilities that are allowed for by Clause 2(3). There is no requirement in Clause 4 for the Treasury to consult anyone at all before laying these statutory instruments. This is in stark contrast to the regulators, who have very clear statutory obligations to consult in respect of any rules they will be laying under the terms of the statutory instruments that give them the power.

In addition to Clause 4—this is the actual example that has come to my attention—the Treasury might choose to use the new designated activities power in Clause 8 to set up the replacement regulatory regime under UK law. As with Clause 4, the use of the Clause 8 power does not require the Treasury to consult anyone at all. The example that has been brought to my attention concerns the prospectus regime. I am indebted to the briefing provided to me by a partner in one of the Magic Circle law firms.

As part of the Edinburgh package, the Government published a policy note and a draft statutory instrument on how they intended to replace the EU prospectus rules. Put simply, the designated activities regime will be used to create the new prospectus regime when the existing EU law is repealed. The publication of the draft statutory instrument and the policy note was well received because it allowed those who specialise in this territory to get to grips with the proposed legal framework. Although the policy note was clear that the drafting was not final, it was not clear whether there would be a proper consultation on the new regime.

By way of background, there was a policy intent to deal with the issue of mini-bonds in the light of the London Capital & Finance scandal; that policy is, of course, uncontroversial. The Government were clear in their policy note that they intended to affect retail investors only and did not intend to cover things that were regulated elsewhere. It appears, however, that the chosen vehicle of relevant securities, as defined in the draft statutory instrument, also captures things with no likely impact on the retail market, including—somewhat incredibly—over-the-counter derivates and some loans, securities and financial transactions. I believe that this analysis has been made available to the Treasury via various players in the wholesale financial markets.

Although I understand that communications are constructive, there is a fundamental problem emerging: the so-called illustrative statutory instrument now seems to have morphed into a pre-final document on which no formal consultation will be held. This is important, given the significant widening of the reach of the proposals, well beyond the existing prospectus regime. I would be grateful if my noble friend the Minister could set out how the Government see the next steps for the prospectus statutory instrument and whether formal consultation will occur. I hope that she will be able to respond not only on the particular issue of the prospectus statutory instrument but, more broadly, on the extent to which the Treasury will consult across the range of replacement EU law when it brings that law forward.

Viscount Trenchard Portrait Viscount Trenchard (Con)
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My Lords, I declare my interest as stated in the register.

I congratulate the noble Lord, Lord Sharkey, on finding a way to amend statutory instruments. If it really is possible to change what noble Lords have always believed about SIs, that is welcome news indeed. As the noble Lord says, this procedure would be used only on the rare occasions when your Lordships’ House or another place considered it vital.

I support the noble Lord’s Amendments 243A and 243B, to which my noble friend Lady Noakes has added her name. These would create a super-affirmative category of approval process, introducing a higher bar but only after a resolution is made by either House of Parliament. I also agree with the points made by my noble friend on the prospectus directive and other matters. I support all these amendments.

Lord Thomas of Cwmgiedd Portrait Lord Thomas of Cwmgiedd (CB)
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My Lords, I too support these amendments. I cannot usefully add anything in relation to the super-affirmative procedure. It seems that this an admirable proposal—but I want to say a few words about the proposed new subsection in Amendment 241G, introduced by the noble Lord, Lord Sharkey.

To begin with, it seems that, if Parliament authorises the alteration, as Parliament can do anything—as one is taught from one’s earliest days—it must be able to do something as minor, in theory, as this. Furthermore, as she always does, the noble Baroness, Lady Noakes, made a very good point that this is a very important step, but why is this not the Bill to start? There are three reasons. First, the financial services industry is of vital concern to the UK. Secondly, these instruments are drafted not by parliamentary counsel but by no doubt very competent lawyers in the Treasury—but there is a difference. Thirdly, it seems that, if the draftsman knows that bits can be corrected, that is a very good supervision of the drafting process.

However, although this is in theory a minor step, it is surprising to say that Parliament can amend statutory instruments and there are obviously consequences for our procedures. It might be appropriate for this Committee or someone—I am not sure how it is done—to say, “The appropriate committees and the clerkly authorities in this House should report on the practicality of doing this”. If it is a procedure, how likely is it to be used? More importantly, we can always find an excuse to say, “Let’s push it down the road”. This is the admirable place to start an important reform for our most important industry.

Lord Tunnicliffe Portrait Lord Tunnicliffe (Lab)
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My Lords, I do not formally have a view on these amendments. It seems that they would have wide-ranging implications, and I shall consult with colleagues throughout Parliament about how we should come back to this issue. If a piece of legislation is proposed and supported by the noble Lord, Lord Sharkey, the noble Baroness, Lady Noakes, and the noble Viscount, Lord Trenchard, you have to think that it is pretty wide-ranging—in fact, close to impossible. Whether this is the right place to address this issue is a much bigger question than whether it is a good idea. It seems a pretty good idea, but I shall listen to the Minister’s response to the key point about the right place and the right mechanism.

Baroness Penn Portrait Baroness Penn (Con)
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My Lords, these amendments would introduce new parliamentary procedures when exercising the powers in the Bill, and the Government do not believe that they are necessary.

The Government have worked hard to ensure that every power in the Bill is appropriately scoped and justified. This was recognised by the DPRRC, which praised the Treasury for

“a thorough and helpful delegated powers memorandum.”

The DPRRC has not recommended any changes to the procedures governing the powers in the Bill. That may, in part, answer the question from the noble Lord, Lord Tunnicliffe, about the right place. I have worked on enough Bills to know that that is not a frequent conclusion from the Delegated Powers Committee.

This includes the powers in relation to retained EU law. While they are necessarily broad, they are restricted in a number of important ways. First, they are governed by a set of principles that are based on the regulators’ statutory objectives. Secondly, they are limited in what they can be used for. For example, they cannot be used to create new offences. Thirdly, the powers over retained EU law are strictly limited to a subset of legislation. They can be used only to modify or restate retained EU law in financial services legislation, as set out in Schedule 1. Finally, only a small amount of primary legislation is included in the scope of this power, and it is all listed in Schedule 1, Part 4.

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Throughout the Bill, the Government have followed relevant precedents in FSMA. For example, as I explained in a previous Committee debate, the power to designate activities to sit within the designated activities regime in Clause 8 is closely modelled on the existing power in FSMA for the Treasury to specify regulated activities through the regulated activities order, bringing financial services activities into the scope of regulation.
Parliament will play a key role in scrutinising secondary legislation made under this Bill under the normal procedures. Where the Treasury replaces retained EU law through powers in the Bill, this will almost always be subject to the affirmative procedure, with some limited exceptions specified in the Bill.
The Government have set out how they will deliver this work in practice. As part of the Edinburgh reforms, they published their approach in a document titled Building a Smarter Financial Services Framework for the UK. This describes the Government’s approach, including how they expect to exercise some of the powers in the Bill. It also sets out the key areas of retained EU law that are priorities for reform. Alongside this publication, the Government also published three illustrative statutory instruments using the powers in this Bill to facilitate scrutiny of the Bill.
My noble friend Lady Noakes asked about consultation. The Government expect that there will be a combination of formal consultation, including on draft statutory instruments, and informal engagement in cases where there is a material impact or policy change, such as where activities that are currently taking place in the UK would no longer be subject to a broadly equivalent level of regulation. The Government’s approach to future statutory instruments will be informed by these consultations and by the work of parliamentary committees that relate to these areas of regulation.
Baroness Kramer Portrait Baroness Kramer (LD)
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Could I ask a clarification of the Minister—I know that I have not participated? Has she just confirmed that in the Government’s view statutory instruments will indeed be making policy change? That would be important for us to understand. I believe that is what she has just said, but I thought I should confirm it.

Baroness Penn Portrait Baroness Penn (Con)
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I can only repeat to the noble Baroness my words, which were that consultation and informal engagement, including on draft statutory instruments, will take place where there is a material impact or policy change.

Lord Deben Portrait Lord Deben (Con)
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If my noble friend is saying what the noble Baroness asked, she is making a very serious change. To object to the changes being recommended on the basis that this is the wrong place seems to me to be quite difficult to uphold.

Baroness Penn Portrait Baroness Penn (Con)
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The Government will make those changes only within the agreed scope set out in the Bill. That is perhaps why the DPRRC was content with the approach that they were taking.

Baroness Noakes Portrait Baroness Noakes (Con)
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Does my noble friend accept that the specification in Clause 3 allows for very significant changes to be made? There are many heads under which the Government could fit a change in policy, and that policy change could be significant in the context of the restatement of EU law.

Baroness Penn Portrait Baroness Penn (Con)
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The intention is to allow for the restatement within EU law or to adapt it to a situation or circumstances within the UK. As I have said, in undertaking that work the Government will seek to undertake a combination of formal consultation and informal engagement appropriate to the changes being made. As set out in the Government’s policy statement on the repeal of retained EU law in financial services, the Government aim to balance the need to deliver much-needed reforms with the need to consult industry and stakeholders. They will take the decision on the approach to this on a case-by-case basis.

I wanted to address my noble friend’s specific question on the prospectus regime. The Government intend—

Lord Tunnicliffe Portrait Lord Tunnicliffe (Lab)
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Would the noble Baroness accept that we have heard that speech before? With every complex Bill where we have sought ways to have more control over statutory instruments, we get the same speech—that it has all been worked through, that the constraints are there and so on. Those of us who have to sit through statutory instruments are growing more and more uncomfortable at the increasing number of occasions when we want more involvement and commitment. We want a situation where some variation in the instruments would be possible and this is a way forward. It may not be the right way, but this is an area of powerful area in the House—the relationship between Parliament and the Executive.

Baroness Penn Portrait Baroness Penn (Con)
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The noble Lord, Lord Sharkey, I believe, referred to two pieces of work that looked at the wider concern around procedures when it comes to statutory instruments and the House’s involvement and ability to respond to them. I can talk only in relation to the Bill before us. Our approach is consistent with the policy approach to the regulation of financial services that the Government have set out and consulted on—the FSMA model. That delegates some policy-making both to the Treasury and then, significantly, to the regulators. In the context of the Bill, we are comfortable that our approach is appropriate to the model of regulation that we are advocating in these circumstances. I recognise the wider debate but, in the context of the Bill, we are confident that our approach is right and appropriate.

Coming to my noble friend’s specific question, I think the concern is around the definition of “securities” in the prospectus regime. The Government intend to include certain non-transferrable securities within the scope of the new public offer regime that is being developed as part of the review of the prospectus regime, which delivers on a recommendation of Dame Elizabeth Gloster’s review of the collapse of London Capital & Finance. We intend to capture mini-bonds and other similar non-transferable securities that may cause harm to investors if their offer is not subject to greater regulation.

The Government are keen to ensure that business that does not affect retail investors or is already regulated elsewhere, such as trading in over-the-counter derivatives, is not unintentionally disrupted by the reformed regime. We have been engaging with stakeholders on this point to understand the concerns of industry, and we are considering what changes we can make to the statutory instrument to address them.

The Government do not agree that the use of the super-affirmative procedure in this case is appropriate. Examples where it has been used include legislative reform orders made under the Regulatory Reform Act 2001 and remedial orders made under the Human Rights Act 1998. In both cases, the powers in question can be used very broadly over any primary legislation, due to the nature of the situations that they are intended to address. The delegated powers in this Bill are not comparable with these powers, and I have already explained how the powers over retained EU law are restricted and appropriately scoped. Therefore, in the case of the Financial Services and Markets Bill, we are confident that normal parliamentary procedures remain appropriate. I therefore ask the noble Lord, Lord Sharkey, to withdraw his amendment.

Lord Sharkey Portrait Lord Sharkey (LD)
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My Lords, I am grateful to all noble Lords who have spoken in this short debate. I agree with the noble Baroness, Lady Noakes, about being able to amend SIs. It is a complicated and far-reaching issue and necessarily involves the House of Commons, but we need to find a mechanism for consulting all the interested parties and formulating a plan for reform. The Minister has not mentioned this, but, as I mentioned in my speech, this is to do with the balance of power between the Executive and Parliament. Many of our committees’ reports tell us in dramatic terms that the balance of power has recently shifted very significantly towards the Executive. To change that, we need to do something about our ability to scrutinise work that comes before us. That includes being able to amend it and not relying on a toothless system of negative and affirmative SIs, and it relies on being able to amend constructively regulations that might come before us.

As the SLSC said, it is clear that there is a need for such a mechanism to amend SIs and that finding a path to this fairly quickly is important. I agree with the suggestion by the noble and learned Lord, Lord Thomas, that here and now is a pretty good place to start thinking hard about what we do before we get to Report. It is true that the volume of skeleton Bills continues to increase, as does the abuse of delegated powers in a more general sense, and I cannot see it spontaneously decreasing, unless we do something about it.

As to Amendments 243A and 243B—the super-affirmative amendments—the case for them has been accepted by all speakers, except the Minister. We shall definitely want to revisit the issue on Report. In the meantime, I beg leave to withdraw the amendment.

Amendment 241G withdrawn.
Amendments 242 and 243
Moved by
242: Clause 76, page 89, line 36, after “Act” insert “, or under any other enactment,”
Member’s explanatory statement
This amendment and the amendment at page 89, line 37, would allow any provision that may be made by regulations subject to the negative procedure under this Act, or under any other enactment, to be made in regulations under this Act subject to the affirmative procedure.
243: Clause 76, page 89, line 37, after “regulations” insert “, made under or by virtue of this Act,”
Member’s explanatory statement
See the explanatory statement for the amendment at page 89, line 36.
Amendments 242 and 243 agreed.
Amendment 243A not moved.
Clause 76, as amended, agreed.
Amendment 243B not moved.
Clause 77 agreed.
Clause 78: Commencement
Amendments 244 and 245 not moved.
Amendment 246
Moved by
246: Clause 78, page 90, line 32, at end insert—
“(4A) The Treasury must make regulations under subsection (3) so as to bring section 1 and Schedule 1 into force for the purposes of revoking, within the period of two months beginning with the day on which this Act is passed, the provisions mentioned in that Schedule connected with Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers.”Member’s explanatory statement
This amendment ensures that the retained EU Law which replaced the Alternative Investment Fund Managers Directive and associated legislation will cease to have effect no later than two months after the passage of the Bill.
Viscount Trenchard Portrait Viscount Trenchard (Con)
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I have tabled Amendment 246 to explore the Government’s willingness to move more quickly to take advantage of our new regulatory freedoms. I am grateful to my noble friend Lady Lawlor for her support as she added her name to the amendment. The alternative investment fund managers directive is perhaps the most striking example of an EU regulation that was imposed on this country in the face of strong opposition from the City, the Government and industry at the time. In 2008, Charlie McCreevy, then the EU’s internal market commissioner, assured the industry that the EU would not regulate the alternative investment funds industry, which should be left to member states to regulate or not as they chose. A 2014 report by Dr Scott James for King’s College London, sponsored by the British Private Equity and Venture Capital Association, tells the story of AIFMD very well.

Contrary to Mr McCreevy’s intention, Manuel Barroso, then president of the EU Commission, intervened in 2009 to push for an alternative investment fund managers directive in order to secure support, principally from France and Germany, for his reappointment as Commission president. The initial draft was therefore prepared without the usual preparatory work and led to harmonised regulations covering disparate organisations from the venture capital, private equity, hedge fund and property fund sectors, lumped together by the Commission as alternative investment funds. The Treasury’s initial response was weak, and the FSA was suffering from a lack of confidence and brain drain in anticipation of being broken up.

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The noble Baroness, Lady Bowles of Berkhamsted, who is not in her place today, was at the time the chairman of ECON, the economic affairs committee of the European Parliament. She rightly insisted that the directive had to be amended to correct unintended consequences, such as the risk that institutional investors and pension funds would face excommunication from global capital markets.
Anyway, it is clear that the whole AIFMD regime was politically motivated and perhaps driven by the jealous attitude of France and Germany towards the alternative funds industry, 85% of which was based in the UK. I believe that it is not that different today. In its final, enacted form, the directive imposed stringent requirements on third-country access, disclosure, leverage and depository banks. The costs and burdensome obligations of AIFMD have prevented the establishment of many challenger investment management companies and have cost the financial services industry many thousands of jobs.
Nearly seven years have passed since the referendum, and more than two years since the end of the transition period. The City is a smaller and less competitive place than it would have been without AIFMD.
I expect that the Minister will say that the industry has come around to accepting AIFMD. That may be true, to an extent, but the City’s future depends on it regaining its competitiveness. That means that it must be made possible for newcomers to enter the market. Larger asset management companies have learned how to live with AIFMD, the unnecessary and cumbersome elements of MiFID II, such as the unbundling provisions, and EMIR too, and they have hired large numbers of compliance staff to handle the onerous bureaucracy. It is not surprising that back-office staff are happy to go on doing what they do and being paid for it. The large companies are protected against the incursion of innovative challengers who go elsewhere rather than meeting the very high costs of compliance. Could my noble friend explain why the Treasury is so very slow and cautious in proposing the abolition of regulations that are unnecessary for consumer protection and continue to form part of the very bureaucratic, anti-innovation, codified rulebook that we have inherited from the EU?
As I mentioned, AIFMD is perhaps the best example of an unnecessary EU directive. It was universally resisted by the City, the Bank of England and the regulators. The Government should use the Bill to abolish it without delay. If my noble friend supports this amendment, it will send a hugely important signal that they really mean what they say about making the City the most competitive global market again. But, if the Minister will not support this, it will confirm the view of the sceptics, of whom there are a great multitude, that the Government and the regulators want to keep our cumbersome EU financial services rulebook almost exactly the same as it is today, without any significant changes.
The Government issued a call for input and have committed to explore options for the introduction of a new fund structure, the unauthorised contractual scheme, but I ask the Minister why we do not just go back to where we were before AIFMD and abolish it quickly. Only professional investors may invest in such funds anyway, and the consumer therefore needs no protection. It is not necessary to give the regulators time to consult on replacement rules, because there should not be any, and my amendment would ensure the immediate revocation of the directive and all its associated regulations. The Bill enables the Government and the regulators to do much, but I fear they will change little. It is therefore, in effect, largely an enabling Bill, and there are currently only a few clauses that bring about immediate changes. There is no time to lose; we need to start updating and simplifying the rulebook now. I beg to move.
Baroness Lawlor Portrait Baroness Lawlor (Con)
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My Lords, I support the noble Viscount’s amendment, to which I have added my name. My noble friend referred to the political background of the EU at the time of the AIFMD; he spoke about its impact on the industry, with great knowledge and experience, and about the opposition encountered at the time. I shall say a few words about each, beginning with the policy background, noting other differences between the UK sector and the EU sector, and other concerns raised by the House of Lords European Union Committee at the time.

