Private Sector: Environment and COP 26

Lord Callanan Excerpts

Wednesday 7th July 2021 Lords Chamber

[Lord Bird]

To ask Her Majesty’s Government what steps they are taking to incentivise the private sector to make their operations more environmentally friendly ahead of COP 26.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, we are calling on companies to commit to cut emissions via the UN’s Race To Zero campaign, to join in submitting near-term plans plus, by 2050, a net-zero goal for independent verification. The UK will also be the first G20 country to require mandatory TCFD-aligned discourses, and we have secured similar commitments from the G7. These initiatives show, among other things, how global businesses are going green and leading the way to a low-carbon future.

[Lord Bird (CB)]

The private sector was very useful when it came to the AstraZeneca vaccine, and the Government were incredibly thoughtful and rushed forward to support that company; it was a good example. However, the four objectives are a bit aspirational at the moment, so we need to push forward the way in which the Government can get the private sector on their side. May I suggest that they look again at some examples such as contracts for difference, which was about giving guarantees to start-ups and new businesses in the private sector in order to push forward? In that way, we can have the same response in the private sector for the environment as we got with AstraZeneca.

[Lord Callanan (Con)]

The noble Lord will I am sure be delighted to hear that we are launching a new contracts for difference round in December.

[Lord McConnell of Glenscorrodale (Lab)]

My Lords, the best multinational companies have actually been ahead of the Government in relation to the sustainable development goals. Therefore, I wonder whether the Build Back Better World initiative announced at the G7 summit recently by the Prime Minister will actively engage multinational companies in delivering the sustainable development goals, and will the UK have a key role in taking forward this initiative after leading the G7 in Cornwall last month?

[Lord Callanan (Con)]

The noble Lord makes a very good point, and indeed we will. Already, 40 of the UK’s leading companies have joined the net-zero challenge and, as he will be aware, as part of the 10-point plan, the Government have invested over £12 billion to stimulate a green industrial revolution in the UK supporting up to 250,000 jobs.

[Lord Jones of Cheltenham (LD) [V]]

What help are the Government planning to give the construction industry to build carbon-neutral homes?

[Lord Callanan (Con)]

The industrial strategy challenge fund has 10 challenges, and one of these, as the noble Lord will be aware, is the transforming construction fund, with £170 million of public funding and £250 million of private funding, providing safer, healthier and more affordable buildings that use dramatically less energy.

[Baroness Bottomley of Nettlestone (Con)]

Building on the role of enlightened international businesses and with the exciting international leadership offered by COP 26, will my noble friend ensure that the magnificent Siemens wind turbine blade factory and Green Port Hull have the opportunity to showcase the pivotal role of the private sector in enabling all operations to move to a net-zero future? I declare my interest as chancellor of the university and sheriff of the city.

--- Later in debate ---

[Lord Callanan (Con)]

My noble friend makes a very good point. She will have seen the announcement that we made only this morning on additional investment in wind turbine infrastructure in the Humber and the Tees. We will of course showcase the excellent efforts of these companies.

[Baroness Hayman (CB)]

My Lords, given the enthusiasm that the Minister has expressed for the work being done and the fact that many companies are making great progress in this area, do the Government support the Better Business Act campaign business leaders who are calling for the amendment of Section 172 of the Companies Act to remove shareholder privacy provisions so that companies are legally obliged to operate in a manner that benefits all stakeholders. Do the Government have plans to review the UK’s corporate governance code to ensure that it is in line with our net-zero-by-2050 target?

[Lord Callanan (Con)]

The noble Baroness makes a good point. We keep all these matters under constant review. We are constantly looking at the corporate governance code and we are reforming audit and corporate governance at the moment. We will be announcing some plans when the consultation has closed.

[Lord Grantchester (Lab)]

In June, the Government announced that Microsoft would join SSE, Scottish Power, NatWest Group, National Grid, Sky, Sainsbury’s, Hitachi, Reckitt and GSK as principal partners for COP 26. Can the Minister explain the Government’s criteria for appointing the principal partners? Does this mean that they consider these companies to have clear plans for achieving net zero which are being implemented with a company-determined contribution?

[Lord Callanan (Con)]

All companies that take part in COP 26 will have joined our race to net-zero initiative. As I mentioned in response to the noble Lord, Lord McConnell, 40 of the FTSE 100 companies have already joined it and we hope that more will follow.

[Baroness Walmsley (LD) [V]]

My Lords, can the Minister get all the companies that run public electric car chargers together in one room and force them to simplify and standardise their access and payment technologies? I ask because if anyone wants to drive an EV to Glasgow for the COP 26, they will need a phone full of apps, a handful of cards and nerves of steel in case the charger that they urgently need is either occupied or broken.

[Lord Callanan (Con)]

I think that the House has some sympathy with the points made by the noble Baroness. She will be delighted to hear that the Competition and Markets Authority is carrying out a market study into electric vehicle charging in the UK, considering two broad themes: how to develop a competitive sector and attract private investment, and how to ensure that people using EV charge points have confidence that they can get the best out of the service. I am sure that the noble Baroness will want to contribute to that study.

[Baroness Blackwood of North Oxford (Con)]

My Lords, I pay tribute to the work of the late Sir Roger Gifford, an exceptional leader in the City and on the green finance taskforce. A key output of the latter was the Green Finance Education Charter, a critical step for embedding vital skills for accurately assessing climate-related risks and opportunities in business, finance, and professional services. As set out in the Green Finance Strategy, the charter forms an important part of the Government’s path to COP 26. Can the Minister recommit to the programme of work today that is set out in that, and will he ensure that it delivers on its full potential ahead of COP 26?

[Lord Callanan (Con)]

I am very happy to join my noble friend in recommitting to that. Sir Roger was an inspiring champion for using finance as a force for good in tackling climate change and improving the environment. All of us in government will remember his work.

[Lord Sarfraz (Con)]

My Lords, the increased attention given to climate change in boardrooms is largely being driven by investor sentiment. Last year, over 100 new environmental, social and governance funds were launched in Europe alone. ESG funds happen to be performing exceptionally well, demonstrating that ethical investing is profitable investing. Can my noble friend send a clear message to ESG investors today that the Government recognise their efforts, that they are welcome and that they will be supported?

[Lord Callanan (Con)]

I agree with the points made by my noble friend. The Government’s ambition is for the UK to be the best place in the world for green and sustainable investment. ESG funds are a crucial part of this. The Chancellor used his Mansion House speech on 1 July to announce a set of ambitious new policies to drive forward this important agenda.

[Baroness Prashar (CB)]

My Lords, I refer to my interests as set out in the register. Can the Minister tell the House what steps the Government are taking to deliver decarbonisation of the existing housing stock and how they are supporting the delivery of the pipeline of skills required to undertake this work?

[Lord Callanan (Con)]

The Government are making substantial progress in this area. The noble Baroness will be aware that we will be publishing our heat building strategy shortly, which will help to set out this path. We are already doing a lot through a number of targeted investments, through the local authority delivery fund and the social housing decarbonisation fund, to help those on the lowest incomes to decarbonise their houses and properties.

[Lord Flight (Con)]

How has the Minister’s department, BEIS, helped to support this transition while also fostering innovation by business at all times and at all levels?

[Lord Callanan (Con)]

My noble friend is very keen on innovation. I am delighted to tell him that, as part of BEIS’s £505 million energy innovation portfolio and our £10 million Industrial Energy Efficiency Accelerator programme, we have provided grant funding for technology developers—industrial sites to install, test and prove innovative equipment that could help to reduce energy consumption and greenhouse gas emissions. We have also boosted access for SMEs to energy efficiency innovation competition and provided £6 million to fund the development of innovative market solutions that can provide businesses with tailored energy efficiency advice.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, all supplementary questions have been asked and we move to the next Question.