Although businesses may have learned to live with the directive, as one person in the industry told me, it is not exactly something that helps competition or helps the sector to do as well as it might do—nor has it. At the time, the directive had a policy background. It was portrayed as a response to the financial crisis, but in fact it was already on the cards in the European Parliament in 2008. Discussions took place again in April 2009 at the G7. I see it, in terms of policy, as part of Michel Barnier’s commissionership for Internal Markets and Services between 2010 and 2014, when it was driven through as part of a raft of measures designed to promote EU monetary and banking union, including, for instance, the single supervisory mechanism. Monsieur Barnier’s overall approach was to have a centrally controlled and directed policy for the sector, reflecting the traditional approach of the French state to the economy and brought into the EU at its inception.

So, AIFMD should be considered in that context, rather than as suitable for the UK, which was outside the single currency and the economic union. Our financial model is based on markets, freedom and competition under UK law. Indeed, even in the context of the global direction of the sector leading to cross-border regulatory systems, it was seen from the European legal perspective as potentially having “undesirable effects”, with the need highlighted there to find the right balance between rules and freedom, according to the co-authors of a section in the Alternative Fund Managers Investment Directive, a multi-volume assessment, from a legal perspective particularly, published by Kluwer Law in the Netherlands in 2012. The co-authors of the chapter “Challenges from the Supervisor’s Perspective” were concerned about finding the right balance between rules and freedom.

Here in the UK, that balance has traditionally been struck by domestic law and regulation, which has accommodated innovation, competition and regulated risk in a diverse range of businesses. My noble friend Lord Trenchard spoke about those: hedge funds, private equity and, indeed, property. It has not been under a rule of law with a “one size fits all” approach, such as that of the EU, which reflected a different approach—a precautionary and code-based system of the law—that is ill equipped for our diverse sector.

My noble friend mentioned the differences between the UK and EU sectors. I would just add that, overall, when we look at the context, the UK sector is different in proportion, in size and in composition. Our financial services sector accounts for 8% of the UK economy—the same proportion as that of Canada and the US. By contrast, in the European states—in Germany and France—as well as in Japan, it accounts for just 4%, so half of ours.

Within the sector, the UK AIFs have a particular profile. According to the figures from ESMA collected for 2019—the last year when they were collected—before leaving the EU, the UK’s AIFs accounted for a net asset value of €1,338 billion, compared with €5,468 billion for the EEA 30, so about 20% of the net asset value. As my noble friend Lord Trenchard said, he puts the percentage of UK AIFs as a proportion of the EU at 85%. Other figures suggest slightly less, such as 75%, but it is not worth fiddling over the percentage—it is very significant.

That brings me to my third point. My noble friend mentioned many concerns at the time. I would just raise the concerns of the House of Lords EU Committee in February 2010. Commenting on the alleged or apparent aims to increase the stability of the financial sector and facilitate the single market in alternative investment funds, it noted that the discussions about hedge funds and private equity funds regulation had taken place at the EU level in 2008, with reports by MEPs in the EU Parliament, and before the G20 summit. The committee’s balanced report broadly welcomed and acknowledged the potential for risk and welcomed the co-ordination and supervision of fund managers, which would benefit the single market and the UK economy, as well as the co-ordination and supervision of arrangements. It also welcomed the introduction of passports for the sector.

None the less, it had serious concerns about a number of rather major points. It said that this was a directive designed to cover all non-UCIT funds. It said that there was a failure to acknowledge the differences in how AIFs are structured and operate, as well as a failure of proposed disclosure by managers to supervisors to take account of the different types of AIFs and the fact that the requirements should be proportionate and relevant. Above all, the committee was concerned that the directive should be

“in line with, and complement, global arrangements”.

It added:

“Coordination with the US regulatory regime … is essential to avoid a situation in which the EU alternative investment fund industry loses competitiveness at a global level as a result of regulatory arbitrage.”


To conclude, the AIFMD was designed for a different economic and legal system and is not suitable for the UK’s approach. It was seen at the outset to be unsuitable for our sector—one that is different in proportionate size and composition. It is ill suited to the supervision of individual firms and the diverse composition of the sector. It is also ill equipped for a market system under UK law; rather, UK arrangements should be in line with and complement global arrangements. As was explained by the House of Lords EU Committee in 2010, co-ordination with the US regime is essential.

14:30
Baroness Penn Portrait Baroness Penn (Con)
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My Lords, through this Bill, the Government are seeking gradually to repeal all retained EU law in financial services so that the UK can move to a comprehensive FSMA model of regulation. Under this model, the independent regulators make rules in line with their statutory objectives as set by Parliament and in accordance with the procedures that Parliament has put in place.

It is not the Government’s intention to commence the repeal of retained EU law without ensuring appropriate replacement through UK law when a replacement is needed. The Government set out their approach to the repeal of retained EU law in the document that I referred to earlier, Building a Smarter Financial Services Framework for the UK, which was published in December last year as part of the Edinburgh reforms. It makes it clear that the Government will carefully sequence the repeal to avoid unnecessary disruption and ensure that there are no gaps in regulation.

The Government are prioritising those areas that offer the greatest potential benefits of reform. They have already conducted a number of reviews into parts of retained EU law, including the Solvency II review, the wholesale markets review and my noble friend Lord Hill’s UK listing review. By setting out these priorities, the Government are enabling industry and the regulators to focus their work on the areas that will be reformed first.

My noble friend Lord Trenchard’s Amendment 246 relates to legislation implementing the Alternative Investment Fund Managers Directive in the UK. As has been noted, the UK is the second-largest global asset management hub, with £11.6 trillion of assets under management; this represents a 27% growth in the past five years. The sector also supports 122,000 jobs across the UK and represents around 1% of GDP. These statistics demonstrate the huge value of this industry to the UK and, while the Government would never be complacent, also suggest that the sector is in good health.

The health of the sector is underpinned by proportionate and effective regulation. The Government believe that this must include an appropriate regulatory regime for Alternative Investment Fund managers. These funds are major participants in wholesale markets; they take influential decisions about how capital is allocated, and it is vital that they are held to standards that protect and enhance the integrity of the UK financial system. Moving simply to repeal the legislation that currently regulates this sector without consideration of replacement could open the UK up to unknown competitiveness and financial stability risks. It could undermine the UK’s reputation as a responsible global financial centre committed to high standards of regulation, which could have significant ramifications for the UK’s relationships with other jurisdictions.

I understand that my noble friend Lord Trenchard has some concerns that the legislation deriving from the Alternative Investment Fund Managers Directive creates unnecessary burdens on innovative UK firms serving professional investors. The Government have not to date seen evidence that the reform of that directive is a widely shared priority across the sector.

Baroness Lawlor Portrait Baroness Lawlor (Con)
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Does my noble friend the Minister agree that UK law would be a better arrangement for supervising the sector than inherited EU law?

Baroness Penn Portrait Baroness Penn (Con)
- Hansard - - - Excerpts

As I said at the start of my contribution, it is the Government’s intention to move all retained EU law when it comes to financial services into the FSMA model of regulation. That will apply to this area, too, but it is a question of sequencing and priorities. As I referenced before, we have set out our first wave of priorities and are seeking to look at those areas where the greatest potential benefits of reform lie. I am happy to confirm for my noble friend that it is our intention to move all areas of retained EU law on to a UK law basis.

Baroness Lawlor Portrait Baroness Lawlor (Con)
- Hansard - - - Excerpts

Just for clarification, will that involve moving away from the precautionary, code-based approach of the EU, which very much influenced the sector post the 1990s and the thinking of our regulators? Will my noble friend confirm that, when the Government review the corpus of retained EU law for this sector, in line with their objects as has been stated, they will pay special attention to the need to rethink the framework of approach rather than simply adopting it? These are different ways of thinking.

Baroness Penn Portrait Baroness Penn (Con)
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My Lords, I would not want to pre-empt the approach for any specific area of regulation, but the principles on which we are seeking take forward this work are about looking at regulation and ensuring that we use the opportunities outside the EU to take the right approach to that regulation for the UK. My noble friend talked about the different perspectives taken by regulators in the different jurisdictions. That is right. The aim of moving from retained EU law is not simply to transcribe it into UK law but to ensure that it is well adapted to our own circumstances, too. However, I do not think that I can helpfully pre-empt the approach in each area in this debate, but only talk about some of those wider principles.

I was talking about the intention to move all retained EU law into the FSMA model. We have set out our priorities for the first areas in which we are seeking to do this. The Government have not to date seen evidence that the reform of the Alternative Investment Fund Managers Directive is a widely shared priority across the sector. However, the Treasury would of course welcome representations on this point. We are keen to engage further with industry and understand the sector’s priorities as we work to repeal retained EU law associated with alternative investment fund managers over the medium term.

The FCA also recently issued a discussion paper to consider whether wider changes to the asset management regime should be undertaken in future to boost UK competitiveness using the Brexit freedoms introduced by this Bill. This will allow the Government and the regulators to consider what replacement is appropriate for the legislation before commencing its repeal. For these reasons, I ask my noble friend to withdraw his amendment.

Viscount Trenchard Portrait Viscount Trenchard (Con)
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My Lords, I thank my noble friend the Minister for her reply, but I confess that I find it rather disappointing. I am grateful for the support that I received from my noble friend Lady Lawlor, who talked more than I had and expanded on what I had said about the emergence of the directive and the reasoning behind it at the EU level at the time. As she so well explained, the AIFMD system was always seen, not only at the outset but since then, to be unsuitable for the UK system.

My noble friend the Minister said that the Government have decided gradually to approach the question of repeal and reform of EU law—certainly, very gradually, I would suggest. As she rightly pointed out, this sector is hugely important and of huge value—she mentioned the figure of 122,000 jobs—to the City and the economy as a whole.

However, the Minister said that the financial services industry is underpinned by healthy and proportionate regulation, which I cannot agree with. I tried hard to explain the reasoning, as I understood it, for the introduction of this directive, and I tried to argue that it is not proportionate at all; it is widely regarded as being disproportionate.

The Minister said that there is no evidence of a widely held belief that the regulation underpinning this sector needs reform or revocation. I strongly question who she has been speaking to. In the last week, I have spoken to a very senior regulator of one of the Crown dependencies, who completely endorsed what I said: it is just not true to argue that this regulation is proportionate. The City has been hugely damaged over the years that the AIFMD regime has been in force. The Minister talked about 122,000 jobs, but how many more would there have been had we not, wrongly and unnecessarily, shackled this innovative sector of our financial services industry with this unnecessary, bureaucratic, cumbersome regulation, introduced entirely for political reasons?

I do not accept what the Minister said: that this would undermine the UK’s reputation. The UK’s present reputation, in the IOSCO and among other financial services markets, is that it has become steadily more bureaucratic. I talk to a number of other regulators, and I have technically been a regulator: I was the first non-Japanese to be appointed to the board of the Japan Securities Dealers Association, which has statutory, regulatory powers.

I very much hoped that the Minister would at least say that this is one sector where the Government recognise that there is disproportionate regulation, rather than argue that it is proportionately regulated, which I am convinced it is not. This would have been an opportunity to improve the City’s competitiveness. The listings review recently conducted by my noble friend Lord Hill of Oareford contains many instances of areas where the Government should move quickly. It is a pity that the Government are not using this Bill to move ahead immediately in areas where the case for further consultations is rather weak.

I hope that the Minister will bring back some better news when we next discuss matters such as this. In the meantime, I beg leave to withdraw my amendment.

Amendment 246 withdrawn.
Clause 78 agreed.
Clause 79 agreed.
Committee adjourned at 2.43 pm.

House of Lords

Thursday 23rd March 2023

(1 year, 3 months ago)

Lords Chamber
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Thursday 23 March 2023
11:00
Prayers—read by the Lord Bishop of Worcester.

Prisons: Education

Thursday 23rd March 2023

(1 year, 3 months ago)

Lords Chamber
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Question
11:07
Asked by
Baroness Blower Portrait Baroness Blower
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To ask His Majesty’s Government what assessment they have made of the potential merits of bringing the delivery of prison education into the public sector.

Lord Bellamy Portrait The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Bellamy) (Con)
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My Lords, core education in prisons is delivered by four providers: three classified as public sector providers and one as a private sector provider. Wider, non-core prison education is delivered by a range of suppliers, including the third sector. We are engaging with the market to encourage new providers to work with us to deliver high-quality prison education. We do not currently envisage fundamental change to the present system of outsourcing core delivery to specialist education providers.

Baroness Blower Portrait Baroness Blower (Lab)
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Does the Minister agree with me, Charlie Taylor and the Education Select Committee that education is fundamental to rehabilitation, so the fact that current providers do not have teaching prisoners to read as their responsibility is staggering? Can the Minister agree to look, at least, at the launch of the prisoner education service as an opportunity to bring all prison education back into the public sector, with standardised curriculum and qualifications, which are so important when prisoners are moved, and standardised education staff contracts to assist with recruitment and retention?

Lord Bellamy Portrait Lord Bellamy (Con)
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I thank the noble Baroness for her question. The Government entirely agree that prison education is vital for rehabilitation. In the Government’s view, it does not follow that education, particularly in relation to reading, should be brought back into what the noble Baroness describes as the public sector. Specifically on reading, I can report the Chief of Inspector of Prisons’ remarks of yesterday. Following his report last year, he considers that we are seeing some improvement in reading and that there are encouraging signs of good developing practice in relation to reading education in prisons.

Baroness Meacher Portrait Baroness Meacher (CB)
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My Lords, as a member of the Justice and Home Affairs Committee, I know that the Minister has recognised the huge importance of prison education. Have His Majesty’s Government assessed the potential benefits of doubling the prison education budget, and, in particular, have they assessed the impact of such a policy shift on reoffending rates?

Lord Bellamy Portrait Lord Bellamy (Con)
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My Lords, the Government currently spend about £125 million a year on the core programme and a further £30 million on special development strategies. In relation to the future, we are developing new contracts from 2025, and I am sure the question of the budget will arise in that context.

Lord Cormack Portrait Lord Cormack (Con)
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My Lords, the noble Baroness, Lady Blower, made the point about rehabilitation being so vital. Can my noble and learned friend publish statistics to show the variable reoffending rates between those who do not get qualifications and various other things from education in prison, and those who do? I think this could be very interesting and salutary information.

Lord Bellamy Portrait Lord Bellamy (Con)
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My Lords, the Government are committed to improving the statistics in this area, and I will investigate whether we can publish that further information.

Baroness Burt of Solihull Portrait Baroness Burt of Solihull (LD)
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My Lords, the best education in the world, public or private, is useless if there are not the staff there to enable prisoners to get out of their cells to receive it. But if they could, the education service has been carved up by just four main providers, and governors have little or no say in who delivers education in their prisons. The House of Commons Education Committee report has already been mentioned. What are the Government going to do about this issue?

Lord Bellamy Portrait Lord Bellamy (Con)
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Staffing levels are a continuing problem, but full-time equivalent prison officers have increased by 3,677 between 2016 and December 2022; it now stands at 21,632. In the Government’s view, there is no problem with the quality of our existing providers. The challenges of prison education are evident to all, and the Government are doing their best to tackle them.

Lord Harris of Haringey Portrait Lord Harris of Haringey (Lab)
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My Lords, when I conducted the review into self-inflicted deaths in prison some years ago, a very substantial issue arose about the cancellation of education sessions simply because there were insufficient staff to transport prisoners to education venues within prisons or, alternatively, because prisons were locked down. What proportion of education sessions do not go ahead for the reasons I have described? If those statistics are not collected, could the Minister explain why this rather important performance indicator is not looked at?

Lord Bellamy Portrait Lord Bellamy (Con)
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My Lords, I cannot give the noble Lord the information he rightly seeks, but I will see if I can. Attendance at classes is an ongoing issue. It is sometimes due to staff shortages. We have introduced new KPIs for prison governors which include attendance, among other things, so I hope to see improvement in this area.

Lord Bellingham Portrait Lord Bellingham (Con)
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My Lords, would the Minister agree that a vital part of prison education is to help former offenders into gainful employment at the end of their sentence? A number of businesses such as Timpson, under the inimitable Sir John Timpson, have done pioneering work in this field to help prevent recidivism. What more can the Minister do with his department to encourage other firms to follow Timpson’s example?

Lord Bellamy Portrait Lord Bellamy (Con)
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My Lords, I entirely agree with my noble friend in paying tribute to Timpson. There are many other employers with which we are in close touch. The Prison Service has recently introduced prison employment advisory boards in all prisons and an employment innovation fund, and heads of education, skills and work will be established across the prison estate. This is all to improve post-prison employment, which is, I am glad to say, on the increase.

Lord Addington Portrait Lord Addington (LD)
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My Lords, would the Minister agree that prisoners have probably the highest density of special educational needs of any group in society? All these groups need different learning patterns compared to the norm to be successful. Is the prison education service equipped to, first, identify and, secondly, provide the extra different types of learning to this client base? If not, it is not going to succeed.

Lord Bellamy Portrait Lord Bellamy (Con)
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I agree with the noble Lord that the Prison Service needs to be equipped, and I respectfully suggest that it is. There are a whole range of things here. There is the core curriculum, which is made up of English, maths and digital skills; vocational courses, such as construction; personal development courses; and digital personal learning plans. I assure the House that the Government are on the case and working hard to improve matters.

Baroness Wilcox of Newport Portrait Baroness Wilcox of Newport (Lab)
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My Lords, the Open University offers a range of introductory access modules funded by the Prisoners’ Education Trust, under the banner of “Steps to Success”. They have been specifically designed to help students find out what it is like to study with the OU, get a taste of a subject area, develop study skills and build confidence. As a former teacher, I can tell your Lordships that those things are vital. Does the prison estate have the facilities to offer such excellent distance learning, and who would meet the cost of these courses that are on offer?