Climate Change

Lord Callanan Excerpts

Tuesday 29th June 2021 Lords Chamber

[Lord Teverson]

To ask Her Majesty’s Government what steps they intend to take in response to the Climate Change Committee’s 2021 Progress Report to Parliament, published on 24 June.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

Over the past three decades, we have driven down emissions by 44%, the fastest reduction of any G7 country, and set some of the most ambitious targets in the world for the future. Our forthcoming strategies on heat and buildings, hydrogen, transport and comprehensive net zero will address many of the changes in policy that the Climate Change Committee is calling for, and we will respond formally to the CCC report by 15 October.

[Lord Teverson (LD) [V]]

My Lords, the Climate Change Committee report rightly praised the climate progress in the past that the Minister has referred to—but the past is the past and the committee was scathing about the Government’s plans to meet future targets. So how will the Government practically now save our nation’s previously good and hard-won reputation and retain our credibility as president of COP 26? A destination is useless without a route to get there.

[Lord Callanan (Con)]

The noble Lord is of course quite right, and we do have a route to get there. We will be publishing a number of sector strategies, as I mentioned in my opening Answer, including the transport decarbonisation plan and the heat and buildings strategy, which will illustrate to the noble Lord exactly how we will get to the destination that he refers to.

[Baroness Whitaker (Lab)]

My Lords, it has been reported that over £400,000 was donated to the Conservative Party by firms that subsequently obtained licences to explore North Sea oil and gas. How does the continued extraction of fossil fuel square with the Government’s policy of carbon-neutral energy when hydrogen gas and biogas are capable of coming onstream?

[Lord Callanan (Con)]

The noble Baroness should read the Climate Change Committee report, which itself recognises the ongoing demand for oil and natural gas, including in all scenarios for how the UK will meet its target for achieving net-zero emissions by 2050.

[Lord Krebs (CB) [V]]

I declare my interests as recorded in the register. The Climate Change Committee has been saying for the past decade that there is a gap between the Government’s rhetoric and the reality in actions to cut greenhouse gas emissions. This year the chief executive, Chris Stark, said that

“progress is illusory. Government strategy has been late and what has come has almost all been too little.”

In this context, what action will the Government take, and when, on aviation and dietary change, as recommended by the Climate Change Committee?

[Lord Callanan (Con)]

As I said in my earlier answer, the noble Lord will have to be a little bit patient and wait for the sector strategies that are coming out, which will help to address his point—but I do not accept that we have not done anything. We have taken action on transport with a £5 billion package and we have spent £3 billion on buildings and £1 billion on carbon capture, et cetera, et cetera. So we have done a lot, but I totally accept that we have much to do.

[Lord Oates (LD)]

Can the Minister assure the House that at the very least no decision to approve the Cambo heavy crude field, or any other oil and gas field in UK jurisdiction, will be taken without subjecting it to the test of whether it is compatible with the UK’s legally binding net-zero commitment?

[Lord Callanan (Con)]

As I said in my answer to the noble Baroness, Lady Whitaker, the report itself recognises that there is ongoing demand for oil and gas, including in all scenarios for how we meet net zero. We have worked closely with the sector and across government to agree a North Sea transition deal, delivering the skills, innovation and infrastructure required to decarbonise North Sea oil and gas production.

[Baroness Hayman (CB)]

My Lords, I declare my interest as co-chair of Peers for the Planet. The Climate Change Committee report, as the Minister will know, was explicit about the need for all government policies to be subject to a net-zero test, yet we have before the House at the moment a skills Bill—and skills will be crucial to the green jobs of the future—that makes no mention whatever of our net-zero targets. So will the Minister undertake to have discussions with his colleagues at the Department for Education about supporting the amendments to the Bill that I am tabling to remedy this serious omission?

[Lord Callanan (Con)]

I cannot promise the noble Baroness that we will support her amendments; I will need to look at them first. But we are doing a lot on skills. For example, the green homes grant included tens of millions of pounds that we spent on grants to encourage providers to provide the training that will be required to undertake many of the green improvements that we all want to see.

[Lord Grantchester (Lab)]

The Climate Change Committee has called out the Government for the scale of the yawning gap that exists between government rhetoric and the Government’s lack of decarbonisation realities. Can the Minister confirm that the missing net-zero strategy will set detailed timelines for how each element of each missing policy will start to deliver decarbonisation with the required urgency, and then ensure that adaptation to climate change is properly integrated into that plan?

[Lord Callanan (Con)]

Well, the strategies will provide some of the detail that the noble Lord is looking for. We will set out a detailed road map of exactly how we will meet our net-zero targets, as he suggests.

[Baroness Prashar (CB) [V]]

My Lords, surveys suggest that public engagement should focus on deepening public attitudes towards climate change, not just by increasing knowledge of the science of climate change but by connecting the public to their values, a sense of identity and a cultural worldview. What plans do the Government have to deepen this meaningful public engagement?

[Lord Callanan (Con)]

The noble Baroness makes a good point. Achieving our net-zero target will be a shared endeavour, requiring action from everyone across society. We will set out our approach to public engagement in the net-zero strategy. For many years the Government have been funding and running public workshops and deliberative dialogues, and the noble Baroness will be aware that, ahead of COP 26, we launched the Together for Our Planet campaign to further raise awareness.

[Lord Clark of Windermere (Lab)]

My Lords, the Climate Change Committee has declared:

“The UK does not yet have a vision for successful adaptation to climate change, nor measurable targets to assess progress.”


Can we expect such a plan, and when?

[Lord Callanan (Con)]

I cannot give the noble Lord precise dates, but we are committed to publishing the strategy and plans that I mentioned earlier, which will be out later this year. We are currently finalising them within government. So I ask the noble Lord to be a little bit patient and wait for those documents.

[Baroness Bennett of Manor Castle (GP)]

My Lords, following the publication of the committee’s report, the Independent quoted a government spokesperson saying that

“any suggestion we have been slow to deliver climate action is widely off the mark.”

Does that dismissive approach to a report from an independent and highly respected committee, chaired of course by a former Tory Minister, reflect the way in which the Government are going to approach the formal response that the Minister told us would arrive by 15 October?

[Lord Callanan (Con)]

I understand why the noble Baroness wants us to go further and faster, but I remind her that we have already driven down emissions by 44%, which is the fastest reduction of any G7 country, and that we have set some of the most ambitious targets in the world for the future. So, while I am sure she is going to push us to go further, I think we have made good progress so far.

[Lord Young of Norwood Green (Lab) [V]]

My Lords, as the noble Lord, Lord Teverson, said, this issue clearly has added importance as we are hosting COP 26. How we set our targets and the metrics that we use are vital. Do we take into account the impact of technical innovation?

[Lord Callanan (Con)]

The noble Lord makes a very good point. Over the past three decades, as I have said, we have reduced our emissions by 44%. We will continue with policy engagement. We regularly review the frame- works that incentivise the further deployment of new technology. I can give the noble Lord an excellent example in the form of the UK electricity market framework.

[Lord Berkeley of Knighton (CB) [V]]

My Lords, I declare my interests as listed in the register. How is it logical or consistent with the Government’s carbon-footprint ambitions to transport meat all the way from Australia to the UK, especially given that our farmers provide a high-quality product?