Lord Bellamy Portrait Lord Bellamy (Con)
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My Lords, there is a problem within the prison estate in relation to distance learning from external providers, because most prisons do not have external access to the internet. There is an intranet, and it may well be that in due course organisations like the Open University are encouraged to access that facility. But I take the noble Baroness’s question and will investigate further.

Baroness Boycott Portrait Baroness Boycott (CB)
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My Lords, I am sure the noble and learned Lord knows about the Clink Charity, which sets up restaurants in prisons where prisoners are taught by chefs and then serve meals to the general public. If any noble Lords do not know about this, I urge them to go to the one in Brixton. These now have a 49.6% rate of lowering reoffending, because prisoners come out with a job and a skill and somewhere to sleep, which is arranged. This all depends on the good will of the governors. Can the Minister assure the House that he will encourage such projects? I think there are seven now, but there could be many more.

Lord Bellamy Portrait Lord Bellamy (Con)
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My Lords, the answer is yes. Prison governors are now specifically required to have regard to developing employment opportunities for those in prison, attendance rates at courses and other matters. I pay tribute to Clink, which is a very well-known and respected organisation. Similar programmes are being offered by other employers, and this is all, I respectfully suggest, good progress.

Baroness Williams of Trafford Portrait Baroness Williams of Trafford (Con)
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My Lords, it is the turn of the noble Baroness, Lady Fox.

Baroness Fox of Buckley Portrait Baroness Fox of Buckley (Non-Afl)
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My Lords, in my experience with broader education projects such as Debating Matters Beyond Bars, I have found that private sector prisons can be more flexible and less bureaucratic than some state-run prisons. Does the Minister agree that we should focus less on who provides prison education and that education should be given far more priority? Does he also agree that prison education should not be limited to literacy, as it often is, but should be far more imaginative?

Lord Bellamy Portrait Lord Bellamy (Con)
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My Lords, the Government regard prison education with high priority and are working to improve its imaginative and innovative aspects all the time.

Leasehold Reform

Thursday 23rd March 2023

(1 year, 3 months ago)

Lords Chamber
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Question
11:18
Asked by
Lord Kennedy of Southwark Portrait Lord Kennedy of Southwark
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To ask His Majesty’s Government when they intend to introduce legislation to end the residential leasehold system.

Lord Kennedy of Southwark Portrait Lord Kennedy of Southwark (Lab Co-op)
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My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I refer the House to my registered interests and the fact that I am a leaseholder.

Baroness Scott of Bybrook Portrait The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)
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My right honourable friend the Secretary of State set out in the Commons his intention to bring the outdated and feudal leasehold system to an end. The Government wish to extend the benefits of freehold ownership to more home owners. That is why we have committed to end the sale of new leasehold houses and to reinvigorate commonhold so that it can finally be a genuine alternative to leasehold. We will bring forward further reforms later in this Parliament.

Lord Kennedy of Southwark Portrait Lord Kennedy of Southwark (Lab Co-op)
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My Lords, I thank the Minister for her response. The residential leasehold system is not fit for purpose. The Government need to make significant progress in this Parliament, as they promised. We are running out of time, and the purpose of my Question today is to seek absolute clarity. Will the Bill we are going to get in the next Session of Parliament abolish residential leasehold as a tenure? The answer is either yes or no.

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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Leasehold—the noble Lord is not getting a yes or no—is increasingly seen as an outdated form of home ownership and, as I said, the Secretary of State has set out his intention to bring this outdated and feudal tenure to an end. I cannot set out the precise details of the future plan at this stage. However, the Government are committed to creating a fair and just housing system that works for everyone, and we are taking forward a comprehensive programme of reform to end unfair practices in the home ownership market by reinvigorating commonhold, which will also give developers and buyers of flats a genuine alternative to leasehold.

Lord Young of Cookham Portrait Lord Young of Cookham (Con)
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My Lords, these are difficult times for leaseholders. Many face high service charges as a result of the cladding scandal, while others, as my noble friend just said, are exploited by a minority of freeholders, and there is uncertainty in the market while we await the Government’s reforms. Can my noble friend do more to publicise the existence of a free, independent advisory service for leaseholders, which is supported by her department, and can she give an assurance that it will have the resources and skills to meet demand?

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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I think my noble friend is probably talking about LEASE, which is a government-sponsored arm’s-length body. The Government provide £1.9 million of funding every year so that leaseholders and park home owners can get free information and advice. We recognise that these people face some parallel complexities and lack of control over some of their properties. We are looking at LEASE—a new chair is being recruited at the moment—and we are looking for it to be a little more impactful, customer friendly and cost effective into the future, as well as leading important work to ensure that the voices of leaseholders and park home owners are listened to.

Baroness Watkins of Tavistock Portrait Baroness Watkins of Tavistock (CB)
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My Lords, can the Minister assure the House that the future legislation will take careful consideration of issues relating to retirement homes and villages?

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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I am sorry—somebody was talking behind me. Can the noble Baroness please repeat that?

Baroness Watkins of Tavistock Portrait Baroness Watkins of Tavistock (CB)
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My question was about ensuring that the future legislation will take into consideration retirement villages and communities.

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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Absolutely. It is extremely important; if the noble Baroness was in the Chamber last night she would have heard us talking about the planning system as well, making it clear that with an ageing population we need to consider homes of all types for older people in the future.

Lord McFall of Alcluith Portrait The Lord Speaker (Lord McFall of Alcluith)
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My Lords, the noble Lord, Lord Campbell-Savours, is participating remotely.

Lord Campbell-Savours Portrait Lord Campbell-Savours (Lab) [V]
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My Lords, have Ministers noted the large number of leasehold ground rent investments on property auction sites, as landlords, aware of potential changes in the law affecting valuations, offload their leasehold ground rent investments? Innocent non-professional buyers, ignorant of potential changes in the law, are now buying them—caveat emptor—placing themselves at risk of substantial loss. Should government not consider secondary legislation which would alert an innocent market to the dangers of buying these leasehold ground rent investments?

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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The noble Lord brings up a very interesting point. I will take it back to the department and we will discuss it further. These are the sorts of issues that LEASE will be helping potential buyers work their way through.

Lord Naseby Portrait Lord Naseby (Con)
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My Lords, since there is a considerable challenge in the housing market, arising partly from Grenfell and the related programme, and there is a shortage of homes at every single level, is this not a case where His Majesty’s Government need to move with speed but also with thoroughness before we take any action?

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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My noble friend is absolutely right. Leaseholder issues are complex and contain a lot of legal issues that need to be dealt with. Therefore, we need to take our time, and we are doing so, but the government manifesto says that we will deal with this issue within this Parliament, and we intend to do so.

Viscount Hanworth Portrait Viscount Hanworth (Lab)
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My Lords, the Minister will be aware that freeholders have been empowered to impose the costs of any litigation that has been initiated by an aggrieved leaseholder upon that leaseholder. When will that extraordinary anomaly in British law be corrected?

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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The Government recognise that the existing statutory requirements do not go far enough to enable leaseholders to identify and challenge those unfair costs. We believe that leaseholders should not be subject to unfair legal costs and should be able to claim them from their landlords, and we are taking action to address that.

Lord Stoneham of Droxford Portrait Lord Stoneham of Droxford (LD)
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My Lords, in 2020 the Law Commission recommended commonhold ownership as an option. I thought the Minister committed to that in her Answer. Can she tell us how the Government see this proceeding, and is it one of the principal options that the Government are looking at?

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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The Government are looking at all options but, as the Secretary of State has said on a number of occasions, we are looking at commonhold.

Lord Anderson of Swansea Portrait Lord Anderson of Swansea (Lab)
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My Lords, the only potential benefit I can see is inserting restrictions on non-conforming developments, which the leasehold system provides. It is a good start to call the system outdated and feudal, but can non-conforming developments be prevented by other means, such as the planning system?

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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The planning system will have to be looked into, but I can say that, interestingly, through the recent rent Act, new builds are now no longer or are very rarely leasehold—they are now freehold—so the developers themselves are looking at this. It is more complex in flats and with multiple occupancy, but in terms of houses very few leasehold properties are available.

Lord Kamall Portrait Lord Kamall (Con)
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My noble friend the Minister will be aware that in many cases the freeholder is a local authority. Can she advise us on what conversations her department has had with local authorities across the country, or representative bodies of local authorities, to make sure that they make it easier for leaseholders to acquire their properties?

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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I will write to the noble Lord with all the details of those conversations. They are being had, but I will give him more information when I write.

Lord Kennedy of Southwark Portrait Lord Kennedy of Southwark (Lab Co-op)
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My Lords, can I just draw the Minister’s attention to some of the excellent Private Members’ Bills, including my own, which seek to address some of the issues that the Minister herself wants to address?

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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I certainly hope that we get our Bill in before the noble Lord’s.

Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (GP)
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My Lords, community land trusts, co-housing schemes and co-operatives offer different models focused on building community, delivering for the common good rather than focusing on individual profit. Will the Government look into how they can strongly support these creative, innovative models of housing?

Baroness Scott of Bybrook Portrait Baroness Scott of Bybrook (Con)
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The Government do support those forms of housing. We will continue to do so and will look into how we can support them more in the future.

Data Protection

Thursday 23rd March 2023

(1 year, 3 months ago)

Lords Chamber
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Question
11:28
Asked by
Lord Davies of Brixton Portrait Lord Davies of Brixton
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To ask His Majesty’s Government when they intend to introduce legislation on the United Kingdom’s data protection framework.

Viscount Camrose Portrait The Parliamentary Under-Secretary of State, Department for Science, Innovation and Technology (Viscount Camrose) (Con)
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My Lords, the Data Protection and Digital Information (No. 2) Bill was introduced to Parliament on 8 March. It seizes our post-Brexit opportunity to create a new UK data rights regime. It will now be subject to the usual parliamentary processes, starting with Second Reading in the other place, the date for which will be announced in due course.

Lord Davies of Brixton Portrait Lord Davies of Brixton (Lab)
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I first welcome the Minister to his new role on the Front Bench, particularly given his undoubted expertise. However, I must ask him whether he understands the concerns of many at the proposal to allow NHS data to be uploaded to a data system based on tech from Palantir—of Cambridge Analytica infamy—that will offer inadequate data protection to patients? These concerns have only been increased by the Secretary of State’s claim that one of the purposes of the Bill is to give organisations greater confidence about the circumstances

“in which they can process personal data without consent.”

In other words, the Bill will reduce protection to individuals, not increase it, with one result being that some people will not seek the medical attention that they require.

Viscount Camrose Portrait Viscount Camrose (Con)
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I thank the noble Lord for his question. My first observation is that Palantir is a very good illustration of some of the new technology providers we are seeing, because the value it was able to provide and demonstrate is very great. However, the perfectly legitimate concerns about data privacy are, none the less, equally great. Any organisation operating in the UK or processing the personal data of people in the UK must comply with our strong and internationally renowned data protection laws, and those laws set out robust penalties for those who do not, including, as necessary, Palantir. Lastly, with respect to the Secretary of State’s remarks, the intention is by no means to reduce the requirement for data protection, merely in some cases to make it more straightforward to demonstrate that the requirements are being met.

Lord Clement-Jones Portrait Lord Clement-Jones (LD)
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My Lords, I join in welcoming the noble Viscount to the Dispatch Box in his role as the first Minister for AI and IP—I think it is the first time those two responsibilities have been joined together. I wish him every success. Given that there is a new data protection Bill in the Commons, does he agree that it would be highly damaging to our AI developers if we were to diverge too widely from the EU GDPR and risk access to the datasets on which they rely so heavily?

Viscount Camrose Portrait Viscount Camrose (Con)
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I thank the noble Lord and pay tribute to his expertise and knowledge in the area, of which I look forward to taking full advantage. The EU adequacy requirements are uppermost in our minds in continuing our ability to maintain the data relationship with it. I note that EU adequacy does not set out any particular legislative requirements to maintain adequacy, judged as it is on outcomes of data protection rather than its specific mechanisms. I am told that there are currently 14 jurisdictions that meet EU adequacy but have different legislative approaches to acquiring it. Our well-founded ambition is to be among them as well.

Lord Holmes of Richmond Portrait Lord Holmes of Richmond (Con)
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My Lords, I welcome my noble friend to the Front Bench and declare my technology interest. Does he agree that data is completely pervasive and all around us, that data literacy is critical and should be taught from the kindergarten right through life, and that data privacy is a key element of such data literacy teaching?

Viscount Camrose Portrait Viscount Camrose (Con)
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I thank my noble friend for his question and pay tribute to his well-known expertise in the area. Public confidence in the huge mass of data and in the changing systems and tools that use it is absolutely key. This goes into AI, cybersecurity and a range of other areas. That is why education for public confidence will be a key part of the Government’s strategy.

Earl of Kinnoull Portrait The Earl of Kinnoull (CB)
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My Lords, I suggest that the Minister looks at the EU’s data adequacy decision. It is 52 pages long. The decision is a dynamic one and comes up for renewal on 27 June 2025, which is quite close by. It was good to hear that the Government are having regard to all the various international data adequacy decisions that we benefit from, but I suggest that it is important to engage in conversation and discussions with the EU to bring it along. This is quite complex, and its decision is quite nuanced.

Viscount Camrose Portrait Viscount Camrose (Con)
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I thank the noble Lord for his question and his suggestion. We will of course be engaging with the EU throughout, and we are under no illusions as to the importance of maintaining our adequacy arrangements with the EU.

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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My Lords, I welcome the noble Viscount to his new position. He says that the new Bill should be an opportunity to develop data regulations to put Britain at the forefront of the data revolution. However, instead of setting out a clear regime for the sector, it further complicates what is an overcomplex legislative area. I urge the noble Viscount to work with the Labour Party to ensure that this Bill is what the country needs, rather than just a series of patchwork amendments and more sweeping powers.

Viscount Camrose Portrait Viscount Camrose (Con)
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I thank the noble Lord for his kind words of welcome. I am absolutely willing to work with the Labour Party. I do not believe there is an ideological divide in approach, but more a pragmatic question of how we get this done. I observe that the overall economic impact of the Bill will contribute £4.7 billion of growth over the next 10 years; it is important to bear that in mind. When we discuss the Bill further, the noble Lord may come to feel that the characterisation of it as patchwork or disorganised is not entirely fair, but I look forward to working with him.

Baroness Blackwood of North Oxford Portrait Baroness Blackwood of North Oxford (Con)
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My Lords, I welcome the Minister to his place. The AI regulation policy paper published last July set out a framework for fostering responsible innovation in AI. It included principles such as ensuring AI is secure and operates as designed, is transparent and explainable, and embeds principles of fairness and redress. Given the accelerating LLM models and their rapid inclusion in daily life, can the Minister give the House some idea of how these principles might be included in the upcoming Bill?

Viscount Camrose Portrait Viscount Camrose (Con)
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The AI regulation White Paper is due for publication next week and my noble friend will see a lot of that detail set out in it. I observe for the time being that the approach is, as far as possible, to maintain sectoral regulation where it is but apply the principles that she mentioned over the top of it. I look forward to working with her on the AI White Paper, which I hope will set her concerns to rest.

Lord Allan of Hallam Portrait Lord Allan of Hallam (LD)
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My Lords, following up previous questions on adequacy, the Minister will be aware that these are ultimately matters for the European Court of Justice, where any Commission decisions can be challenged—and are often struck down, as the United States has found to its cost. Given the likelihood that any decisions of adequacy in respect of the revised UK law will be challenged, what preparations are the Government making so that they are out there, defending the interests of British business in front of the European Court of Justice in future? That is an easy question for the Minister’s first day out.

Viscount Camrose Portrait Viscount Camrose (Con)
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I thank the noble Lord and am always very much in favour of easy questions. As the Bill progresses through Parliament, we will indeed be engaging with the EU, as he suggests. I share his view that this is something we have to take extremely seriously and have proper preparation and engagement throughout.

Lord West of Spithead Portrait Lord West of Spithead (Lab)
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I welcome the Minister to the Front Bench and his new role. In this new role, particularly its AI aspects, can he go across government—particularly into the MoD—to look at the use of AI and weapon systems and how that is moving forward, because there are some worrying areas?

Viscount Camrose Portrait Viscount Camrose (Con)
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I thank the Lord for his welcome. I should declare that I was previously a member of the Committee on AI and Weapon Systems before taking up my ministerial post. As for the niceties of the machinery of government, I must confess that I do not yet understand them, but I am very happy to write to the noble Lord once I understand more.

Avanti West Coast

Thursday 23rd March 2023

(1 year, 3 months ago)

Lords Chamber
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Question
11:39
Asked by
Lord Goddard of Stockport Portrait Lord Goddard of Stockport
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To ask His Majesty’s Government how they justify further extending the contract for Avanti West Coast, given its service record over the last six months.

Baroness Vere of Norbiton Portrait The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)
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My Lords, Avanti was awarded a six-month contract in October 2022 to provide the opportunity for its recovery plan to yield demonstrable improvements. It has done this, with services increased and delays and cancellations reduced. In this next six-month period, Avanti will need to do more to win back passengers with a reliable and dependable service. With accountability comes the chance to put things right.

Lord Goddard of Stockport Portrait Lord Goddard of Stockport (LD)
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I thank the Minister for another magnificent effort in defending the indefensible. My question is quite simple. Will she agree to meet with me, as a frequent flyer on Avanti trains, to hear the other side of the coin? Tuesday’s Hansard reports her commenting that not all train delays are due to Avanti, which is true. The other side of the coin is that Avanti has completely changed the rosters and rotas for staff. They are now on 10 and 11-hour shifts, meaning that they have a 20-minute window at any station they land at before leaving it. If the train is 30 minutes late, there is no time to change. The next train is then late, and it is an ever-decreasing circle. This is affecting the staff.

The Minister also commented about sickness levels. Staff on Avanti trains feel undervalued and overworked, which cannot be a recipe for an outward-facing railway system. If Avanti cannot treat its staff with respect when all they want to do is give us a good service, somebody else should be looking after that railway system.

Baroness Vere of Norbiton Portrait Baroness Vere of Norbiton (Con)
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I would be very happy to meet with the noble Lord to discuss Avanti, but I hope to offer him something slightly better—a meeting with the Rail Minister. I will extend that offer to all noble Lords so that we might discuss the issues that they are experiencing on Avanti. He might be able to reassure the noble Lord that we are taking these issues very seriously and want Avanti to put them right.

Baroness Bryan of Partick Portrait Baroness Bryan of Partick (Lab)
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My Lords, as a Scottish user of Avanti, I hope the Minister understands the despair that we felt when we heard this decision. On the west coast, we look in envy at the east coast trains. Can she explain why the west coast line was not taken into public ownership after such a disastrous performance?

Baroness Vere of Norbiton Portrait Baroness Vere of Norbiton (Con)
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I am aware of some of the challenges of travelling down the west coast from Scotland. Many of them are due to infrastructure changes happening in the north of England. Sometimes it is tempting to compare the west coast with the east coast. One other element of the east coast that is worth thinking about is that it has competition. There are open-access operators on the east coast as well. That is a contributing factor to making the services better all round.

Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering (Con)
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My Lords, my noble friend will be aware of the severe delays and disruption caused by TransPennine Express, which seems to be competing very well with Avanti on its record. Will she update the House on the Government’s plans for a possible renewal of such a hopeless operator? Will it be allowed more time, or will it be put out to tender for other franchise operators?

Baroness Vere of Norbiton Portrait Baroness Vere of Norbiton (Con)
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The current contract for TransPennine Express comes to an end on 28 May. It too is under a recovery plan, but TransPennine Express and Avanti have one thing in common that no other train operating company shares: they have suffered the immediate and simultaneous withdrawal of rest-day working by the trade unions. That has had an enormous impact on their services. It is worth bearing in mind that no other train operating company has had that.

Baroness Taylor of Stevenage Portrait Baroness Taylor of Stevenage (Lab)
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My Lords, it is disappointing to hear the Minister again blaming the workforce for the problems of Avanti. Rail passengers in the north-west and Wales will have greeted the six-month extension to Avanti’s contract with incredulity. Over the past six months it has broken records for delays and cancellations yet, astonishingly, earlier this week the Times reported that the Government could offer Avanti a further 10-year extension at the end of this six-month extension. Can the Minister please now rule this out?

Baroness Vere of Norbiton Portrait Baroness Vere of Norbiton (Con)
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I am absolutely not blaming the workforce here. I have never said that I was, but the noble Baroness will be unsurprised to hear that I am putting a little blame at the door of the trade unions. On the process for the next round of contracts for the west coast—because there will have to be a contract—the publication of the 10-year period was a statutory notice. Should it go to Avanti, the six-month contracts would be taken off it. Should it go to another operator, it might be for up to 10 years. The noble Baroness should not read too much into it; it could be any period up to 10 years.

Lord Bishop of Manchester Portrait The Lord Bishop of Manchester
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My Lords, as a fellow traveller on Avanti, often in the same coach as the noble Lord, Lord Goddard, I agree entirely with his comments. It is not only that trains are delayed or cancelled; sometimes the services on those trains are not provided, particularly food. These are long journeys and often at the very last moment, when you are sitting on the train and have been told that there will be food, you are then told, “We haven’t been able to load the food; there are no refreshments on the journey”. Can we please bear in mind that it is a whole service? The staff are wonderful, but they are labouring against impossible circumstances at the moment.

Baroness Vere of Norbiton Portrait Baroness Vere of Norbiton (Con)
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The right reverend Prelate is entirely right. That is one of the things on which we hold Avanti to account. Passenger experience is at the heart of what we want to do with our railway system, and as we look to the future for Avanti, and indeed for all train operating companies, passenger experience is one of the key things that they are judged on.

Baroness Randerson Portrait Baroness Randerson (LD)
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My Lords, since Avanti has been rewarded with more after such a record of failure, what incentive is there for other train operating companies to maintain the highest standards and to improve? When the Minister gave us her answers on the Statement the day before yesterday, she was not specific. Can she make clear now whether Avanti will face financial penalties for its failures over recent months?

Baroness Vere of Norbiton Portrait Baroness Vere of Norbiton (Con)
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All train operating companies face financial penalties or financial jeopardy from their performance, as all train operating companies have performance fees. When the current period comes to an end at the end of March, there will be an independent evaluation of Avanti’s performance, and performance fees will be set accordingly. Two issues really impact performance at the moment—the ongoing issues around train crew and availability, and growing concerns around infrastructure, which is why our reforms to bring track and train closer together are so vital.

Lord Snape Portrait Lord Snape (Lab)
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My Lords, is the Minister aware that in the last quarter of 2022, Avanti achieved a historic low, with only 45% of its trains on time? Sad character that I am, I have looked back through the statistics on train travel on the west coast main line. That 45% low never happened under British Rail, the London, Midland and Scottish Railway or the London and North Western Railway. I gave up when it came to the London and Birmingham Railway in the 19th century because I was bored with my own research. Is it fair or right that, despite that historic low, taxpayers should fund dividends to shareholders and bonuses to management while those of us who travel regularly on Avanti would rather walk than catch a train?

Baroness Vere of Norbiton Portrait Baroness Vere of Norbiton (Con)
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I am delighted to be able to tell the noble Lord that currently 90% of Avanti trains arrive within 15 minutes of their scheduled arrival time. That is up from 75% in early January. I am sure that noble Lords can see the trajectory. The dividend to which he refers related to a financial period to March 2021, well over two years ago now and not related to the current performance issues.

Lord Reid of Cardowan Portrait Lord Reid of Cardowan (Lab)
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My Lords, I have been travelling on the west coast line for more than 40 years. Admittedly this is anecdotal, but my experience was that until Covid the service was actually quite good on Avanti. So was Virgin before Avanti. It was certainly better than the east coast line, quite apart from the fact that the east coast line went to Edinburgh whereas the west coast line went to the fair city of Glasgow.

Twice the Minister has mentioned infrastructure problems. Historically that was the problem with the east coast line, but there was sufficient investment to improve it. What is the nature of the infrastructure problems on the west coast line and why have they not been dealt with in the 13 years that the Government have been in charge?

Baroness Vere of Norbiton Portrait Baroness Vere of Norbiton (Con)
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The Government are putting record investment into our railway infrastructure. There are two issues around infrastructure. The first is the long-term plans that need to be put in place to upgrade it, but there are also short-term issues. For example, overnight there was cable theft at Wolverhampton. Cable theft is not Avanti’s fault, but it has caused some of its trains to be delayed this morning. We have to clamp down on the short-term problems but also continue to invest in the west coast main line, which is exactly what we are doing.

Electricity Supplier Obligations (Green Excluded Electricity) (Amendment) Regulations 2023

Thursday 23rd March 2023

(1 year, 3 months ago)

Lords Chamber
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Electricity Supplier Obligations (Excluded Electricity) (Amendment) Regulations 2023

Thursday 23rd March 2023

(1 year, 3 months ago)

Lords Chamber
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Motions to Approve
11:50
Moved by
Lord Callanan Portrait Lord Callanan
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That the draft Regulations laid before the House on 8 and 20 February be approved.

Relevant document: 32nd Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 20 March.

Motions agreed.
Committee (2nd Day)
Relevant documents: 10th Report from the Joint Committee on Human Rights, 27th Report from the Delegated Powers Committee, 14th Report from the Constitution Committee
11:50
The Schedule: Minimum service levels for certain strikes
Amendment 14
Moved by
14: The Schedule, page 3, line 31, at end insert—
“(5) Regulations made under this section in relation to strikes affecting services in an area for which an elected mayor is responsible may not be made without the consent of the elected mayor for that area.”Member’s explanatory statement
This amendment would require the consent of the relevant elected mayor before minimum service levels could be set in relation to an area for which an elected mayor was responsible.
Baroness Randerson Portrait Baroness Randerson (LD)
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My Lords, I will speak to the amendments in the group starting with Amendment 14 in the name of my noble friend Lord Fox. This group is all about devolution. The Government have hyped up their commitment to devolution in England, so Amendment 14 is in line with the proposals in the levelling-up Bill and in Bills on the powers of existing mayoral authorities. In England, an increasing number of those have great powers over transport—for example, bus franchises—so it is logical that elected mayors should be consulted by the Government before they intervene with minimum service levels.

I move on to Amendments 19 and 49 in my name, which refer to the much stronger devolution that has existed in Wales and Scotland and, we hope, will be returned in Northern Ireland in due course. Amendment 19 refers to Part 1 of the Schedule, which relates to minimum service level regulations that may be applied by UK Government Ministers to the list of services specified in the Bill. The key point is that most of these services—health, fire and rescue, education and most of transport—are devolved. Only the decommissioning of nuclear installations, management of radioactive waste and so on, and border security are reserved matters falling to the UK Government. Once again, we have this Government riding roughshod over the core business of devolution. Even border security could be argued to be a very legitimate interest to the devolved Administrations. For example, the Welsh Government owns and runs Cardiff Airport, and that would clearly be directly affected if there were a dispute with border security staff. Similarly, the safe and efficient operation of the several very important and significant Welsh ports is of direct concern to the Welsh Government. In practice, you could not impose a minimum service level without consultation and close co-operation.

I need to point out here that the Welsh Government have a much more positive relationship with public sector trade unions than that between the UK Government and trade unions in England. Although they have not totally avoided strike action in Wales recently, it has certainly been much less intense and acrimonious. The Welsh Government have adopted more of a social partnership approach, and we have seen none of the provocative rhetoric that we have seen in England.

Amendment 19 is very modest: it simply asks for an obligation for proper consultation with Welsh and Scottish Ministers before regulations are made. It reflects similar provisions in the Civil Contingencies Act 2004. It specifies that a senior Minister of the Crown should undertake this consultation because we have lately had repeated evidence that this Government have failed to interact at the appropriate level with Ministers in the devolved Administrations, whom they seem, on occasion, to regard as insignificant juniors. Very recently, in the debate on the retained EU law Bill, we were repeatedly referred to officials as the appropriate level for such links. If the UK Government decide to intervene to specify minimum service levels for devolved services, that is a political decision, and the very least that they should do is ensure that Ministers take the lead in that political process.

Quite apart from the need to respect devolution, there is considerable scope for confusion if the UK Government decide to define what they regard as an MSL without close liaison with the devolved Administrations. Let us take health as an example: waiting times for treatment are defined differently in Wales and England, as are ambulance response times, so one size definitely does not fit all. The very simple Amendment 49 takes a much more radical approach. By leaving out “Wales and Scotland”, it would limit the extent of the Bill to England. That would reflect the points that I made previously: most of the public services specified are devolved, and even those which are not have a close interaction with devolved services.

During the pandemic, for instance, we became acutely aware of the differences in organisation and ethos between the UK Government’s approach and that taken, for instance, in Wales, but which I also observed in Scotland. There are plenty of stresses in the delivery of Welsh public services. I do not defend the current standard of some of those. They are under acute stress. If this comes to a head in the form of strikes, it is unlikely that dictation from the outside by the UK Government will help the situation.

Finally, I remind noble Lords that the UK Government are just the Government for England when we talk about strikes in schools or in the NHS, for instance, and other services specified in the Bill.

Lord Thomas of Cwmgiedd Portrait Lord Thomas of Cwmgiedd (CB)
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My Lords, I speak in support of Amendment 49. All the points arise in relation to it, so I do not think it necessary to go into the other amendments. I will make six points.

First, I do not believe that it is contested that a number of the services covered by the Bill are effectively within the control of the Governments of the nations of Scotland and Wales, and that is reflected everywhere in the consultation that has so far been made. However, when you take that, you have to consider whether you can disentangle services during periods of strikes from services elsewhere. On our previous day in Committee, the noble Lords, Lord Kakkar and Lord Patel, eloquently put why it is quite impossible to disentangle them. What I simply do not understand at the moment is why, if you have a minimum standard on a strike day, that is not the minimum standard across all these areas on every other day. How can the public be expected to think that in strikes there is a minimum standard? There is not.

12:00
This is a critical point because it goes to my second point: the purpose of this Bill. The Government, relying, no doubt, on their legal advice, take the view that this has nothing whatever to do with Wales and Scotland. They assert as a matter of constitutional law that this is an entirely reserved matter. With her usual clarity, the noble Baroness, Lady Noakes, explained the purpose of the Bill, which is what I tried to summarise in my first proposition: it is to do with services; it is not a Bill to do with industrial relations, employment rights and duties. Clearly, this is not a reserved matter and therefore, you need a legislative consent Motion. Unfortunately, the question of whether you need a legislative consent Motion has fallen into disuse. It is a real problem, which I have raised many times in this House, that the Sewel convention is in serious danger of not being a convention any longer.
You can look at the legal analysis from a different point of view, but that is sufficient because you pick up in there the point that, even if this whole thing can be disentangled, you ought to realise that this is not a matter entirely for the Government of the United Kingdom but for the Governments in Cardiff and Scotland. Even if you do not agree with my analysis of the law, it is really important that you engage with those Governments—a point picked up in the earlier amendment. I am always extremely grateful for the very warm words of the Minister on this but, as many have said, you are judged by your deeds, not your words. The deeds in this case are all one way, and that is to try to whittle down the powers of the devolved legislatures in Scotland and Wales and thereby weaken the union.
My third point is that even if you could disentangle and ignore what was said in the previous debate, and even if you do not want to engage, it is not practical to think that Secretaries of State in England can make decisions in respect of minimum service levels in Scotland and Wales. One of the consequences of devolution has been that the ignorance in Whitehall of how these services are run in Wales and Scotland increases year by year. It is not a criticism; it is just the fact of devolution. Let us take, for example, education. We have no idea yet how they are proposing to specify minimum standards in education. I assume that the Secretary of State is competent to decide the minimum standard so, if you go by subject matter, what is the minimum standard of bilingual education to be? It is not something that I imagine engages the Whitehall mandarins in the department concerned with education. You can multiply this—the ambulance service, for example—right across the spectrum. So, even if it is possible to do it and even if you ignore the devolution settlement, it is simply not practical.
I go on to my fourth point. Even if practical, the effect is to remove responsibility from the person who deals with the workforce. I know this Government have great skill in industrial relations, but in saying that the Bill is all about industrial relations—which, of course, it is not; it is to do with minimum standards—they obviously feel that by imposing their own views on industrial relations on those responsible for the negotiations in Wales and Scotland, they can do better. I am not sure that their track record really justifies that conclusion. If one looks back to the events of recent years, the Governments in Scotland and Wales have generally been more successful in dealing with negotiations in relation to these services than His Majesty’s Ministers in Whitehall. What you are doing by this Bill is effectively taking away power from those who have responsibility for the negotiations. There is a well-known quotation about power without responsibility, to which is unnecessary to refer.
That takes me to the fifth point I want to make, which is that the consequences of this undermine democracy and accountability. One of the great virtues of this House is that it attaches great importance to accountability. By transferring responsibility for minimum services, the Bill is taking it away from those who are accountable to the people of Wales and Scotland. It is quite wrong that we should proceed on this basis.
My sixth and final point is this. When you sit and think, you must ask yourself, why is this Bill being put forward? Normally, as I understand the way we have traditionally been governed in this country, you work out the policy first and legislate second. What is happening in this Bill is that you legislate first and think second. Now that we turn to devolution, there is yet another problem. Had we proceeded in the right way, we would not be in the mess this Bill is getting us into. I suggest that if you look at the consequences for devolution, you see yet another reason why this Bill, a skeletal Bill, should not proceed. I shall add just one scintilla to that—it is a point I do not want to develop any further. This Bill is Henry VIII on stilts. Looking at a Bill of this kind, we have not yet examined whether you should put into such a Bill a clause that limits the Government’s power to override the devolution settlement. I do not know. This is a subject that we ought to be debating, but I think it unnecessary to add to the length of what has already been too long a speech on these points.
Baroness Noakes Portrait Baroness Noakes (Con)
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My Lords, since the noble and learned Lord, Lord Thomas of Cwmgiedd, used what I said earlier in aid of his arguments, I thought I ought to say a few words. First, unfortunately I do not speak for the Government in any respect. Indeed, the Government are generally to the left of my views, so my views are indeed my own. I have said that this Bill is about protecting service levels, in particular for those who have paid through their taxes for public services to be provided to them. That is the aim of the Bill. The means of the Bill is via trade union and industrial relations legislation. That is a reserved matter, and I think the Government have to accept the point.

Having said that, I of course agree that the devolved Administrations should be consulted on minimum service levels because they are bound to affect their citizens. I believe that the devolved Administrations would want to be involved in any consultation, to put across the views of their citizens as to the appropriate minimum service levels that their citizens should be demanding. However, I do not think it goes beyond that, and I do not think it is necessary to go to the extent of the amendment from the noble Baroness, Lady Randerson, which talks about meaningful consultation. They are of course going to be consulted on these matters.

When the noble Baroness, Lady Randerson, introduced Amendment 14, she very carefully said that elected mayors should be consulted. That is not what Amendment 14 says. It says that regulations cannot be made

“without the consent of the elected mayor for that area.”

That would mean, for example, that any minimum service level which affected a train service between London and Manchester could be vetoed by either the elected Mayor of Greater Manchester or the elected Mayor of London—or indeed Birmingham. That seems to me to be complete nonsense. I believe they should be consulted because they will want to input the views that protect services for the residents in their areas, but we should not go as far as requiring consent.

Baroness Bryan of Partick Portrait Baroness Bryan of Partick (Lab)
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My Lords, I speak in favour of Amendments 19 and 49 in the name of the noble Baroness, Lady Randerson, which try to mitigate in one and contain in the other the level of interference that the Bill intends to make into areas that are clearly devolved. This is in a long line of legislation that has trampled over the accepted responsibilities of devolved Governments. The United Kingdom Internal Market Act, the Nationality and Borders Act, the Subsidy Control Act, the Elections Act, the Levelling-up and Regeneration Bill and the retained EU law Bill are just a few of the Bills that have impacted on the devolved Administrations.