[Lord Callanan (Con)]

The noble Lord of course makes an important point about worldwide emissions and our overall carbon footprint. We have been at the forefront of measuring the emissions associated with our global carbon footprint every year. Defra publishes statistics to account for emissions generated overseas in the production of goods and services consumed here in the UK. The latest statistics show that our overall carbon footprint decreased by around 26% between 1997 and 2018, while our territorial emissions fell by 38% over the same period.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, all supplementary questions have been asked.

Office of the Whistleblower Bill [HL]

Lord Callanan Excerpts

2nd reading
Friday 25th June 2021 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I start by joining virtually every other speaker in the debate in offering my congratulations to the noble Baroness, Lady Kramer, on securing a Second Reading for her Private Member’s Bill. She has spoken passionately today, as she has on a number of previous occasions, about the experiences of whistleblowers, in advocating the need for reform. I thank all other noble Lords who have contributed to this important debate. As the noble Lord, Lord Sharkey, pointed out, the work of whistleblowers is invaluable, and there should be no doubt that this Government value the important work that whistleblowers do when they speak up to shine a light on cases of wrongdoing.

Before I turn to the contents of the Bill, I say in response to the noble Baroness, Lady Chakrabarti, that this Government take the issue of sexual harassment in the workplace extremely seriously. Our strategy on violence against women and girls will be released later this year.

I turn now to address the contents of the Bill, which seeks to establish a new office of the whistleblower. First, the office would have the power to give direction to and monitor relevant authorities in their investigations. I understand that the intent is to provide consistency in standards for regulatory investigations triggered by whistleblowing information. My concern is that this duplicates the role of the existing prescribed persons, and at some considerable cost. The Government believe that it is the regulator that has the best understanding of its sector. Prescribed persons have been given this legal status because of their ability to take action in respect of a disclosure made to them; many have extensive knowledge and understanding of the subject matter and, in some cases, regulatory oversight of that sector. An overarching body would be pressed to meet this level of specialist expertise. With around 35,000 whistleblowing disclosures made to named prescribed persons in 2018-19, should the new body have these functions, it would require significant staffing resources, with diverse expertise across all sectors, to enable it to carry out these functions effectively.

Secondly, the office would consult on amending or replacing the Public Interest Disclosure Act 1998 and the Public Interest Disclosure (Northern Ireland) Order 1998. The Government welcome feedback and comments on the UK whistleblowing framework. In 2013, we published a call for evidence on the whistleblowing framework, seeking views on ways that it could be made more effective. We have since implemented the action plan from this review. The Government have been clear that we will conduct a further review of the whistleblowing framework when the time is right, and when the more recent reforms, which date from 2017, as the noble Baroness, Lady Kramer, pointed out, have had time to take effect.

It is also important to acknowledge that employment law is devolved in Northern Ireland. To all intents and purposes, these matters are aligned, as Northern Ireland has similar legislation in place to protect whistleblowers; however, we need be mindful of the extent of our remit.

Thirdly, the office would act as a point of contact for whistleblowers, and provide legal and financial assistance. It is the Government’s position that whistleblowers already have a range of channels available to them to get advice on whistleblowing. Comprehensive government guidance is available on GOV.UK. Whistleblowers can also contact ACAS, which deals with questions from employers and employees about a wide range of employment relations matters, including whistleblowing. As the noble Lord, Lord Hendy, pointed out, whistleblowers may also approach their trade union, prescribed person or one of the organisations specialising in whistleblower support, such as Protect or WhistleblowersUK.

Fourthly, the office would provide financial redress to individuals whose disclosure is deemed by the office to have harmed their employment, reputation or career. The current framework under the Public Interest Disclosure Act allows a whistleblower to take action against their employer or former employer at an employment tribunal. This recognises that it is the employer’s responsibility, as an organisation, to support whistleblowers at work. There is no cap on the compensation that employment tribunals can award to whistleblowers. This is designed to be a powerful deterrent to poor employers and to reflect the potential career-ending nature of whistleblowing. Making the office of the whistleblower responsible for financial compensation may break these vital links and introduce a lot of complexity into the enforcement landscape. I believe that is it right that the framework seeks to ensure that organisations are held accountable for the behaviour of their staff and the culture that they create.

I thank the noble Baroness for bringing the Bill to the House and for enabling this important debate. I have not been convinced that the Bill is the right solution to the matters that have been raised, but the Government will continue to monitor the situation and to make improvements where needed, as we have done over the past decade.

Covid-19: Vaccine Production

Lord Callanan Excerpts

Thursday 17th June 2021 Lords Chamber

[Baroness Sheehan]

To ask Her Majesty’s Government what progress they have made in discussions with members of the World Trade Organization to facilitate increased production and supply of COVID-19 vaccines.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, the UK is proud to be playing a global leading role in the development and distribution of coronavirus vaccines. What is now needed most is the scaling up of existing and new vaccine production to achieve equitable, affordable access for all. We continue to engage actively and constructively at the WTO regarding increasing the production and supply of Covid-19 vaccines.

[Baroness Sheehan (LD)]

My Lords, the temporary TRIPS waiver proposed by South Africa and India to the WTO is supported by the US and France, as well as the leaders of the COVAX initiative—Gavi and the WHO—which has proven entire-chain processes that deliver to the last mile. Does the Minister agree that the counter-proposal by the European Commission to encourage voluntary action and reliance on compulsory licences is a red herring, because both options already exist? Millions of people have died while we rely on the good will of big pharma, which has yet again failed the humanity test.

[Lord Callanan (Con)]

I am afraid that I do not agree with the noble Baroness. We are working with industry, the COVAX Manufacturing Task Force and the ACT-A Vaccine Manufacturing Working Group to champion other routes to scale up capacity and engage on forward supply chain planning in order to accelerate and progress vaccination programmes across the world. We think that is the best way forward.

[Baroness Bryan of Partick (Lab) [V]]

Ensuring accessible and affordable Covid-19 vaccines across the globe is a human rights duty that requires international co-operation. Can the Minister give details of government support for the WHO Technology Access Pool, and have the Government ensured that the intellectual property in respect of vaccines developed with the support of public funding has been deposited with C-TAP, in order to scale up production in countries that have untapped capacity?

--- Later in debate ---

[Lord Callanan (Con)]

It is not simply a question of scaling up untapped capacity; producing these vaccines is complicated and technically challenging, and we need the support of big pharma to do it. There are few facilities across the world that can produce them properly and we have seen, even in the West, how some batches have gone wrong because of manufacturing problems. However, we are proud to be working with the COVAX initiative. We have helped to raise more than £1 billion through match funding other donors. Combined with our aid, that is helping to distribute 1.8 billion doses across the world.

[Lord Mackenzie of Framwellgate (Non-Afl) [V]]

My Lords, AstraZeneca has been generous in providing vaccines to the world at cost. Do other companies oppose the principle of giving up their intellectual property rights in respect of these vaccines? As there is a humanitarian justification in their allowing the world to so benefit, would there be any merit in naming and shaming such big pharma companies?

[Lord Callanan (Con)]

It remains the case that we have not seen any convincing evidence that intellectual property is a limiting factor in the production and/or supply of Covid vaccines or other technologies. As the noble Lord points out, the Oxford/AstraZeneca vaccine is being made available at cost.

[Lord Kirkhope of Harrogate (Con) [V]]

My Lords, first, I congratulate the Government, through my noble friend, on the success of the UK vaccine rollout and the involvement with AstraZeneca, whose vaccine is widely being offered on a no-profit basis, as has been said. While I hope for our continuing commitment in assisting with worldwide protection, can my noble friend confirm that, in any discussions on possible intellectual property waivers, he will ensure that standards of production and vaccine quality will not be prejudiced at all?