On this occasion, in the Bill’s list of six services to be targeted I found only one that was reserved and that was border security, though I take the point made by the noble Baroness, Lady Randerson, that airports and ports will be dragged into that. Health services, education, fire and rescue services, transport services and the decommissioning of nuclear plants are devolved responsibilities, and the elected Members of the Scottish Parliament and the Welsh Senedd are ultimately accountable for the delivery of these services. The Minister and his colleagues have no electoral mandate to interfere in these services. Not only does the Bill seek to allow government Ministers to interfere in devolved areas of competency but it does not even have the good manners to outline in the body of the Bill how they would use these powers. Parliament is yet again being asked to put its name to a blank cheque.

It may surprise the Minister to know that both the Welsh and Scottish Governments have respectful working relationships with trade unions in their countries. In Scotland, the fair work framework has a different model of industrial relations from that adopted by the UK Government. The framework states that there are many examples in Scotland and elsewhere of how the collective voice of trade unions working with employers has addressed the wide range of organisational challenges and contributed to organisational improvements. The Welsh Government are committed to the Fair Work Commission in Wales, which respects and encourages trade unions to have a significant role in workplaces, society and policy-making. How different that is from the approach taken by this Government. These fair work arrangements do not prevent industrial disputes but allow constructive dialogue between government, employers and trade unions, so that when disputes occur there is greater good will to resolve them.

12:15
In support of these amendments, I particularly appreciate the insistence of the noble Baroness, Lady Randerson, that consultation must mean more than lip service, with Amendment 19 specifying that it must be
“with a view to reaching an agreement.”
Unlike the noble Baroness, Lady Noakes, I think it is important to have that in—how many consultations do we really believe have changed thinking?
While it would be better if the Bill is not taken forward at all, if it is, it should not apply in Scotland and Wales. I would support particularly then Amendment 49. What the Bill has achieved is a strong case for devolving employment law to Holyrood and the Senedd. As explained quite entertainingly and enjoyably by the noble and learned Lord, Lord Thomas, the Sewel convention has been abused time and again so that it is no longer meaningful. There is an urgent need to rethink the balance between the devolved Administrations and the UK Government. As we approach the 24th anniversaries of the opening of the Scottish Parliament and the Welsh Senedd, we should remember that these institutions were established to allow the people of Scotland and Wales to make decisions about how their countries should be run. This must not be undermined by such poorly framed and unnecessary legislation as this Bill. I urge noble Lords to support these amendments.
Baroness Finlay of Llandaff Portrait Baroness Finlay of Llandaff (CB)
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My Lords, it is a pleasure to follow the noble Baroness, Lady Bryan, and to add to her remarks. I strongly support Amendment 49 and point out to the noble Baroness, Lady Noakes, that the phrase in Amendment 19 of consultation implying a view to meeting an agreement is particularly important because in this Bill we are talking about devolved competencies directly, and I am afraid the track record has not been that good. Indeed, the Bill seems to have been announced without any prior consultation with the Welsh Government at all, and officials have been reluctant to share substantive information relating to the Bill which is not in the public domain but does affect devolved competencies.

In paragraph 141 of Schedule 7A to the Government of Wales Act it would seem that legislative consent is required over aspects of health, education, fire and rescue, and certain transport services. But the Welsh Government appear to be set to vote overwhelmingly to refuse legislative consent, and for good reason. As the Government themselves have conceded, the services are

“run differently in England, Scotland and Wales and are the responsibility of Scottish and Welsh Governments respectively.”

With that responsibility comes a requirement to set pay and terms and conditions of service, and those cannot be disentangled from strategic and operational decisions taken in Wales and Scotland. To give those powers to Westminster and override the devolved legislations would effectively undermine their ability to run the services that they run as effectively as they see fit to meet the needs of the population—the population which have voted those devolved Ministers into their positions in government.

There is a different approach to the unions, as has already been said. There is a model of social partnership, which I am familiar with in Wales. It was notable that, even going back to 2015, the junior doctors did not go on strike in Wales whereas they did in England, and the current rail strikes have shown a different pattern of working because an agreement was made with Transport for Wales.

It certainly is not incidental that this has been included in the Bill, because it threatens the Welsh Government’s ability to maintain a model that is interwoven with those responsibilities, as I have said. In fact, those services are essential to the running of the devolved nations. The approach would undermine accountability in Wales, as the Bill provides no role for the Senedd, despite the strong argument that it has the competences to legislate in areas contained in the Bill. The Secretary of State being able to set minimum service levels for local services in most parts of England is already questioned by some, but it seems almost an affront to devolved responsibilities to say that that could override the responsibilities in the devolved nations.

The consultation process set out in the Bill fails to specify who should be consulted; it is whoever the Secretary of State sees fit, and they do not seem to have to pay regard to the outcome of that consultation. That means there is no role for the Welsh Ministers, who are actually responsible for running the services. If the Bill is passed, the backdrop to negotiations undertaken in Wales will be fundamentally altered. There is a concern—a valid one, I think—that that could be used for political ends, because there is no protection in the Bill from a Secretary of State who wishes to provoke or prolong a dispute for political ends.

Sadly, no Minister in Wales or Scotland can take comfort from assurances given and being told that they will be consulted. Similar assurances were provided over the financial powers in the internal markets Act, but those are now being used to ensure that Welsh Ministers cannot take the decisions over EU successor funds provided in the form of the shared prosperity fund and the levelling-up fund. I hope the Committee will see that in order to maintain the integrity of the UK, it will be important to take Wales, Scotland and, I think, Northern Ireland out of the wording in the Bill.

Baroness Noakes Portrait Baroness Noakes (Con)
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Has the noble Baroness realised that the Bill does not actually require any employer in Wales to issue a work notice? The only thing that the Secretary of State will be doing is setting minimum service standards. The implementation via work notices is entirely at the option of the employers, which will be either the Welsh Government or one of the various Welsh bodies that are answerable to the Welsh Government. I understand the point that she was trying to make, but she was implying that the UK Government were interfering in the operation of the services, which the Bill does not come close to doing.

Baroness Finlay of Llandaff Portrait Baroness Finlay of Llandaff (CB)
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I remind the noble Baroness that we have already had a debate over the difficulty of setting minimum service levels and the dangers thereof. Minimum levels for nursing have already been set in Wales, for example, so we cannot disentangle the one from the other. That is the point that I was trying to make.

Baroness Donaghy Portrait Baroness Donaghy (Lab)
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Yes—“Come into my parlour”.

I attended the Wales TUC and the Scottish TUC for well over a decade—some might say I do not have a home to go to. That helped me to understand the completely different cultures of those countries and the completely different relationship that the workforce, the trade unions, employers, Governments and successive Administrations had with each other, and the respect that successive Governments had with the trade unions. It is not just that this is a damaging Bill; it is an affront to those countries that there should be some imposition of power. That is what we are talking about, not whether employers should be forced to issue a work notice but that there will be an overall power, the details of which are not known, which the Welsh and Scottish Administrations will have to accept.

We are talking here about the tone of employment relations, which has always been completely different. It has been conducted in a non-legalistic way. There have been as many strikes, and I am not saying that the services are particularly better in Wales or Scotland, but the tone of the relationship is what could be so badly damaged.

It was most interesting at Question Time today for those noble Lords who were here to hear the noble Baroness, Lady Vere, talking about the distinction between the workforce and the trade unions. I have been trying to make the point all along that this Government are doing their best to separate trade unions from their workforce. The noble Baroness was very keen to assure the House that she was not blaming the workforce for people not doing non-contractual rest-day work; she was blaming the trade unions for those members not doing non-contractual rest-day work. That in any case is a bad practice that has grown up over the years, which has really been because members have wanted a better standard of living, but are we really saying that a minimum service level will have to include this non-contractual rest-day working, or will it not include it? Or will it not be mentioned at all in any document?

The Minister is shaking his head and smiling. I realise that he must be getting very fed up of listening to all of this. Maybe that will help the Government next time to bring forward a Bill that actually has some content in, and then he will not be so bored.

I do not know how many people here watched “Boys from the Blackstuff”—some Members are certainly too young for that—but I am reminded of the character called Yosser Hughes, who went around saying “Gis a job”. In this case it is the Government saying, “Gis a power. We don’t know what we’re going to do with it, we can’t tell you yet, we promise to consult you, but gis a power.” I think the Government are hoping that, if they carry on repeating that for long enough, everyone will sit back and say, “Oh all right, let’s see what they do with it”. As far as I am concerned, that is the main principle: the Government are asking us to give them a power and not telling us how they will use it.

Lord Balfe Portrait Lord Balfe (Con)
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My Lords, there is a feeling growing up or being put around this House that somehow the Conservative Benches are historically against trade unions. These Benches are not historically against them. I spent 25 years in the European Parliament, and my noble friend the Minister spent some years there. I spent some time on the European Economic and Social Committee, which, as with Scotland and Wales, bases itself on trying to get a consensual view of industrial relations. If you want to improve the wealth of the country, that is the way forward. That is what made the German economy as successful as it is today: the works councils and the compulsory consultation. We seem to be in danger of drifting in the opposite direction, but I remind the Minister that the great tradition of Christian democracy in Europe, which has a much wider following than conservatism, is based on working between social partners.

This legislation is, let us say, imperfect. It has great difficulties and is almost unworkable, and I do not know why the Government are pursuing it. I hope that maybe at the end of this series of debates they will decide to pause it and not go forward. As these amendments show, it is going to be very difficult to implement, even if the Government wanted to. Set aside the local mayors, which I think are impractical; railway trains run between our countries and planes fly between them, while I am told that some services, such as organs and blood in the health service, are organised on a national basis so that people can get the best service wherever they live. We are after all in a United Kingdom, as this party often says.

I ask the Minister to look at hitting the pause button on this piece of legislation because even if it is passed it will not work, and it is not good government to pass legislation that just will not work.

12:30
Baroness Finlay of Llandaff Portrait Baroness Finlay of Llandaff (CB)
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My Lords, may I ask the Minister, when he comes to sum up, if he could clarify for the Committee why he was shaking his head so strongly over his experience in the European Parliament? I think it would be quite helpful to clarify that, given the remarks of the noble Lord, Lord Balfe.

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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My Lords, this has been an incredibly valuable discussion. The noble and learned Lord, Lord Thomas, is absolutely right. One of the problems we have is that, in the past, good governance was Green Papers, White Papers, a debate about policy and then a considered approach to what sort of legislation would be appropriate. The other thing we are jumping around between is the question: is this about minimum service levels, or is it a power grab by the Government?

The reality is that we have minimum service levels, but they are negotiated locally, taking in many factors. As the noble and learned Lord said, we are talking about devolved matters. It is the responsibility of the Welsh and Scottish Governments to set up and organise their health, education and other services. It is not just about the devolution settlement. I have heard Government Ministers, on the levelling-up agenda, talk about how we want to push responsibility locally. But suddenly that sort of politics goes out of the window when it comes to trade unions. I heard what the noble Lord, Lord Balfe, said about his party, but the simple fact is that this is a power grab by Ministers.

We will no doubt hear the Minister respond that work notices are a matter for employers, and no one is forcing people. Let me ask the question: if the Minister is going to set the minimum service levels but a local authority, a devolved mayor or the Welsh Government do not force through work notices, will that leave those authorities that fail to implement it in the way the Government suggest open to legal action? Will they face a challenge from those who claim they were denied services? We need a very clear answer to that question. The Bill was published without any consultation of the people who will have the responsibility to deal with it and implement it. Even the consultations taking place now are using language that I find difficult to understand, in terms of the responsibilities of devolved authorities and local mayors.

I am trying to avoid being repetitive—I know that will get the Minister’s head nodding—but fundamentally we will keep coming back to certain principles. Let us just focus on these amendments and have some clear answers to questions. If it is down to the devolved Administrations and local mayors to determine something, does it leave them vulnerable to legal challenge?

Lord Fox Portrait Lord Fox (LD)
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The noble Lord might like to note that, as we were sitting, we received an email from the noble Lord, Lord Markham, which partially responds to his question. It would be rather helpful if we could have letters from Ministers with some notice, rather than simultaneous to our arrival in this Committee. It reinforces the uncertainty around legal redress, the point which the noble Lord, Lord Collins, just made.

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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I appreciate the noble Lord drawing that to my attention. I have not had the opportunity to read the email, so maybe I will be jumping back up when the Minister responds and I have been able to read it.

Baroness Bloomfield of Hinton Waldrist Portrait Baroness Bloomfield of Hinton Waldrist (Con)
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My Lords, I thank the noble Lord, Lord Fox, and the noble Baroness, Lady Randerson, for their amendments. Amendments 14, 19 and 49 relate to devolved matters, either via devolved Governments or local government. Amendment 14 seeks to require the consent of elected mayors before minimum service levels could be set in an area for which an elected mayor is responsible. The noble Baroness, Lady Noakes, is right to point out that this is unworkable. Consultations have been published on minimum service levels for ambulance, fire and rail services, and we welcome the engagement of elected mayors on those consultations. Similarly, Amendment 19 seeks to require consultation with Scottish and Welsh Ministers before minimum service level regulations are made in Scotland or Wales, with a view to reaching an agreement. Amendment 49 seeks to limit the territorial extent of the Bill to England.

The noble Baroness, Lady Randerson, raised concerns about the impact of this legislation on devolution, and this is an important issue. However, employment rights and duties and industrial relations are reserved in Scotland and Wales. That said, I reassure her and the noble and learned Lord, Lord Thomas of Cwmgiedd, that my noble friend the Minister met both the Welsh and Scottish Governments to discuss the Bill.

The Government have a duty to protect the lives and livelihoods of citizens across the United Kingdom. The disproportionate impacts that strikes can have on the public are no less severe on people in Scotland and Wales or on those living in areas with elected mayors. They have every right to expect the Government to act to ensure that they can continue to access vital public services during strikes.

The Government therefore resist these amendments. However, as I said earlier, nothing in the Bill requires an employer, which might include a devolved Government or an elected mayor, to issue a work notice. That would include the example of Cardiff Airport that the noble Baroness cited.

Lord Thomas of Cwmgiedd Portrait Lord Thomas of Cwmgiedd (CB)
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On that point, which is repeatedly coming up, would the noble Baroness be able to assure the Committee that we can have a clause in the Bill—because courts sometimes interpret “may” as meaning “shall”—that makes it very clear that no legal obligation whatever rests on any person whatever to implement the minimum standards set out in the Bill, unless the employer decides to implement a notice? If the case the Government are making is that the Bill has no effect unless the employer does something, that needs to be spelled out with crystal clarity. If the Ministers would like, I will have a go at drafting a clause to save the overburdened so-called parliamentary counsel.

Baroness Bloomfield of Hinton Waldrist Portrait Baroness Bloomfield of Hinton Waldrist (Con)
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I repeat at the Dispatch Box that under the Bill it is a statutory discretion and not a statutory duty for employers as to whether to issue a work notice. It is a matter for the employer to consider any contractual or other legal obligations it has in taking this decision.

We of course hope that all employers will want to apply minimum service levels where they are needed. In reference to the point made by the noble and learned Lord, Lord Thomas of Cwmgiedd, I say that, before making minimum service level regulations, government departments need to consult on the appropriate minimum service for their sectors. This will enable detailed evidence to inform the development of minimum service levels in specific services. This includes understanding the differences between services in each sector across Great Britain and the implications for setting minimum service levels. We will continue to engage with the devolved Governments on the geographical scope of the regulations.

The noble Lord, Lord Collins of Highbury, is correct that of course we would rather have a negotiated agreement on minimum service levels. I also reiterate, in response to the question from the noble Baroness, Lady Finlay, on why my noble friend was shaking his head, that we think there has been a misunderstanding. There is no statutory duty but, as I said, rather a statutory discretion under the Bill for employers to issue work notices.

Baroness Chakrabarti Portrait Baroness Chakrabarti (Lab)
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Does the Minister understand the concern and the problem? “May” can become “must” if someone sues an employer for not having issued work notices, on the basis that the Secretary of State took the view that a minimum service level requirement should be there but the employer chose not to issue work notices but to carry on negotiating, et cetera, and a third party then challenges that discretion and the more gentle decision made under it. That is how “may” can become “must”, and that means litigation, cost and more aggravation. I believe that this is the concern that was expressed by the noble Lord on the Liberal Democrat Front Bench last time and put so eloquently today by the noble and learned Lord.

Baroness Bloomfield of Hinton Waldrist Portrait Baroness Bloomfield of Hinton Waldrist (Con)
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I hear and understand the noble Baroness’s concerns, but I default to the Government’s position: the Bill gives only a statutory discretion, not a statutory duty, to the employer on whether to issue a work notice.

Lord Fox Portrait Lord Fox (LD)
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I will pursue this “may/must” argument from a slightly different direction. One of the arguments made in the letter of the noble Lord, Lord Markham, is that the unsatisfactory nature of the current situation is that the Government were unable to secure a national agreement from the ambulance services on the level of cover. The Minister will be aware that we do not have a national ambulance service; we have a series of ambulance services across the country. Under the “may/must” doctrine that the Minister set out, it is perfectly possible that one ambulance service in one area “must”, while another one chooses not to; in other words, we would still have a patchy service across the United Kingdom and the Government would have failed to achieve the objective that the noble Lord, Lord Markham, set out in his letter. So, given the good faith that I put in the Minister’s comments, I do not understand what problem this solves, because the compulsion—or lack of it—within the Bill means that we still do not have a national agreement on service levels.

Baroness Bloomfield of Hinton Waldrist Portrait Baroness Bloomfield of Hinton Waldrist (Con)
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The Government’s position is that we would rather have a voluntary agreement than a compulsion to issue notices. Of course, we would hope that each employer would choose to accept minimum service levels, because the Government are here to protect the level of service available to all UK citizens, not just those in England.

Lord Fox Portrait Lord Fox (LD)
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The noble Baroness has set up a whole new stream of thought because now she is saying that there is an ability for government to compel the employer to give a notice. We all hope that there will be voluntary agreement—that is where we are now, and it is what the Bill seeks to undermine.

Baroness Bloomfield of Hinton Waldrist Portrait Baroness Bloomfield of Hinton Waldrist (Con)
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I do not accept the noble Lord’s points at all, but I will continue my answer to the noble Lord, Lord Collins. Of course, we would rather have a negotiated agreement on minimum service levels, but the Government resist these amendments. I hope that I have been able to reassure noble Lords—I feel I have not entirely—on “may” versus “must” and the compulsion, the statutory discretion or the statutory duty. With those comments, I ask the noble Baroness, Lady Randerson, to withdraw her amendment.

Baroness Randerson Portrait Baroness Randerson (LD)
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I thank the Minister and all who took part in this useful debate. We started with the noble and learned Lord, Lord Thomas, who pinpointed the persistent erosion of devolution. He called the Bill “Henry VIII on stilts”, and the noble Baroness, Lady Donaghy, called it “Gis a power”—I think both phrases will stick in our memories. The noble Baroness, Lady Noakes, said that of course the devolved Administrations will be consulted, but the problem is that, persistently, they have not been consulted at the right levels and the right point in time. There has been a thin façade of last-minute, low-level consultation, and this has not worked—it is not consultation in the proper sense of that word. The Minister did not reassure me when she said that it was complete nonsense that elected mayors should need to give consent—that shows a lack of understanding of the concept of proper consultation.

The noble Baroness, Lady Bryan, gave us a useful long list of recent Bills that have undermined devolution—I will copy it out when I read Hansard so that I remember each one. The noble Baroness, Lady Finlay, took the points further by raising the fear that UK Ministers would use powers in the Bill for political ends. The truth is that this is a heavily political issue and, in England, the wrong sort of political interference has created problems in industrial relations that have not existed in Scotland and Wales to the same extent, because industrial relations have been handled with more sensitivity there. I have no doubt that the UK Government have their own reasons for wishing to sharpen relations with the unions, but that is nevertheless a political issue.

12:45
I will refer specifically to the challenge of the noble Baroness, Lady Noakes, to the noble Baroness, Lady Finlay, about the Secretary of State setting an MSL for the NHS in Wales, for example. That MSL could be at variance with that already set in Wales—that is a problem in itself—but what happens when Welsh NHS leaders choose not to implement that MSL? The noble Baroness, Lady Chakrabarti, and the noble Lord, Lord Collins, both confirmed that, in their view, this would be fertile territory for lawyers—let us put it that way. The noble Lord, Lord Balfe, pointed out that this is a totally impracticable Bill and, even if it were passed, it would not work—I agree with him totally.
I thank the Minister for her comments. She said she hoped that employers will want to apply MSLs, so the Government are clearly encouraging that—we are not on neutral territory. But that seems at variance with the idea that the Government want voluntary agreements, as she said next. As my noble friend said, we have voluntary agreements now, and that is what is being disapplied by the Bill. I am not reassured by the Government’s answer, and this is yet more evidence, if we needed it, that the Government are out of their depth on the Bill and do not know how it will or could be applied.
Finally, I will of course be withdrawing my noble friend Lord Fox’s amendment, but, in light of the lengthy letter from the noble Lord, Lord Markham, that we received after these proceedings started—as far as I can manage to read it on my phone, it seems to be at variance with some of the Minister’s points—I will quite possibly come back to these points on Report. When Ministers cannot agree on the interpretation of a Bill, we need to probe further. I withdraw Amendment 14.
Amendment 14 withdrawn.
Amendment 15
Moved by
15: The Schedule, page 3, line 31, at end insert—
“(5) Before making regulations under this section the Secretary of State must lay before each House of Parliament a statement outlining how the regulations are both necessary and proportionate.”Member’s explanatory statement
This amendment would require the Secretary of State to outline why regulations made under this section are necessary and proportionate before making them.
Lord Allan of Hallam Portrait Lord Allan of Hallam (LD)
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My Lords, throughout the passage of the Bill, the Government have repeatedly said that we are talking about last-resort measures that they are reluctant to, and hope they will not have to, introduce. In this group, we will test the extent to which they genuinely see these as last-resort measures.

Collectively, the amendments could be described as seeking to introduce additional elements of friction, before the Government move to regulating for these minimum service levels. Friction can be a useful thing in the right places: if I wish to enter my own house, I would like that to be as frictionless as possible, but if the police would like to enter it to carry out a search, I would like there to be a reasonable level of friction, with them having to prove why they have the ability or need to do that, and to go before a court to have their need tested in front of others. So, here, we are trying to put those kinds of friction in place so that Ministers do not do what we fear: rush to regulate in the heat of action in the same way that they have rushed to bring this legislation before us in the first place.

Amendment 15 in my name uses two concepts that are familiar to those who work with human rights legislation—the notions of necessity and proportionality. I am not practised in public human rights law, so I will defer to the noble Broness, Lady Chakrabarti, who I am sure will have things to say on this group of amendments. However, I have had to make decisions on freedom of expression and surveillance questions on online platforms where these tests are useful and applied because they seek to balance different rights that we have. It has been generally accepted in our debates that we are talking about fundamental human rights here—the right of an individual to withdraw their labour. When considering whether the Government in the public interest can override that right, these necessity and proportionality tests are the right ones, just as they are in other contexts such as freedom of expression and surveillance.

I am sure that the Government in their response will refer to the human rights certification that is on the front page of every piece of legislation and say that it is an implicit commitment. Of course, no British Government could ever not apply tests of necessity and proportionality because they have signed off the legislation as compliant. However, there are significant advantages to making these tests explicit in this section of the Bill.

The amendment would force the Minister to consider the tests and to apply them explicitly before making regulations, and to publish their deliberations for scrutiny. In practice, this would mean that the Minister would have to ask the team that is putting together the case for the regulations to show its workings; this would have significant value if those workings were available to all of us. That is not least of defensive value for the Government, because at some point they will have to explain why they felt compelled to make the regulations and why they passed the threshold.

I look first at the necessity test. The Minister would need to be satisfied that all other avenues had been tried, which in this case largely means negotiated agreements to provide cover. The risk with the Bill as it stands is that Ministers will be satisfied with vague assurances. They will ask, “Did you ask for voluntary cover?” “Yes, Minister, we did.” “Did they agree?” “No, Minister, they didn’t.” “Okay, let’s move to a regulation.” The test may be no more than that and, indeed, in the letter that has just arrived from the noble Lord, Lord Markham, which we are now considering, one senses an element of that with the Government’s argument around ambulance services: “We asked; we didn’t get one and we therefore now need this piece of legislation.” That is not good enough and, if this is truly a last resort power, we want the Minister to press for all avenues to have been explored including the potential offer of carrots to the workforce for agreeing to provide minimum services, as has happened in many other countries. We debated that at length on the first day of Committee. It is not simply a question of employers ordering their workforces to provide minimum service levels; in many institutions there is a negotiated agreement whereby something is offered to the workforce in return for providing minimum service levels. What we do not want is a necessity test that bypasses and ignores that option altogether. By putting that explicitly in the Bill, the Minister would have to be satisfied that all reasonable steps had been taken and there was no other way in which to guarantee minimum service levels. That is the right necessity test when one is overriding somebody’s fundamental rights, as we have all agreed is happening in this case.

I turn now to the proportionality test. It is included to make sure the provision is done properly. There is a risk of a superficial version of this test—one which is effectively a cost-benefit analysis. We have seen this again in the context of the ambulance debate. The Government will argue that the benefits of having life-saving ambulance cover outweigh the cost of some workers not being able to strike. At that superficial level that sounds reasonable, but it is not a true proportionality test. To do that properly we need to dig into the next level, where we look at the likely actual impacts. There are two areas where the proportionality test might be more complex. First, if there is any likelihood that workers could end up being dismissed—as we have accepted is a potential outcome of this legislation—in this case the costs are dramatically different and that equation would change. Providing emergency cover versus dismissal of workers is a different test from emergency cover versus simply losing the right to strike.

Secondly, if the regulations did not result in more people showing up for work—for example, because people take other forms of industrial action, which they are entitled to do; there are all sorts for ways in which the climate could be poisoned to such an extent that one ends up with fewer people at work than one would have done absent the regulation—the benefits would not have been realised and the proportionality, the cost-benefit equation, changes. This amendment therefore proposes the kind of proportionality test that I hope the Minister would apply by rigorously looking at all the costs and benefits, and is then prepared to publish and defend that analysis rather than making simplistic assumptions. The amendment simply seeks to introduce that rigour with publication to make sure that it happens.

Other amendments in the group will add other forms of beneficial friction and I will leave it to their proponents to argue for them, but I hope that I have made a reasonable case for the Government to accept the additional clarity offered by Amendment 15. I beg to move.

Baroness Chakrabarti Portrait Baroness Chakrabarti (Lab)
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I speak in support of every amendment in this group, even at the risk of offending the noble Baroness, Lady Noakes. At first blush, her Amendment 17 enhances my noble friends’ amendment and does no mischief to it whatever because. by including the impact of the legislation on service users in the list of other groups of people affected, she has, perhaps inadvertently, introduced an element of proportionality into the assessment of the legislation. I completely agree with the noble Lord, Lord Allan of Hallam. I perhaps would not have chosen his friction metaphor because it is the legislation itself that is introducing friction into what ought to be partnership industrial relations. This group may not be Henry VIII on stilts, but it is Henry VIII revisited. What every amendment in the group at least purports to do is to introduce an element of transparency into the process before the Secretary of State inflicts these regulations on the public or on Parliament.

I want to be clear, as I have been in the past, that the Bill is not desirable or necessary but if such minimum service level agreements were in a particular instance desirable, necessary and proportionate to comply with convention rights, as the noble Lord, Lord Allan, rightly pointed out, it would be for a number of reasons better for everyone—including Ministers—to do this by way of purpose-specific primary legislation. In a moment where it was truly necessary to impose these agreements because they could not be reasonably negotiated, it would be better for legal advocacy to do this by way of purpose-specific primary legislation. Why? Because it would be purpose-specific and because any court subsequently considering the necessity, proportionality and compliance with the law of the measure would give greater deference to the scrutiny and process undertaken in both Houses of Parliament in the context of a Bill rather than regulations.

13:00
Finally, under our human rights settlement in this country, at least at the moment, primary legislation may never be struck down by the courts. Even if the Bill was not necessary and proportionate in the instances that I identified, when it becomes an Act of Parliament it cannot be struck down. If the Government are really to be believed that these measures are only in extremis, are not political tub-thumping, are not about trying to divide the unions from the workers, and so on—and that the Bill is about ensuring a level of service when it cannot be reasonably negotiated—Ministers would be very wise to take the rather sage advice of the noble Lord, Lord Balfe, and pause this legislation, having opened up the argument, in order to save the possibility of purpose-specific and sector-specific primary legislation down the road in the event that, in one sector, there was such a problem and people were behaving so unreasonably that a service could not be guaranteed in a way that was reasonable. We heard different arguments from Ministers in the previous debates about what the test should be: whether it should be life and limb or, perhaps, based on annoyance; in the context of the Public Order Bill, it is about “more than minor” disruption.
Assuming that the Government will not agree with me and will not pause this legislation, at least today, the second-best option is greatly to beef up the process of parliamentary scrutiny and public transparency before such a draconian measure as a minimum service level agreement is imposed by government. I certainly cannot imagine that Ministers can object to a turbo-charged scrutiny procedure for matters that I really do not think should be dealt with by secondary legislation at all, for the reasons I previously gave. What is the possible objection from any Minister to, for example, Amendment 15 in the name of the noble Lord, Lord Allan of Hallam, which proposes a statement setting out why the regulations are “both necessary and proportionate”?
What possible objection could there be, not least given that the Minister, the noble Lord, Lord Callanan, has set out his statement on the cover of the Bill that he thinks it complies with the convention rights? If he is thus convinced, surely, he would have no objection to any specific regulations made thereunder setting out reasons, in a statement before both Houses, why the regulations are necessary and proportionate. That is the convention test in terms of the European convention; there are other conventions to which we will come in later groups of amendments. I am really interested in the Minister’s response to why something as innocent and desirable as Amendment 15 should not be welcomed with open arms.
Similarly, a bit a more granular detail about impact is provided in Amendment 16, which is enhanced by Amendment 17, thanks to the noble Baroness, Lady Noakes. Various other process amendments in this group are also designed to give Parliament greater access to ministerial reasoning before being faced with the “yes or no” choice that secondary legislation puts before both Houses. That is one of the fundamental objections to doing very grave things by way of secondary legislation: we are always told, “Well, Parliament can always disagree”, but Parliament cannot amend or refine; it has to say yes or no to the Government of the day. That is particularly difficult for Back-Benchers of the governing party, whichever party is in power.
If Ministers will not listen to the noble Lord, Lord Balfe, who is very experienced in this area—by the way, I agree with his assessment that, historically, Conservative leaders and Ministers have not always been so anti-trade union; I will not bore noble Lords again with references to Disraeli and Churchill, but they are all over the history books, so it is a shame that the Government are going down this path—and if the Government insist on the Bill and will not pause it, surely they should welcome pretty much every amendment in this group, or some version of them.
Lord Balfe Portrait Lord Balfe (Con)
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I say to the noble Baroness that, early in my career, I asked a senior trade unionist who had been the best Minister of Labour, and he said Walter Monckton followed by Iain Macleod.

Baroness Chakrabarti Portrait Baroness Chakrabarti (Lab)
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That is even more wisdom from the noble Lord, Lord Balfe.

That concludes what I wanted to say about this group of amendments, and I look forward to hearing later, I hope, a word of consensus from the Minister in response.

Baroness Noakes Portrait Baroness Noakes (Con)
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My Lords, I think that the noble Baroness, Lady Chakrabarti, has tried to damn my amendment with faint praise, so I had better explain it and my approach to this group of amendments.

First, I remind the Committee that this is not draconian legislation, as the noble Baroness has just suggested. It does not impose minimum service levels; it merely allows the Government to specify minimum service levels, which can then be imposed via work notices if employers so choose. That is all this legislation is doing.

This group of amendments, in various ways, is trying to make the process of establishing regulations specifying minimum service levels more difficult, and to make them harder to get through Parliament by putting more hurdles in their way. The Bill already requires consultation; indeed, consultations have already been published for three instances of minimum service levels, and that process will run its course. The departments will then produce their minimum service levels and the appropriate statutory instruments, which will be accompanied by impact assessments. All of this is perfectly ordinary practice; it does not need any of the amendments in this group.

I tabled Amendment 17 simply because the noble Lord, Lord Collins, asked in his Amendment 16 for an assessment of the impact on

“workforce numbers … individual workers … employers … trade unions … and … equalities.”

Just for the sake of balance, I wanted to remind the Committee that there is the other side: people who are affected by strike action and who want to receive services. The point of my amendment is to say: I do not support the amendment tabled by the noble Lord, Lord Collins, but if you are going require something such as this, it should not give just a one-sided picture; it should be balanced. To that extent, I am grateful for the comments from the noble Baroness, Lady Chakrabarti.

Baroness Chakrabarti Portrait Baroness Chakrabarti (Lab)
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I am grateful for that gracious response from the noble Baroness. Whatever her motivation, I agree that service users should be included in that list, not least for the reasons set out earlier by the noble Lord, Lord Allan of Hallam.

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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One thing that the noble Baroness could read is the original impact assessment for the transport Bill, which said—and I will come back to this point—that there will be an impact on service users because disputes will be longer and industrial relations will be worse. The problem we have had is that that Bill and this Bill had impact assessments there were red-rated. The noble Baroness should focus on that.

Baroness Chakrabarti Portrait Baroness Chakrabarti (Lab)
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Indeed. The point is that the noble Baroness opposite and I disagree, perhaps, about what the effect will be on service users and others, but the test is necessity and proportionality, as was set out so well earlier by the noble Lord, Lord Allan of Hallam. Whatever the motivations, it is a good addition to the list, in my view.

As for the noble Baroness’s point that this is will all be voluntary and the legislation will not impose anything on anyone, that really does not hold as a matter of law—not least because, as we discussed earlier, the “may/must” point is really significant; it is not hypothetical. It is hugely significant that, when one is a given a power—whether the Secretary of State is given a power to make regulations or an employer is given a power to issue work notices—they must exercise that power rationally. They cannot ignore that they have that power; they will face litigation. That is compounded in this area because the employers may well be contracted by the Secretary of State. The Secretary of State would then have the purchasing power—the significant contractual power as the buyer of the service at one end—and would also wield regulations with the other hand. It is not completely ingenuous to suggest that this is all just helping the discussion and that there is no element of compulsion in it.

Lord Hendy Portrait Lord Hendy (Lab)
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My Lords, much of the debate on this Bill has been concerned with its substantive content, but my noble friend Lady Chakrabarti draws attention to a major problem with the Bill; namely, its form.

I remind noble Lords that last year two committees of this House reiterated long-standing principles for drafting legislation. The Delegated Powers and Regulatory Reform Committee, of which I have the honour to be a member, in its report Democracy Denied?, and the Secondary Legislation Scrutiny Committee, in its report Government by Diktat, set out those principles, which were overwhelmingly endorsed in the debate in the House on 6 January last year. The fact is that this Bill flouts those principles. That view is reiterated by the reports on the Bill by the Delegated Powers Committee, the Joint Committee on Human Rights and the Constitution Committee. In addition, as my noble friend Lord Collins has just pointed out, the Regulatory Policy Committee has described the Bill’s impact assessment as “not fit for purpose”. This raises the question of what steps this House could take to ensure that Bills comply with the principles that are essential for parliamentary democracy in this country.

I turn to my Amendment 36A in this group, which is my attempt to give some substance to—or to redress—the omission pointed out by the Delegated Powers Committee in its report on the Bill. I will read two short paragraphs from our report. Paragraph 19 says:

“The Government have chosen to put no detail in the Bill in relation to minimum service levels, leaving the matter entirely to regulations. Important matters of detail should be included on the face of the Bill, perhaps with a power to supplement those matters in regulations.”


That is my noble friend Lady Chakrabarti’s point. The conclusion, which the committee reached at paragraph 23, is:

“Given the absence of an exhaustive or non-exhaustive list in the Bill of the matters that can be included in regulations, the unconvincing reasons for this power in the Memorandum, and the absence of indicative draft regulations illustrating how the power might be exercised, the House may wish to press the Minister to provide an explanation of how the power to set minimum service levels in new section 234B(1) of the 1992 Act is likely to be exercised. In the absence of a satisfactory explanation, we regard the power as inappropriate.”