[Lord Callanan (Con)]

I thank my noble friend for his comments and he makes a very good point, the same point that I made earlier. Production of these vaccines is technically complicated, particularly the mRNA vaccines. There are not really any other production facilities outside the West in the property of big pharmaceutical companies that are able to produce them. It is not a question of simply waiving the IP rights and allowing anybody to produce them.

[Lord Purvis of Tweed (LD)]

My Lords, paragraph 10 of the G7 communiqué refers to 700 million doses being made available from domestic productions, over half of which have gone to other G7 countries. Uganda, for example, is paying three times as much as the EU and the UK for the AstraZeneca vaccine because of the limit and because it is not using the WHO Technology Access Pool. Will the Government think again and open up access to technology and know-how in order to allow other countries to increase domestic production, so that they pay the same to AstraZeneca as the UK is paying?

--- Later in debate ---

[Lord Callanan (Con)]

I am not sure that the noble Lord’s figures are correct. I will certainly write to him if that is not the case, but my understanding is that the vaccines are being distributed at cost. AstraZeneca already has supply agreements—with the Serum Institute of India, for example, to produce 1 billion doses. We will donate 100 million surplus coronavirus vaccine doses within the next year. We are committed to helping the third world to access the vaccines it needs.

[Lord Lansley (Con)]

My Lords, as the Minister said, the process of manufacturing vaccines is complex and difficult, as we saw with Johnson & Johnson in America, for example. The fastest and best way to set up large-scale vaccine manufacturing in developing countries is for the rights holders to invest. Will our Government work with IP holders such as AstraZeneca to set up across the world? We do not need to deprive them of their rights. The Oxford/AstraZeneca group intends its vaccine to be for the world; will our Government help it to deliver that?

[Lord Callanan (Con)]

My noble friend is correct and speaks with great authority on this subject, but the best way forward is voluntary licensing and technology transfer partnerships. They are making a real and positive impact on vaccine delivery, and the UK Government will of course do all we can to facilitate this process.

[Lord Bilimoria (CB) [V]]

My Lords, as president of the CBI, I chaired the B7, which fed into the G7. The B7 was attended by Dr Ngozi, the new director-general of the WTO. There was unanimous agreement on the free flow of trade for the manufacture and distribution of vaccines. Do the Government agree that there needs to be unhindered trade for vaccine manufacture and distribution? The Pfizer/BioNTech vaccine, for example, contains 280 different components, manufactured in 86 different sites across 19 countries. Does the Minister also agree that, although it is good that the UK and US have agreed to supply 600 million surplus doses of vaccines around the world, what is actually needed is for the wealthiest countries in the world to urgently finance and help enable the manufacture and distribution of 11 billion doses, including at the Serum Institute of India, which the Minister just mentioned?

[Lord Callanan (Con)]

There was a lot in those questions. The best way to facilitate this is through the COVAX initiative. The UK is proud to be one of its largest funders. We have helped to raise almost $1 billion for that initiative, which is helping to supply vaccines to 92 developing countries across the world.

[Lord Grantchester (Lab)]

The G7 leaders’ communiqué notes

“the positive impact that voluntary licensing and technology transfer on mutually agreed terms have already made to increasing global supply.”

But untransparent exclusive bilateral voluntary licences from pharmaceutical companies have led to the grossly insufficient quantities of Covid-19 vaccines that we see today. I return to the line of questioning of the noble Baroness, Lady Bryan, and the noble Lord, Lord Purvis: will the UK Government not continue to miss the point but instead use their initiative and push pharmaceutical companies to share intellectual property and tech through the World Health Organization’s Covid-19 Technology Access Pool?

[Lord Callanan (Con)]

My Lords, the intellectual property for the AstraZeneca vaccine, as is known, is actually owned by the University of Oxford. We will of course work with the companies and everyone possible to make sure that the third world is vaccinated, because that is in our interests. That is why we have contributed so much to the COVAX initiative.

[Baroness Northover (LD)]

Does the Minister agree that it was ODA funding to the Jenner Institute, for the Ebola crisis, that helped to underpin what it was later able to do in this pandemic? Has any new money been allocated by the UK to COVAX since the ODA cut last year?

[Lord Callanan (Con)]

We have donated £548 million to the COVAX initiative, which has been match funded to a total of $1 billion.

[Lord Alton of Liverpool (CB)]

My Lords, given the government statement at the TRIPS council meeting on 9 June that suggested that

“vaccines for new pandemics will simply not be developed”

if there is action on intellectual property, what role does the Minister consider the £100 billion in taxpayer subsidies played in Covid-19 vaccine development? Will he confirm that, apart from the role of big pharma, to which he has referred, 97% of the costs of developing the Oxford/AstraZeneca vaccine were covered by public funds?

[Lord Callanan (Con)]

A strong IP system is crucial in supporting the rapid development of new vaccines, but the noble Lord is right: we contributed extensive taxpayer funds to supporting it.

[Baroness Sugg (Con)]

My Lords, as my noble friend has said, ramping up production of vaccines is key in the medium and long term but, in the short term, rich countries such as ours have been fortunate enough to be able to buy sufficient vaccines to vaccinate our population many times over. The 100 million doses the UK has now committed is a welcome first step, but 70 million will not be distributed until next year. Given that we will have fully vaccinated our adult population by the end of the summer, can my noble friend look again at the timing of our contribution?

[Lord Callanan (Con)]

We will certainly look at it, as my noble friend suggests, but the Prime Minister has announced that the UK will share 100 million doses within the next year, of which 30 million will be delivered by the end of 2021. We currently do not have any surplus vaccines and the health of the UK public remains our first priority. But I agree with my noble friend that this virus will not truly be beaten until it is defeated everywhere. We have been committed to affordable access to vaccines for all since the start of the pandemic, and this announcement is another tangible demonstration of that.

[The Lord Speaker (Lord McFall of Alcluith)]

My Lords, all supplementary questions have been asked and we now move to the next Question.

Pollution Prevention and Control (Fees) (Miscellaneous Amendments) Regulations 2021

Lord Callanan Excerpts

Thursday 17th June 2021 Lords Chamber

Moved by

[Lord Callanan]

That the draft Regulations and Orders laid before the House on 21 and 28 April and 12 and 13 May be approved.

Relevant documents: 1st, 2nd and 3rd Reports from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 8, 10 and 15 June.

Motions agreed.

Climate Change Act 2008 (Credit Limit) Order 2021

Lord Callanan Excerpts

Tuesday 15th June 2021 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Climate Change Act 2008 (Credit Limit) Order 2021.

Relevant document: 3rd Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I beg to move that this order, which was laid before the House on 13 May 2021, be approved.

The question of how we act on climate change is perhaps one of the most pressing issues of our time. Climate change is here—this Government absolutely accept that and are determined that the UK play its part in upholding the Paris Agreement and driving down our own greenhouse gas emissions. This Government are committed to decarbonising the UK economy while of course, at the same time, driving economic growth, and to meeting our ambitious targets for net zero emissions by 2050. We were the first major economy in the world to set a legally binding target to reach net zero carbon emissions across our economy by 2050, and we have shown that rapid progress on decarbonisation is possible alongside a thriving economy. Our emissions are down by almost 44% across the last 30 years and our economy has grown by 78% during the same period. We are currently in the process of reaching a significant milestone in approving legislation to enshrine the UK’s sixth carbon budget in law, proposing a target that would reduce greenhouse gas emissions by 78% by 2035, compared to 1990 levels. This is a huge commitment and one which the Government are working flat out to achieve.

Turning to the topic of today’s debate, under the Climate Change Act 2008 the Government must set a limit on the number of international carbon units that can be credited to the net UK carbon account for each budgetary period. These carbon credits represent the reduction or removal of greenhouse gas emissions overseas. The legislation we are debating today sets a limit on the net number of international carbon credits that may be used to meet the fourth carbon budget, which runs from 2023 to 2027. The Climate Change Act, passed with near unanimous support in this House, allows for the flexibility of using carbon credits to meet a carbon budget. The order will set the credit limit for the fourth carbon budget at 55 million tonnes of carbon dioxide equivalent, which is about 2.8% of the total carbon budget. This is the same amount of flexibility as the House agreed for the second and third carbon budget credit limit orders. However, I highlight that this legislation does not commit the UK Government to buying international credits: as we have witnessed with previous carbon budgets, the Government have a strong track record of delivering clean growth and have not used any of our allowances on other budgets to date.

We continue to put forward ambitious plans to meet future carbon budgets, including through our bold sector strategies, and are committed to meeting our world-leading targets through domestic action. Noble Lords should be aware that the credit limit set through this legislation excludes any net use of credits that result from the operation of the European Union Emissions Trading Scheme. The exclusion is required because, while the UK Emissions Trading Scheme replaced the UK’s participation in the EU ETS on 1 January 2021, Northern Ireland electricity generators continue to participate in the EU ETS and will therefore receive EU ETS allowances within the fourth budgetary period.

The role of the Climate Change Committee in providing independent expert advice to government on climate change mitigation and adaptation is widely accepted as global best practice. The Government’s net zero target covers the whole of the UK, and all four parts of the union have an integral role to play in delivering the Government’s carbon budgets leading up to 2050. As such, we of course also work closely with our partners in the devolved Administrations in order to achieve our climate goals.

In determining the appropriate credit limit for the fourth carbon budget, which is the subject of the present discussion, the Government have considered the advice of the Climate Change Committee and the views of the devolved Administrations. All parties agree that the purchase of international credits should not replace domestic abatement when delivering our net zero target. While the Climate Change Committee and the devolved Administrations recommended a zero-credit limit, the Government have concluded that it is best to maintain a small amount of flexibility over the fourth carbon budget period.

As a Government, we have undertaken our own robust analysis to validate our position and have considered the range of factors required by the Act, including the economic, fiscal, social, scientific and international circumstances. We judge that this flexibility will continue to ensure that the Government can best deliver our carbon targets more effectively and be resilient to unexpected changes in future emissions.

We are extremely grateful to our independent advisers for their expert analysis and advice, and to the devolved Administrations for their valuable ongoing engagement. We look forward to working closely on the fundamental decisions that we will need to take over the coming years in order to drive forward this progress.

The Government recognise the significant advantages that the net zero transition can bring, in addition to the essential benefits of ending our contribution to global warming. Now is the time to double down and decrease our emissions further and faster. Ahead of COP 26, we will bring forward further bold proposals, including our net zero strategy, to cut emissions and create new jobs and industries across the whole country, going further and faster towards building a stronger, more resilient future and protecting our planet for this generation and those to come.

As for the legislation for debate today, the Government’s sustained drive ensures that we are on track for the fourth carbon budget. However, as we have outlined, in our view it is still prudent to allow ourselves a small amount of flexibility in the future in order to manage the uncertainty in emissions projections and to continue to deliver emissions reductions in the most prudent and fair manner for the whole of the UK. I therefore commend this order to the House.

--- Later in debate ---

[Lord Callanan (Con)]

First, I thank all noble Lords for their extremely valuable contributions to this debate.

This year, we in the UK find ourselves in the privileged position of being the president of the G7 and the host of COP 26. We are determined to use these key international moments, as noble Lords saw at the G7 earlier this week, to promote ambitious action to deliver the transformational change required by the Paris Agreement. In line with this, it is imperative that we continue to be bold and ambitious in not only our commitments but our actions, as the noble Lord, Lord Oates, pointed out, to deliver progress against climate change.

To reiterate what I said earlier, our position remains that the Government intend to meet all our targets through domestic abatement. International credits merely afford us a potential flexibility to ensure a cost-effective approach to reducing carbon emissions when managing uncertainty in historic and future emissions.

As usual, we have had a very interesting debate. I will pick up on some of the points raised. We acknowledge the progress pointed to by the noble Lord, Lord Bradshaw, and other noble Lords, including my noble friend Lord Bourne, and the success we have had so far in decarbonising the UK economy to date. Many developing countries plan to sell credits in future, but my noble friend is absolutely right that these must be of the very highest quality. We are using our international climate finance to ensure that developing countries have the capacity to meet this bar and access finance through the carbon market.

On the action that the Government are taking to decarbonise transport, which my noble friend Lord Bourne also asked about, we recently announced that the UK is embarking on a comprehensive transport decarbonisation plan. This will be a bold, ambitious programme of the co-ordinated action needed to end the UK’s transport greenhouse gas emissions by 2030 and, at the same time, ensure that the transport sector plays its part in delivering our legally binding carbon budgets. The plan will think in terms of not only modes of transport but technology and places. Part 1 of the plan was published in March 2020, with part 2, containing policies and proposals, expected to be published shortly.

We will also commit to communicating our public engagement approach to our net-zero strategy to generate widespread awareness, and, hopefully, acceptance, across the UK, because achieving the net-zero target will be a shared endeavour requiring action from everyone in society—people, businesses and government. Therefore, we are increasing our work on public engagement on net zero, both in communicating the challenge and in giving people a say on shaping future policies.

I have addressed a number of my noble friend Lord Bourne’s questions, but I am sorry to tell him that he missed the debate on the most recent carbon budget. It was debated in this House last week; the noble Lords, Lord Oates and Lord Grantchester, were present, with a couple of other Peers. It still has to go to the House of Commons, but I am afraid that my noble friend has missed his opportunity to contribute to that one.

On Northern Ireland and the emissions trading scheme, Northern Ireland power plants have remained in the ETS under the Northern Ireland protocol, but all other emissions in Northern Ireland remain under the UK Government’s coverage.

The noble Baroness, Lady Jones, asked why we chose not to set a credit limit at zero tonnes, as was recommended by the Climate Change Committee. I can tell her that the Government intend to meet our net-zero target and our interim carbon budgets through cutting our domestic carbon emissions. As I said earlier, we are simply choosing to maintain the limited tools that we already have under the Climate Change Act to ensure that we can deliver on our carbon targets at the lowest possible cost, including the option of using international credits. Our internal analysis reaffirmed that this level is suitable to account for any potential uncertainties.

The noble Lord, Lord Oates, implied that we could have sought to deliver a lower level for the credit limit order. Again, I remind him that our analysis indicates that any lower level might not provide sufficient flexibility to manage the uncertainty associated with the inventory using only credits.

The noble Lords, Lord Oates and Lord Grantchester, asked whether the Government are on track to meet carbon budgets 4 and 5. We are taking decisive action to ensure that we deliver on both. Ahead of COP 26, we will set out our ambitious plans across key sectors of the economy, such as the energy White Paper and the industrial decarbonisation strategy. These will build on the strong recent progress that we set out in the 10-point plan and will culminate with the net-zero strategy later in the year.

The noble Lord, Lord Grantchester, asked about future carbon budgets. I remind him that this current legislation only concerns carbon budget 4, of course. We will consider the limit for carbon budgets 5 and 6 at the appropriate times in the future, using analysis that is relevant to the context at the time.

The noble Lord also raised the use of other flexibilities in the Climate Change Act 2008. In response, I want to make it clear that we have no intention of using any other flexibilities afforded to us through the Act and we intend to meet our ambitious targets purely through domestic action.