My noble friend Lady Chakrabarti says that we can make it good by passing primary legislation. I wonder whether the Government will consider the possibility—even at this stage—of introducing amendments to put those omissions into the Bill to give it at least some semblance of meeting the format and principles for the drafting of legislation.

13:15
Lord Fox Portrait Lord Fox (LD)
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My Lords, we should be indebted to my noble friend Lord Allan for introducing the concept of necessity and proportionality. It is a shame because, in an ideal world, the Minister would have stood up at Second Reading and set out at the outset the necessity and proportionality of the Bill. That did not happen, with due respect to the Minister, so we are having to have that debate now in Committee.

We heard from the noble Baroness, Lady Bloomfield, that the Government’s preference is to negotiate, rather than compel these MSLs. I believe that she is sincere when she says that, but we must look at what has been happening with the disputes. We have had several real-world examples going on around us. To take the rail dispute, for example, it is absolutely clear that the Secretary of State, operating behind the scenes, prevented decisions being made that would have shortened that dispute. Had this legislation been in existence, how would the Secretary of State’s hand have been strengthened even further? Would we be any closer to a resolution now? I suggest that we would have been a lot further away.

When it comes to the health disputes, it took months before the Government got around the table with nurses and doctors to negotiate and do what was needed to end those disputes. It is not clear to me that the idea that “We would rather negotiate” is absolutely on the table. We know very well that “We would rather stand back” has actually been the Government’s approach. We have to take the Government on the evidence that we have seen, rather than what we have heard in your Lordships’ House.

I turn to the short, but excellent and pithy, debate that we have been having. With the fear of damning the noble Baroness, Lady Noakes, yet further, I say that she is completely correct to focus us on the users of the services. However, I would say that the impact of days that make up a year of service disruption through strikes, regrettable though these are, is far smaller—thank goodness—than that of the day-to-day service that people experience. Perhaps the noble Baroness could focus her not inconsiderable energies on improving the day-to-day services that her Government are delivering for consumers across this country. That is the real world that most of them experience: the everyday service, not the strike day service. So perhaps she could use her energies in that direction—I am sure that everything would get better if she did.

I will say a few words about Amendment 40 in my name and a little bit about the friction that the Bill is creating within industrial relations or, indeed, in the case of my amendment, with recruitment. It is really a probing amendment to ascertain from the Minister whether he thinks that the Bill will impact the morale of existing workers and, more specifically, the ability to recruit new people. The existence of the Bill, whether or not it is used, will have a communicating effect both on the current and future employees of these services. The Government need to take that into consideration.

In an earlier group, noble Lords talked about the chronic shortage of people in many of the sectors that we are dealing with here—health, education and others. I realise that job security is not something that many Ministers experience—although the noble Lord, Lord Callanan, is perhaps an exception to that, having been a Minister for many years—but I ask him to empathise on the subject of job security, and indeed task security. As I say, that may not be something that he has experienced widely. We have to remember that the employment market is a seller’s market; there is a shortage of people to go into these services. Therefore, it is absolutely not helpful if the Government make the prospect, or the sense, of working in these services less good and less favourable.

I am not necessarily suggesting that this legislation does that. I am asking the Government what work they have done to assess what effect this legislation would have on employee morale and future recruitment. Can the Minister set out the response and the nature of that work, statistically and qualitatively? If the work has not been done, why not?

Lord Bishop of Manchester Portrait The Lord Bishop of Manchester
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My Lords, I am sorry to come into the debate quite late; I had not realised we were getting so close to the end. I support Amendment 20 from the noble Lord, Lord Collins, and Amendment 40 from the noble Lord, Lord Fox. I regret that I have been unable to be in my seat at earlier stages, but I am grateful that my right reverend friends the Bishops of London and St Edmundsbury and Ipswich have passed on my concerns. Amendments 20 and 40 are absolutely invaluable. If this Bill is—regrettably, in my view—to become law, it must have all necessary consultation and evidence gathering before it.

Amendment 20 would require that an assessment of health and safety performance in the affected sector is made prior to minimum service regulations, and that is critical. As other noble Lords have said, if we look at this past winter, it is valid to ask whether what might be considered a minimum service level is reached on a daily basis even when there is not a strike going on. Assessing the level of service provided in periods when the service is not affected by strike action, and requiring that to cover the most recent 12 months, creates an important benchmark.

Amendment 40 would introduce a necessary review of the impact on recruitment and retention of staff. Research by the TUC suggests that the recruitment and retention crisis is ongoing. Something like two-fifths of public servants say that the implications of this Bill have made them more likely to consider leaving their job in the next three years. We have a crisis of vacancies in many sectors. This is not going to help.

Earlier today the noble Lord, Lord Goddard, asked a pertinent Question about the performance on the west coast rail line, and I was glad to be able to ask a supplementary to that. If nothing else, that exchange should have made clear to every one of us in this House that there is no point in setting minimum service levels for strike days when current performance is so depleted. Such poor provision of services, often exacerbated by the low morale consequent upon poor or aggressive management practices, means that acceptable minimum levels of service are just not available to customers or the public even on normal working days.

There is a duty on all of us who govern our nations to go beyond the most basic economic calculations when we are legislating to do so for the common good and human flourishing—something set out in the teaching of many religious denominations. This Bill, as drafted, fails that duty.

Lord Cashman Portrait Lord Cashman (Lab)
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My Lords, I rise to speak in favour of the amendments listed. I look to the noble Baroness, Lady Noakes, and assure her that I will not, at this point, offer my support to her amendment; I am sure that will give her great comfort. I will not repeat the points I made at Second Reading, but I believe this Bill undermines basic democratic and fundamental rights. I believe it is dangerous. It is barely drafted and badly drafted. I thank my friend the executive dean of Leeds, Professor Johnson, for the advice he has given me on the Bill.

I equally thank the Equality and Human Rights Commission and will refer to its recommendations now. I hasten to add that the commission, in my opinion, has been much muffled and muted during the last 18 months. Let me quote:

“Having carefully considered the issues, we believe the Bill raises several human rights considerations, specifically in relation to Article 4 (Prohibition of Slavery and Forced Labour), Article 11 (Freedom of Assembly and Association) and Article 14 (prohibition of discrimination) of the European Convention on Human Rights (ECHR) that require careful scrutiny.”


I believe that these amendments provide for that.

To pick at random out of the commission’s substantial documents, paragraph 4 says:

“In the human rights memorandum that accompanied the earlier Transport Strikes (Minimum Service Levels) Bill”—


to which my noble friend Lord Collins referred earlier—

“now superseded by this Bill, the case for the lawfulness of similar provisions was made partly by distinguishing the Bill’s transport-focused clauses from measures affecting other sectors, including health and education. In that document, the Government recognised the importance of existing measures to mitigate the impacts of industrial action in health, education and fire and rescue services. For example, some healthcare sector trade unions already provide life and limb cover during strikes, and the Secretary of State has legal powers to give directions to fire and rescue authorities, which could be used in the event of industrial action.”

Paragraph 5 says:

“It is not clear what consideration has been given to these existing measures in the current Bill. We advise that more detail may be needed to articulate a legitimate aim for imposing Minimum Service Levels (MSLs) on each sector impacted by the Bill.”


I now turn to paragraph 11, to which I referred at Second Reading:

“Finally, we are concerned that an employee would lose automatic unfair dismissal protection not only if they fail to comply with a work notice, but also if their trade union has failed to take reasonable steps to ensure compliance: an employee will not know before participating in a strike whether that is the case or not.”


I could go on. For those reasons and many more, I urge noble Lords, if not now then when these amendments come back, to give their full support.

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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My Lords, I also welcome the contribution from the noble Baroness, Lady Noakes. We have worked together, and one of the things I have always been impressed with, particularly on the Finance Committee we served on jointly, is her insistence on decisions being clearly evidence based. That is what this series of amendments is seeking, because at the moment the only evidence we have is an impact assessment that was judged to be red-rated by the Regulatory Policy Committee—not fit for purpose. It was published after the MPs in the other place had scrutinised and passed the Bill, so they did not even have an opportunity to see the red-rated impact assessment.

The noble Baroness has raised the important point that industrial action affects the economy and all kinds of things, not just people travelling to work. It has a cost, and it has a cost for a purpose. When I studied industrial relations, many economists tried to make me better understand that strikes brought two sides together because they had costs imposed on them. The problem we face now is that some of the costs, particularly in the rail industry, are hidden. A rail employer does not suffer any cost from industrial action because the Government indemnify it for those costs, so there is no imperative on the employer to reach a settlement. I suspect that is why the public realise who is to blame for the length of these disputes. The public are not as easily fooled as the Government think they are.

Importantly, the impact assessment on the transport strikes Bill said it would have a

“negative impact on industrial relations, which could have detrimental impacts for all parties”

and increase the frequency of disputes, meaning that

“an increased number of strikes could ultimately result in more adverse impacts in the long term”,

particularly on users of the service. Many noble Lords will have seen NHS Providers make the very same point in its briefings to this Committee, saying that it will directly impact good industrial relations and the ability to resolve any disagreements and disputes.

13:30
That is why this series of amendments is important. I like my noble friend’s point about friction—you want to ensure that there are processes to go through before a Minister uses the powers this Bill gives them. My noble friend Lady Chakrabarti is absolutely right; they also try to increase transparency over why a decision has been made and how a conclusion is reached on what a minimum service level is. As we have heard in previous debates, certainly everyone involved in the health service would be intrigued to know how you set a minimum service level and how it would compare to non-strike days. Similarly, in Oral Questions we had questions about levels of service in transport.
There is a very strong view in the impact assessment on the transport strikes Bill. I was interested to see the questions put in the Select Committee. Transport Focus, the government body, said things we need to hear: “A volunteer is worth 10 pressed men—it is often said, but true, and we would see consequences if this type of MSL were ever put into place, but it seems like unknown territory. We are curtailing the right to strike and making things worse.” The sectors are so broad in this Bill—it is more than transport, as we have debated. The Rail Freight Group said that it was quite happy that it was not in scope, but the Bill is now written in such a way that it could be. It said, “We are not in scope, and that is a situation we are actually quite happy with, because freight is a private sector operation. Our members do not see a particular role for the state to get involved in industrial relations between employer and employee”. Phil Smart of the Rail Freight Group said: “Our Members feel it is their responsibility to sort out their industrial relations with their own staff. We think that is the responsible thing to do. We think we might end up somewhere we don’t want to go if we see the state as taking a role in determining industrial relations in private companies.”
That is precisely what is wrong with this Bill and its imposition—I use that term because the noble Lord will no doubt repeat comments he has made before, and the noble Baroness the Minister has also said, “It is up to companies: there is no statutory obligation”. But he who pays the piper calls the tune. I am sure we will see Governments use these powers, whether through funding or other forms of coercion. No one will be fooled. I think it is dangerous for the Government; my advice to them is to stay out of industrial relations—it will only end in tears.
Lord Callanan Portrait The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)
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I thank the noble Lord, Lord Collins, for his helpful advice. I will be sure to pass it on to the Prime Minister.

Lord Collins of Highbury Portrait Lord Collins of Highbury (Lab)
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Ted Heath would have done.

Lord Callanan Portrait Lord Callanan (Con)
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He was slightly less successful than the current one.

Each amendment in this group seeks to add additional evidence-gathering or reporting requirements or scrutiny to the regulation-making powers in the Schedule to the Bill. Before addressing them, perhaps the Committee will permit me a moment to reply to the rather general points made by the right reverend Prelate the Bishop of Manchester. I am afraid that I fundamentally disagree with him. Recent strike action has demonstrated the disproportionate impacts strikes can have on the public, presumably including his parishioners. They have been unable to access work and healthcare or attend education classes and are worrying whether an ambulance will be there when they need it. Businesses are also crucially affected by industrial action; 23% of them could not operate fully due to industrial action in the UK in December and 2.4 million strike days were lost between June and December. I am sorry that the right reverend Prelate does not believe his parishioners need protecting from these actions, but this Government certainly do.

Lord Bishop of Manchester Portrait The Lord Bishop of Manchester
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I have every concern for my parishioners and the members of the various parishes, schools and chaplaincies—everyone in my diocese, whether they are Anglican or otherwise. However, I do not believe that this legislation is taking us in the right direction or that passing it will create better ambulance, train or hospital services for the people in my diocese. We may disagree, but I assure the Minister that I speak on behalf of everyone in my diocese.

Lord Callanan Portrait Lord Callanan (Con)
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They will also get to vote in democratic elections and make their feelings clear. By the very nature of the legislation, if a strike is taking place with no minimum services, given that this Bill imposes minimum services, his parishioners will get a better level of service once it goes through. However, we should have debated these points at Second Reading. I am sorry that the right reverend Prelate could not be present then.

Amendment 15, tabled by the noble Lord, Lord Allan, seeks to require the Secretary of State to lay a Statement before each House outlining how the regulations that set minimum service levels and specify the relevant services are both necessary and proportionate. As my noble friend Lady Noakes, who has had to go to the Financial Services and Markets Bill in Grand Committee, pointed out, this amendment adds unnecessary duplication. Sufficient checks and balances before the regulations can be made are already built into the legislation. This includes the need to carry out consultations and the requirement that regulations must be approved by both Houses before they can be made.

Key stakeholders, including employers, employees, members of the public—perhaps even churches—trade unions and their members are all encouraged to participate in the consultations and have their say in the setting of these minimum service levels before they come into effect. Parliament, including Select Committees, as they already have done, will have an opportunity to contribute to the consultation. Following the consultation, the Government will consider all representations and publish a response setting out the factors taken into account in determining the minimum service level to be specified in those regulations.

Subsequent regulations on MSL will be accompanied by an Explanatory Memorandum which will outline the legal effect of the regulations, to address the complaints of the noble Baroness, Lady Chakrabarti, and the noble Lord, Lord Cashman, and its rationale and why they are necessary. Impact assessments will also be published alongside the regulations, which will then be subject to the affirmative procedure. We think this approach is appropriate; it is a common way for secondary legislation to be made.

Amendment 36, tabled by the noble Lord, Lord Collins of Highbury, and the noble Baroness, Lady O’Grady, also requires the relevant Commons Select Committee to publish a report on how the Act will impact that sector before regulations are made. This will delay the implementation of minimum service levels—I suspect that is its intent—and extend the disproportionate impact that strikes can have on the public.

Amendment 36A, in the name of the noble Lord, Lord Hendy, would require the Government to lay draft regulations before each House of Parliament at least 28 days before the regulations are intended to be made, with an Explanatory Memorandum setting out factors taken into account in determining the MSL. These additional steps are, in our view, unnecessary and duplicative for the reasons that I have set out. The Government resist Amendments 16, 17, 20, 36 and 36A.

Amendments 38 and 39, in the names of the noble Lord, Lord Collins, and the noble Baroness, Lady O’Grady, would place limitations on the consultation provision, which the Government again resist. In the Government’s view, Amendment 39, as drafted, would not have the effect that noble Lords perhaps intended. In reality, it would require consultations to be published within a six-week window after the Act is passed, meaning that, by their very nature, future consultations after this period would then not be possible. Amendment 38 would prevent consultations taking place at all after the Bill has achieved Royal Assent. Both amendments would remove the ability to specify minimum service levels on an ongoing basis and, in our view, unduly limit our ability to respond appropriately as circumstances change—again, I suspect that this is the purpose of those who tabled the amendments. Key stakeholders are all encouraged to participate in the consultations to help shape the way MSLs operate. As I have made clear in previous responses, the Government have already published consultations on implementing minimum service levels in ambulance, fire and rescue, and rail services.

Amendment 40, in the name of the noble Lord, Lord Fox, would require the Secretary of State to lay a copy of a report in both Houses of Parliament, no later than six months after the Act is passed, setting out the findings of a review into the impact of the Act in regard to six key sectors. The noble Lord will be unsurprised to hear that I resist this amendment on the grounds that all the potential impacts of minimum service levels, including those on staffing, etc cetera, and the other factors the noble Lord mentions, will be considered as part of the process of making detailed regulations for those specified services. As I have set out on numerous occasions, these regulations will be accompanied by detailed impact assessments. We have also committed to conducting the usual review of the full impact of the Act within five years of the first secondary legislation coming into force. We believe that is a much more appropriate timescale to review the impacts.

I apologise to the Committee if I have spoken at length but there were a lot of amendments in this group. I hope I have been able to provide at least some reassurance on the consultation processes that we intend to undergo prior to making regulations, as is required by the Bill.

I was going to say that I hope noble Lords will feel able not to press their amendments, but I see that some noble Lords are seeking to intervene.

Baroness Chakrabarti Portrait Baroness Chakrabarti (Lab)
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I want to ask a question of the Minister, just to be clear in my own mind. The trade unions say that the Government do not need these powers to enforce minimum service level agreements because they are reasonable and negotiate voluntarily and will continue to do so—they say it is not necessary to legislate. The Government disagree with that and legislate. Then, when some of us say that there needs to be a transparent process and proper consultation because this is such grave legislation for trade union rights, the Minister responds by saying, “No, no—we do it anyway, so we don’t need to put that on the face of the Bill”. Is there not a contradiction at the heart of this argument? The Government will legislate only one way: for powers for the Secretary of State but never for scrutiny of the Secretary of State. How is that consistent with what the Government say to unions, who are saying do not legislate for this because reasonable agreements will be negotiated in any event?

Lord Callanan Portrait Lord Callanan (Con)
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On a number of occasions, including the first day of Committee, I have made it clear that if voluntary arrangements are in place, which there are in some services, that is our preferred approach. However, it is the case in certain ambulance services that those voluntary arrangements were not agreed until literally the night before the strike action was due to take place, and indeed some trade unions then changed their minds about voluntary arrangements. We therefore think it is appropriate to have the back-up power. If they can be agreed, that is our preferred approach. The approach outlined by the noble Baroness is the normal process of consultation. If Parliament chooses to give the Government these powers—we will see the outcome of the debates in both Houses—then we will consider whether it is appropriate to make these regulations or not, given the circumstances in each case. Those regulations will then be further approved by Parliament.