I conclude by saying that, as I mentioned in my opening speech, this statutory instrument effectively continues the status quo, setting the same credit limit that we have held but not used for carbon budgets 1 to 3. This status quo has allowed the Government to deliver world-leading emissions reductions and encourage similar ambition in other countries across the world. I therefore commend this draft order to the Committee.

Motion agreed.

Conformity Assessment (Mutual Recognition Agreements) and Weights and Measures (Intoxicating Liquor) (Amendment) Regulations 2021

Lord Callanan Excerpts

Tuesday 15th June 2021 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Conformity Assessment (Mutual Recognition Agreements) and Weights and Measures (Intoxicating Liquor) (Amendment) Regulations 2021.

Relevant document: 2nd Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I beg to move that these regulations, which were laid before the House on 12 May 2021, be approved.

The statutory instrument we are debating today implements important aspects of international trade agreements within the Government’s trade continuity programme, ensuring continuity for UK businesses. This includes certain mutual recognition agreements that have been signed with the USA, Australia and New Zealand along with a free trade agreement with Korea that contains relevant conformity assessment provisions. The UK-Japan Comprehensive Economic Partnership Agreement and the UK-Canada Trade Continuity Agreement also include protocols on the mutual recognition of conformity assessment. From hereon in, I will refer to the mutual recognition elements of all of these agreements as MRAs.

These MRAs support trade in goods between the UK and its partners by reducing technical barriers to trade. Importantly, they do so in a way that protects the UK’s robust product safety system. The UK’s product safety legislation requires certain products to be assessed to ensure that they meet requirements in that legislation; sometimes, this assessment is required to be done by third parties. MRAs can reduce barriers by allowing this conformity assessment to be undertaken by a body based in the UK for export to the relevant country. We make the same arrangements for our partners under the agreement so that procedures carried out by recognised overseas CABs are accepted for our domestic regulations.

This SI also implements one aspect of the UK’s free trade agreements in the broader trade continuity programme. As part of the UK-Japan Comprehensive Economic Partnership Agreement, we will give greater flexibility to importers of a traditional Japanese spirit called single-distilled Shōchū. The SI amends specified quantity requirements applying in Great Britain so that bottles of single-distilled Shōchū may be placed on the market in Great Britain in one of the traditional Japanese bottle sizes of 900 millilitres.

Let me now address each of these areas in more detail, starting with the measures we are taking both to recognise overseas bodies and to appoint UK bodies under these MRAs before moving on to the measures we are taking for single-distilled Shōchū bottle sizes.

To begin, let me address provisions for goods in scope of the UK’s MRAs that are assessed by UK conformity assessment bodies for export overseas. This SI provides for the Secretary of State to designate CABs as competent to assess that certain goods comply with the regulatory requirements of our partners under the MRAs as set out in a schedule to the SI.

For example, this means that where a UK-based CAB would like to be recognised by the Australian authorities as capable to assess goods under Australian machinery requirements, the body can apply to UKAS, the United Kingdom Accreditation Service, to be accredited as fit to test against those Australian requirements. The Secretary of State may then designate the body under the UK’s MRA with Australia to assess machinery for export to Australia. As a result, a UK manufacturer that uses the services of that UK CAB can now use the same body to do its accreditation for the Australian market and does not need to identify and start contracting with a CAB actually operating in Australia. Therefore, manufacturers are able to place products on the Australian market more cost-effectively, potentially passing those savings on to consumers.

I now move on to consider provisions for goods coming into the UK. Under the MRAs, the UK recognises the results of conformity assessment procedures carried out by recognised overseas CABs against domestic regulations. This SI makes it clear that assessments carried out by a recognised body based in one of our partner countries should be treated as equivalent to those carried out by a UK-approved body when relevant products are sold in Great Britain. These regulations do not change the detail of the requirements for third-party assessment, nor do they amend any requirements related to a product’s specifications. This means that the UK will maintain its robust product safety protections while continuing to reduce barriers to trade with our partners. The benefits are potentially significant here: trade with our MRA partners in radio equipment alone amounted to nearly £2 billion in 2019, although, of course, not all of these products will have required conformity assessment by a third party.

The regulations also provide for the Secretary of State to create a register of CABs that the UK recognises under the MRAs, defined as MRA bodies. This is communicated via the UK Market CAB database, a publicly available resource that can be used by businesses and regulators to verify quickly the status of CABs. These regulations also provide for Canadian accreditation bodies recognised by the UK under the UK-Canada Trade Continuity Agreement to be listed on the Government’s website.

This SI also provides that the Secretary of State, or a person authorised to act on their behalf, may disclose information to the other party to an MRA where required by an MRA. For example, we may communicate information regarding goods from the USA which have been suspended by UK enforcement authorities, as part of our co-operation commitments in the MRA with the USA. Disclosure will be made in accordance with data protection legislation.

This SI provides for a product known as single-distilled Shōchū, a spirit which is single distilled, produced by pot still and bottled in Japan, to be placed on the market in Great Britain in an additional bottle size, 900 millilitres. Prior to the UK-Japan Comprehensive Economic Partnership Agreement, single-distilled Shōchū bottled in Japan had been permitted in Great Britain, but only in quantities of 720 millilitres or 1,800 millilitres, in addition to the usual specified quantities for prepacked spirits. Providing for sale of this traditional bottle size was very important to Japan during negotiations of the UK-Japan Comprehensive Economic Partnership Agreement. This artisanal product is already on sale across the UK in other bottle sizes, so this change should not have a significant impact on consumers in Great Britain.

I shall now speak to the territorial scope of these regulations. For some provisions, the regulations will make amendments for Great Britain only, while others extend to the whole of the UK. Regulations 4 and 5, relating to recognition of conformity assessment by relevant overseas CABs, extend to Great Britain only. Northern Ireland will continue to recognise the results of conformity assessment procedures done under the mutual recognition agreements between the EU and the relevant third country. This is in accordance with the terms of the Northern Ireland protocol to the withdrawal agreement. Regulation 6, relating to the Secretary of State’s power to designate UK-based bodies under these agreements, will extend to the whole of the UK. CABs across the UK can therefore be designated under the MRAs.

Regulation 7, relating to information sharing, will also extend to the whole of the UK, to enable the Secretary of State to share relevant information required under the MRAs. Regulations 8 and 9, amending the permitted bottle sizes for single-distilled Shōchū, extends to Great Britain only. In accordance with the Northern Ireland protocol, single-distilled Shōchū will continue to be permitted on the Northern Ireland market in 720-millilitre and 1,800-millilitre bottle sizes, in addition to the usual specified quantities for prepacked spirits.

In conclusion, we are introducing these regulations to give effect to provisions which keep our barriers to trade low with some of our significant trading partners. As I have said, we do this while preserving our robust protections for product safety, as a responsible Government. This SI will provide certainty on the UK’s approach to recognising and designating CABs for certain products under the MRAs, as well as making necessary amendments to allow the 900-millilitre bottle size of single-distilled Shōchū to be placed on the market in Great Britain. I therefore commend these regulations to the House.

--- Later in debate ---

[Lord Callanan (Con)]

My Lords, first, I thank both noble Lords for their valuable contributions to this debate.

It is clear from what I said initially and from the contributions that this SI will maintain our robust product safety framework at the same time as reducing barriers to trade with some of our key trading partners. It does this by providing for the recognition in Great Britain of overseas conformity assessments for certain products under an MRA, while overseas bodies will be recognised in Northern Ireland under their country’s MRA with the EU; providing for the Secretary of State to designate UK CABs to assess against the requirements of our trading partners for certain products under an MRA; and amending rules in Great Britain to allow a traditional Japanese spirit to be imported in a 900-millilitre bottle size. In supporting this SI, we keep our trade restrictions low so that our manufacturers and consumers benefit from arrangements to minimise the duplication of conformity assessments.

My noble friend Lord Lansley noted with regard to Part 3 of the regulations, on Shōchū, that that amendment has been delayed beyond 30 March. As he pointed out, we let the relevant Japanese Ministries know that we were unable to implement the obligation by 31 March. As a fellow parliamentary democracy, Japan understood that it was important that the UK Parliament be able to appropriately debate the Trade Bill before we could introduce that provision. On my noble friend’s question about the distinction between Great Britain and Northern Ireland, he is correct that 5 gō bottles of 900 millilitres may be placed on the market only in Great Britain. I can tell my noble friend that there is express provision in the UK-Japan CEPA that applies in the event of inconsistency between the CEPA and the Northern Ireland protocol.

The noble Lord, Lord Lennie, asked whether changes in accreditation policy would affect Northern Ireland trade. The Secretary of State will consider the UK body’s competence against the partner country’s legislative, regulatory and administrative requirements. In making this judgment, he will of course consider the expert advice of the UK’s national accreditation body. The Trade Act provides for product safety and labour recognition, et cetera, and are they captured, to answer his other question. He noted that there are specifications in the Trade Act, and this SI maintains UK statutory protection. Where the specified regulations relate to protection of human health, human life, animal health or environmental protection, foreign CABs must assess against our existing domestic requirements. This is in accordance with our previous approach to MRAs.

The noble Lord also asked whether the UK could take a different approach to conformity assessments in future. In relation to MRAs, this SI is all about providing continuity for businesses. The UK is able to make its own policy decisions on conformity assessment and accreditation now that we have left the EU. Any future changes would be based on the UK’s best interests, with due consideration, of course, of any impact on the UK’s internal market. The noble Lord asked about the trade and co-operation agreement with the EU. Despite the UK ask, the EU-UK deal did not include an MRA. This is regrettable and will result in an extra cost to trade. As he noted, the UK sought such an agreement, but we were unable to secure it there.

I hope that that answers all noble Lords’ questions on this legislation, and I therefore commend these draft regulations to the Committee.

Motion agreed.

Employment Rights

Lord Callanan Excerpts

Thursday 10th June 2021 Lords Chamber

[Lord Fox (LD)]

My Lords, I thank the Minister for repeating the Statement. This is a relatively small, long-overdue step towards upholding workers’ rights, and to that extent it is welcome. However, it comes with no parliamentary time allocated for legislation and no new funding.

There was a glaring hole in the Queen’s Speech. After a pandemic that has made life extremely hard for many people, it is disappointing that the Government are yet to announce an employment Bill to strengthen workers’ rights and to make the rules fit for modern working practice.

A single enforcement agency is welcome but, unless we look again at people’s working conditions and the rules in place, this agency—when it eventually emerges—will not be able to deliver the change that people need in their lives. To do that, it needs proper funding. For example, the International Labour Organization recommends that Governments have one inspector per 10,000 workers. In the UK the current funding is for 0.4, so can the Minister tell your Lordships’ House if and when the new agency will be funded to deliver ILO levels of inspection?

When an illusionist is practising their art, the key skill is misdirection. In this case, our attention is in danger of being distracted by decent and welcome words condemning the practice of fire and rehire. Meanwhile, the Government have conflated employment abuses with measures to crack down on trade unions. While there may be some issues in a small number of unions, they are not the cause of the problems faced by so many families. It is sharp employment practice that is taking UK families to the edge, not trade unions, so my next question to the Minister is: how do the Parliamentary Under-Secretary’s words in this Statement help people who right now are being fired and taken back on downgraded working contracts? This Statement condemns the practice, but now the Government have asked for a further report on the subject. This is kicking it into the long grass. When will the Government actually do something to help workers?

More broadly, in October 2016 the Government commissioned Matthew Taylor to carry out an independent review of the UK employment framework. The Taylor Review of Modern Working Practices found that the labour market was changing due to the emergence of new business models and different forms of gig economy working; the Minister knows about this very well. It proposed many important measures to help support people’s jobs in those sectors. These measures received a broad welcome, and indeed warm words flowed from the Benches opposite. In their last manifesto, the Conservatives undertook to implement many of the report’s findings—yet it still gathers dust. Mr Taylor became interim Director of Labour Market Enforcement in August 2019, but then in January this year he announced that he was leaving and the role was not refilled. So have the Government abandoned their pledge to implement the Taylor review?

With or without Taylor, things need to change—and quickly. When will we see an end to the toxic practice of delivery workers being required to drive illegally so that they can meet their quotas? When will we see an end to people being forced to skip bathroom breaks? When will nearly two in five workers get more than a week’s notice of their working hours? When will gig economy workers get the wages they deserve—for example, the 20% higher minimum wage for people on zero-hours contracts? Because this is the real world of work that is facing many people right now.

Speaking in the Commons, the Parliamentary Under-Secretary said:

“Nothing is off the table.”—[Official Report, Commons, 8/6/21; col. 849.]


Actually, for the poorest, most exploited workers there is nothing on the table. These are words. When will we see some action?

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

I thank the noble Lords, Lord Lennie and Lord Fox, for their comments. To pick up the final question from the noble Lord, Lord Fox, about the Taylor review and workers’ rights, we have made good progress in bringing forward legislation to protect workers’ rights. We have closed the loophole that sees agency workers employed on cheaper rates than permanent workers, we have quadrupled the maximum fine for employers who treat their workers badly and we have given all workers the right to receive a statement of their rights from day one.

We are committed to protecting and enhancing workers’ rights. The noble Lord pointed to the Uber Supreme Court judgment. It was clear that those who qualify as workers under existing employment law are entitled to rights such as the minimum wage, and all gig economy businesses should ensure that they are fulfilling their legal responsibilities.

On the employment Bill, which both noble Lords asked me about, I can tell them, particularly the noble Lord, Lord Lennie, who said that the Bill had been dropped, that he is not correct. We are committed to bringing forward an employment Bill to protect and enhance workers’ rights as we build back better. We want a high-productivity, high-wage economy that delivers on our ambition, and we want to see workers protected.

With regard to firing and rehiring, the Government have set out a clear and proportionate course of action to address fire and rehire. It is a complex area of law so we have asked ACAS to produce better, more comprehensive and clearer guidance to help employers explore all the options before considering fire and rehire and to encourage good employment relations practice. We are looking closely at the ACAS report. While we are not legislating at this stage, we will continue to monitor the evidence on the use and prevalence of fire and rehire.

Both noble Lords asked me about the funding for the single enforcement body. As with all government funding, that will be considered during the spending review later this year. On the questions about the Certification Officer, it is important to point out that the principle of this in the legislation was passed and agreed in the Trade Union Act 2016. This is merely the enactment of those provisions, and it does no more than give powers to the Certification Officer similar to those that many other regulators already possess in these sorts of areas.

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

My Lords, we come to the 20 minutes allocated to Back-Bench questions. I ask that questions and answers be brief so that I can call the maximum number of speakers.

[Baroness Falkner of Margravine (CB) [V]]

My Lords, I welcome the improved guidance that the Government have asked ACAS to produce on fire and rehire, because it is a balanced position in the impact on employers. However, the Minister will know that without strong enforcement powers a regulator, however much of a super regulator it might be, cannot do very much. He also knows that some of the most egregious abuses are happening within supply chains, not in faraway countries of which we know little but here in this country, in places such as Leicester. So when the Government tell us they are still considering options on a garment trade adjudicator, will they recognise how disappointing that is? Like other noble Lords who have gone before me, I want to press the Minister to get moving on setting up this body, giving it strong powers and then going so far as to ban goods in shops that are supplied by people who break the law.