13:45
Lord Fox Portrait Lord Fox (LD)
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I have two points. In answering the noble Baroness, Lady Chakrabarti, the Minister used the ambulance service as an example of the Government having to use the power. I understood that it was the employer that used the power, and in the case of ambulance workers the Government are not the employer. Can the Minister perhaps square that language?

In a rather less difficult answer, in dismissing one of the amendments tabled by the noble Lord, Lord Collins, the Minister said that the process of publishing information at parliamentary level would take too much time. It is on the record that a recent former Transport Secretary of State said that the Bill will not solve the current problems. What is the Government’s time target for this, given we know that the Minister thinks one of the amendments would take too much time? What is sufficient time? When do the Government expect the Bill to be in place, all other things being equal, and what is the hurry?

Lord Callanan Portrait Lord Callanan (Con)
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On the noble Lord’s first question, as he well knows, it is the Government’s job—or duty, if we get the legislation through—to make the regulations, and then it will be at the discretion of employers whether they use the powers that are given to issue work notices. We have debated this many times.

With regard to the timetable, these things are beyond my authority level. It depends how quickly the Bill goes through Parliament, how many amendments there are, how long ping-pong takes, and the scheduling of the legislation by the usual channels. I hope we will get the legislation through as quickly as possible. Of course, I hope that we never need to use it, as I have said before, but we think it is appropriate that the power should be there as a backstop.

Lord Hendy Portrait Lord Hendy (Lab)
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My Lords, I am sorry to trouble the noble Lord a moment further, but could I invite him to express a view on the report of the Delegated Powers Committee? It points out that there is no detail in the Bill and criticises it for that. Does the noble Lord accept that criticism?

Lord Callanan Portrait Lord Callanan (Con)
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We will be responding in due course to the report from the Delegated Powers Committee. I entirely accept that this is a wide secondary-legislation-making power for the Government, but we think that it is appropriate in these circumstances.

With that, I urge noble Lords not to press their amendments.

Lord Allan of Hallam Portrait Lord Allan of Hallam (LD)
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My Lords, I am sorry the Minister did not feel comfortable accepting the amendments in this group, but I think it has been a helpful debate.

The noble Baroness, Lady Chakrabarti, and the noble Lord, Lord Collins, both talked about the potential for inserting friction into industrial relations. These Benches very much agree that that may be the effect of these regulations, so we think it is right to insert a certain level of friction into the legislative process to try to head off what may be a very poor outcome.

The noble Baroness, Lady Noakes, who I understand is now in Grand Committee, talked about the measures as being “not draconian”, which is an interesting framing. However, the fact is that they impact on people’s fundamental rights. Whether it impacts one person, a thousand people or a hundred thousand people, the general principle is that one should be much more careful with any legislation that affects fundamental rights. My amendment was trying to make sure that we had a framework which reflected that.

There is an old maxim that if you only have a hammer, everything looks like a nail. In this Bill, the Government are granting themselves the power to create a hammer which will be offered to employers, but employers may prefer to meet their staff with other tools, such as cash or commitments to a negotiated settlement. In this debate, concerns have come out once more about what happens when the only tool you offer employers is the hammer and the potential knock-on effects of that.

It is right that we are testing whether the Government really will use those powers only in extremis, because “can’t” is often used when “won’t” is closer to the truth, until “won’t” becomes “will” and “can’t” is miraculously turned into “can”—as we have just seen with the recent move to settle the health disputes. That is another example of the Government saying that something is impossible—like minimum service levels are impossible—and then it becomes possible. I hope the Government will strengthen the Bill before Report to make sure that “can’t” really means “can’t” when it comes to negotiated minimum service levels. With that hope, and not yet entirely jaded by experience, I beg leave to withdraw my amendment.

Amendment 15 withdrawn.
Amendment 16 not moved.
Lord Faulkner of Worcester Portrait The Deputy Chairman of Committees (Lord Faulkner of Worcester) (Lab)
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I am unable to call Amendment 17, as it is an amendment to Amendment 16.

Amendment 18 not moved.
13:52
House resumed. Committee to begin again not before 2.25 pm.

Food Price Inflation

Thursday 23rd March 2023

(1 year, 3 months ago)

Lords Chamber
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Commons Urgent Question
13:53
Lord Benyon Portrait The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)
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My Lords, I will now repeat in the form of a Statement an Answer to an Urgent Question in the other place:

“We recognise that food prices have gone up. The recent increase in food price inflation was driven by upward price movements in eight of the 11 food categories. The three most significant price increases since February 2022 are oils and fats, at 32.1%; milk, cheese and eggs, at 30.8%; and non-classified food products, at 28.9%. While recent unseasonable weather in Morocco has also created some temporary supply disruption to fruit and vegetables, domestic retailers have held prices comparatively low compared with the rest of Europe, where increased demand led in some cases to 300% rises in the price of some vegetables.

A number of media outlets have reported that the recent shortage of some salad and vegetables has been the driver of the increase in food inflation in February, but that is not the case. The overall inflation rate increases have been caused by several factors. There are other categories where price increases have been greater than that of vegetables over the past year.

These high overall inflation rates are driven by high utility prices and pressures on global supply chains that are being felt across Europe and beyond. Commentators expect the rate of inflation both across the economy and for food and drink to be near its peak. The Government have put in place a number of measures to support households with prices, including committing £37 billion to support households with the cost of living; £1 billion of that has already gone towards help with the cost of household essentials.

Looking forward to April, the Government will be uprating benefit rates and state pensions by 10.1%. The benefit cap levels will also be increasing by the same amount in order to increase the number of households that can benefit from those uprating decisions. In addition, for 2023-24, households on eligible means-tested benefits will get up to £900 in cost of living payments. That will be split into three payments of around £300 each across the 2023-24 financial year. A separate £300 payment will be made to pensioner households on top of their winter fuel payments, and individuals in receipt of eligible disability benefits will receive a £150 payment.

Free school meal eligibility is being permanently extended to children from all families with no recourse to public funds. The Government have extended free school meals to more groups of children than any other Government over the past half a century. We remain committed to ensuring that the most disadvantaged children continue to be supported.

We are also working closely with retailers to explore the range of measures they can take to ensure the availability of affordable food, so while we recognise that this is a challenging time for consumers, we are taking a large number of steps to support people with the cost of living and I have great faith in the food supply chain, which has proven itself to be extremely resilient over the past few years.”

13:56
Baroness Hayman of Ullock Portrait Baroness Hayman of Ullock (Lab)
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My Lords, I am grateful to the Minister for reading out the response from Farming Minister Mark Spencer, even if it does not fully reflect the struggles being faced by households across the country. Earlier this afternoon, the Bank of England raised interest rates for an 11th consecutive time, which of course will increase mortgage, credit and other costs at a time when many people are already scaling back on their food shops.

We understand that the Secretary of State cannot always be available to take a UQ, but her absence this morning was concerning. She is the department’s representative at the Cabinet table, and I think many people across the country would expect her to take an active interest in issues around food costs and security. Can the Minister therefore outline her involvement in this issue? What meetings has she had recently with producers and retailers, or have those meetings also been delegated to others?

Lord Benyon Portrait Lord Benyon (Con)
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I can assure the noble Baroness that the Secretary of State is deeply involved in this issue. The Food Minister, Mark Spencer, took this Urgent Question, which is right, as he is the Minister responsible for food supply, food security and other related issues. The noble Baroness is absolutely right that this matter affects a number of different departments right across government, and the Prime Minister and the Chancellor of the Exchequer have also been deeply involved in this. I do not know precisely what meetings the Secretary of State has had on this issue, but I will be happy to write to the noble Baroness with details of discussions she has had. I can certainly say from my own experience that the Secretary of State is very involved in this issue.

Baroness Bakewell of Hardington Mandeville Portrait Baroness Bakewell of Hardington Mandeville (LD)
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My Lords, I thank the noble Lord for repeating the Statement. Some £37 billion has gone to support households with the cost of living but there is no detail as to eligibility. Can the Minister say how this money is being distributed? I welcome the Government’s intention to permanently extend free school meals eligibility to children from all families with no recourse to public funds. Can the Minister say whether this means that free school meals will be available to all those who are eligible during the school holidays? As the Statement says, the price of milk, cheese and eggs has risen by 30.8%. Can the Minister say whether any of the £37 billion support is reaching the farmers who produce our milk, cheese and eggs?

Lord Benyon Portrait Lord Benyon (Con)
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I thank the noble Baroness for her question. On free school meals, the Government fully support the provision of nutritious food in schools to enable pupils to be well nourished, develop healthy eating habits and concentrate and learn in school. There is so much evidence from a number of different bodies about the importance of the right nutrition to assist with learning and ensure that the school day is as beneficial as possible. We have full confidence that schools and catering suppliers will continue to deliver a quality service. As the noble Baroness will know, under this Government, eligibility for free school meals has been extended several times, and to more groups of children than under any other Government over the past 50 years. This has included the introduction of universal infant free school meals and further education free school meals, as well as the permanent extension of eligibility to children from all families with no recourse to public funds—for example, people with temporary immigration status—which came into effect in April 2022.

We are doing much more to assist households, but she rightly asked where this money is going. It is going directly to those households that need it. Farmers and producers, who are at that end of the supply chain, are being assisted, supported and incentivised in a number of ways. She will have seen measures brought in in the Budget to help farmers through fiscal changes. We are securing and ring-fencing the £2.4 billion a year that we spend supporting farmers, but encouraging them to move towards a system of sustainable farming so that they are protecting our natural capital. This secures the food supply in the long term; it is not just dealing with a temporary problem that has emanated from the alarming effect of the war in Ukraine. Of course, we need to take further long-term measures to make sure that we are incentivising farmers to continue to produce food close to those who eat it.

Earl of Caithness Portrait The Earl of Caithness (Con)
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My Lords, I thank the Government for their generous support, but what further measures beyond the Genetic Technology (Precision Breeding) Bill are they planning to help science enable farmers to produce more in this country while at the same time improving the environment?

Lord Benyon Portrait Lord Benyon (Con)
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I thank my noble friend for that question. Technology is our friend in tackling the needs of future generations. As part of seeing how the Genetic Technology (Precision Breeding) Bill would work, I went to a laboratory in Oxford and spoke to real experts in this field. I came away extremely optimistic that, through the changes we are bringing in through such Bills, but also the incredible work happening across institutions in the United Kingdom and abroad, our ability to feed ourselves in future is perfectly feasible. It needs will from government, investment and continued support for the scientific community, which is driving this change. Also, that scientific evidence needs to feed through to the farmers, producers and processors so that they can continue to produce food affordably and in a sustainable way. I can absolutely assure my noble friend that science is at the heart of government policy on this.

Baroness Lister of Burtersett Portrait Baroness Lister of Burtersett (Lab)
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My Lords, it is good to hear the Minister talking so positively about school meals, so why are the Government still rejecting the calls from Henry Dimbleby and public health leaders to extend free school meals to all children in families on universal credit? When food prices are going up so much, we will have more hungry children than we have already.

Lord Benyon Portrait Lord Benyon (Con)
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As the noble Baroness will know, we have extended free school meals to the largest group of children for decades, and we will continue to look at any other measures we can take. I draw her attention to the work that the Department of Health and Social Care has done for infants. It has increased Healthy Start food vouchers from £3.10 to £4.25, which is a significant increase, helping low-income families to buy basic food such as milk, fruit and vitamins, ensuring that families are not choosing between costs and healthy choices. There are many other areas where the Government can assist, such as advice on diet and nutrition that enables families to make the right choices for them.

Baroness Bennett of Manor Castle Portrait Baroness Bennett of Manor Castle (GP)
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My Lords, the Statement expresses great faith in the food supply chain, which I can see only as an expression of extreme complacency. It also reflects that domestic suppliers—that is, supermarkets—have kept prices low. Has that not been the source of recent supply problems? The Government have been suggesting that we should be eating more turnips. Of course, the majority of turnips that we consume are produced outside the UK. Does the Minister agree that we cannot keep relying on the soil, water and labour of others to feed ourselves, particularly for the fruit and vegetables which we need far more of?

Lord Benyon Portrait Lord Benyon (Con)
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Our food supply chain was tested as never before through the pandemic. The noble Baroness looks at me as if to say that that is not the case—it is the case. It was tested as never before and found to be secure. With one or two short-term exceptions, it kept us in this country able to have the food that we needed available to us. On costs of lines in supermarkets, Defra works with retailers on a weekly basis to see what direction they are taking to tackle the crisis in household incomes and to make sure that lower-priced products are available, and that those lines are continuing. We do not have a command and control economy that directs our retailers in what they can produce, but they have risen to the challenge, providing a great many lower-priced lines which will continue to be available for families such as this. I hope that will continue.

14:06
Sitting suspended.
Committee (2nd Day) (Continued)
14:25
Schedule: Minimum service levels for certain strikes
Amendment 18A
Moved by
18A: The Schedule, page 3, line 31, at end insert—
“(5) Regulations may not prohibit or enable the prohibition of participation in, or any activity in connection with, a strike or other industrial action; or create an offence.”Member’s explanatory statement
This amendment is intended to ensure that the regulations do not breach Article 11 of the European Convention on Human Rights by permitting the penalisation of individuals for exercising their right to strike.
Lord Hendy Portrait Lord Hendy (Lab)
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My Lords, I shall speak to three of the amendments in this group; they bring into discussion matters of international legal obligation. Amendment 18A deals with protection against the excessive use of the regulations.

I ought to begin by reiterating something the noble Lord, Lord Allan, mentioned earlier, which is that we are dealing here with fundamental human rights. The right to strike is a fundamental human right. It has been held to be a right protected by Article 11 of the European convention in a series of cases, beginning with Unison v the United Kingdom. It is protected not only by Article 11 but by many other international treaties ratified by the UK. In fact, it is protected in many national constitutions; more than 80 protect the right to strike. Of course, it is not unlimited and there are always restrictions in one way or another, but its fundamental nature is that it is a human right.

So too is the right to bargain collectively, which was held by the European Court of Human Rights to be an essential element of Article 11 in the case Demir and Baykara v Turkey. The significance of that is that the right to strike is fundamental to the right to bargain collectively—in other words, to the protection of workers’ living standards. As was said 70 or so years ago, collective bargaining without the right to strike is effectively collective begging.

The right to strike has been lawful in the UK since at least the Trade Disputes Act 1906. There is no further justification, after the many Acts restricting that right since 1980, for yet further restrictions or limitations on the capacity of workers to defend their living standards. In particular, the European Court of Human Rights guarantees through Article 11 that strikers shall not be penalised for taking part in a strike. There are many cases to that effect, notably Danilenkov v Russia and Ognevenko V Russia.

The purpose of my Amendment 18A, given the breadth of the power to make regulations in this Bill, is to clarify that the Government will not use that power to impose an obligation not to exercise the right to strike or to penalise strikers specifically by creating a criminal offence. If that is what the Government intend or merely contemplate, the noble Lord will no doubt say so. If that is not what the Government intend, then Amendment 18A will cause no inconvenience.

14:30
Turning to Amendment 18B, as I have mentioned, the United Kingdom has ratified numerous treaties protecting the right to strike, in particular the International Labour Organization Convention 87 and Article 6, paragraph 4 of the European Social Charter 1961, which is a charter of the Council of Europe. Reference is also made in the amendment to the trade and co-operation agreement of 2020.
The significance of the trade and co-operation agreement is that it requires that the parties to the agreement—the states of the European Union on the one side, and the United Kingdom on the other—will not regress from such standards. Article 387 requires that there be no regression in a manner which affects trade. I imagine the Minister will say that these provisions do not affect it; that may be a moot point. Beyond that, in paragraph 2 of Article 399, there is a commitment by the parties to
“respecting, promoting and effectively implementing”
the core labour standards. Those include ILO Convention 87 and Article 6, paragraph 4 of the European Social Charter.
We know, because the Minister mentioned it, that legal advice was taken on the standing of this Bill, which was presumably the basis on which the noble Lord was able to make the statement on the face of the Bill that it complies with the European convention. Quite understandably, the legal advice is not publicly available. However, I wonder whether it focused sufficiently on paragraph 2 of Article 399: the obligation to respect, promote and effectively implement those core labour standards in the Bill. My view, for what it is worth, is that this Bill will infringe those standards because it exceeds the limits the ILO imposes on minimum service levels. Of course, others will take a different view. However, as I endeavoured to say on the last occasion, there is a precautionary principle here. If there is a risk that we may be in breach of our international legal obligations, we should not take that risk.
My Amendment 36C would make the proposed minimum service levels conform to those ILO standards and hence to the trade and co-operation agreement. At this point it might be useful if I indicate what the relevant ILO standards are for minimum service levels. It has been said on occasion by those speaking on behalf of the Government that the ILO has accepted minimum service levels, but the problem is that the Bill does not conform to the ILO’s minimum service level requirements.
It will not take more than a few minutes to read out what the International Labour Organization’s committee of experts said about minimum service levels. It said that
“the maintenance of minimum services in the event of a strike should only be possible in certain situations, namely: (i) in services the interruption of which would endanger the life, personal safety or health of the whole or part of the population (or essential services ‘in the strict sense of the term’); (ii) in services which are not essential in the strict sense of the term, but in which strikes of a certain magnitude and duration could cause an acute crisis threatening the normal conditions of existence of the population; or (iii) in public services of fundamental importance.”
It said that minimum service levels
“must genuinely and exclusively be a minimum service, that is one which is limited to the operations which are strictly necessary to meet the basic needs of the population or the minimum requirements of the service, while maintaining the effectiveness of the pressure brought to bear; and … since this system restricts one of the essential means of pressure available to workers to defend their … interests, their organizations should be able, if they so wish, to participate in defining such a service, along with employers and the public authorities”.
The Bill does not impose those requirements, and I submit that it should.
I will develop that last point and give one more sentence. The ILO recommends that:
“The workers and employers organizations concerned must be able to participate in determining the minimum services which should be ensured, and in the event of disagreement, legislation should provide that the matter be resolved by an independent body and not by the administrative authority.”