[Lord Callanan (Con)]

The noble Baroness makes some good points. I agree with her that some of the appalling treatment in places such as Leicester that was highlighted in press articles is unacceptable. Our response to the consultation sets out the high-level proposals for the single enforcement body. We will be developing more detailed plans for the body’s operation and structure in partnership with the existing enforcement bodies. The noble Baroness will be aware that creating the new body will require primary legislation, and timing will depend on the legislative timescale. However, we are committed to ensuring that it has adequate funding for enforcement; we will do that through the spending review, as I mentioned.

The Government have a good record on protecting employment rights enforcement. We have more than doubled the budget for minimum wage enforcement and compliance, which is now over £27 million per year.

[Lord Balfe (Con)]

My Lords, a number of noble Lords have mentioned the warm words in this Statement. The one-third of active trade unionists who vote Conservative will welcome those warm words from this Government.

I have two specific questions. First, when will the proposed changes in the power of the Certification Officer be made public and put in the public domain for us to discuss? Secondly, does the Minister agree that it is important to balance flexibility with effective protection for workers?

[Lord Callanan (Con)]

I thank my noble friend for his comments. The legislation will be introduced shortly, and it is important that we balance flexibility with protections. My noble friend feels very strongly about this issue. It is a dynamic, flexible economy that makes the UK such a fantastic place to work and gives us such relatively low levels of unemployment compared to many other European countries. We are the envy of the world in terms of not only our protection for workers’ rights but our flexible economy. The steps that we are taking on enforcement will help the country to build back better by taking a smarter approach to the enforcement of employment law, and will make it easier for the vast majority of responsible businesses to comply with the rules.

[Lord Hendy (Lab) [V]]

My Lords, the Minister in the other place said yesterday:

“It is unacceptable and, frankly, immoral to use the threat of fire and rehire as a negotiating tactic to force through changes to people’s employment contracts”,—[Official Report, Commons, 8/6/21; col. 841.]


yet in only seven months of last year just short of 3 million workers were subjected to it. There is nothing in the ACAS report to justify not legislating. Can the Minister not accept that these millions of workers merit legislation, not just guidance, to protect them?

[Lord Callanan (Con)]

This is a complicated area of employment law. We want to give employers flexibility to manage their business without producing undue effects on workers. Sometimes, sadly, it is necessary for employers to introduce changes; the alternative is that they go bust and no one has a job at all. We want to get this right and we want to introduce proportionate responses, but it is a complex area and we will be looking closely at it.

[Baroness Stowell of Beeston (Non-Afl)]

My Lords, has the Minister had the opportunity to consider the relevant employment law that made it possible for a tribunal judge, as reported in yesterday’s media, to rule in favour of an employee who was dismissed by his employer for dishonesty in respect of sick leave and sick pay? Of course, the specifics of the case are not something on which it would be proper for the Minister to comment and neither is it a matter for this House. However, I would be grateful for the Government’s view on the impact of a ruling such as this one on upstanding employees as well as good employers, especially small business owners.

[Lord Callanan (Con)]

I thank my noble friend for her question. She is correct that it would not be right for me to comment on the specifics of the case without being in possession of all the facts, but it is vital that employees do not abuse their sick leave and pay. If they do, the employer may be able to dismiss them on the grounds of misconduct.

There is a vital balance to be struck to protect employers and employees. As the recent judgment shows, employers must act reasonably in all circumstances, follow the right procedures and conduct appropriate investigations. They should look to the ACAS code of practice on disciplinary and grievance procedures and may want to refer to the guidance on dismissal.

[Baroness Blower (Lab)]

My Lords, for three bodies to become one, legislation will indeed be required, but there is none. Neither is there any commitment to adequate funding, as my noble friend Lord Lennie said. Specifically, why are the HSE and local authority health and safety inspectors not included in the plan for a single enforcement body? Why is there no commitment to increase the existing pathetically low number of inspectors and, regrettably, the equally pathetically low number of notices and prosecutions?

[Lord Callanan (Con)]

The noble Baroness is right: we are not proposing that the HSE become part of the single enforcement body. The HSE is a large, established organisation. Given its size and scope of its functions, and the focus on high-harm incidents, incorporating it into a new body could lead to a shift in priorities away from other employment rights, but we will ensure that the HSE remains a key partner for the single enforcement body. The noble Baroness should be aware that since the start of the pandemic, HSE has carried out more than 243,000 Covid-19 spot checks and responded to more than 22,000 concerns. There are currently around 1,300 workplace spot-checks carried out per day, targeted on those industries whose workers are most likely to be vulnerable to transmission risks.

[Lord Stevenson of Balmacara (Lab) [V]]

My Lords, can the Minister confirm that the Government’s response to the recent court cases on the gig economy—on issues that concerned the minimum wage, sick pay and holiday pay entitlements—are that no further changes to employment law are considered necessary?

[Lord Callanan (Con)]

We are considering all these matters. We keep these matters under review. We are committed to protecting and enhancing workers’ rights. As I said earlier, the Uber Supreme Court judgment was clear that those who qualify as workers, under existing employment law, are entitled to rights such as the minimum wage. All gig economy businesses should ensure that they are fulfilling their legal responsibilities. I think it is important to point out that the gig economy offers individuals flexibility and it can provide opportunities for those who may not be able to work in more conventional ways. Indeed, Government research has indicated that people mostly value the flexibility that it offers—56% of respondents said that. An individual’s entitlement to rights at work is determined by their employment status, whether employee, worker or self-employed, and gig economy workers can be classed under any of these, depending on their particular employment relationship.

[Lord Lea of Crondall (Non-Afl) [V]]

My Lords, we are witnessing the rampant spread of precarious contracts, exemplified by fire and rehire. Has the aphorism that we are moving to a position where instead of a proletariat we have in its place a precariat. In the absence of legislation, where is the levelling-up to come from? In addition to stronger enforcement, which is indeed vital, the trade unions’ role itself is vital—more vital than ever. The Minister said he does not want too much legislation, but will he welcome the fact that we now have a growth in trade union membership for the fourth year running? It is hardly the time for proposing, in the words of Frances O’Grady of the TUC, to tie them up in red tape. Rather, should we not be facilitating the negotiation of pro-rata rights for workers’ representatives, this being the norm in the most successful European economies?

[Lord Callanan (Con)]

I bow to the noble Lord’s superior knowledge of the proletariat and the precariat, or whatever words he used. I do not have strong feelings about any potential growth in trade union membership. People are free to join a trade union if they wish. I would merely point out to the noble Lord that, of course, only a small minority of employees choose to join trade unions.

[Lord Davies of Brixton (Lab) [V]]

My Lords, I start by telling the Minister that the claim in the Statement that the UK has one of the best records on workers’ rights is patent nonsense. We know it and, as a reasonable man, I am sure he knows it too. We also know, not only from the Taylor review, that one thing that could be done to improve the regulation of workers’ rights is to eliminate the scope for employers to exploit regulatory arbitrage. Will the Minister therefore give a commitment to reduce the number of categories of workers with different entitlement to statutory rights?

[Lord Callanan (Con)]

I am afraid I just do not agree with noble Lord. We have an excellent record of workers’ rights in this country. Of course, the best workers’ right of all is the right to a job. We have a better record on employment and employment creation than most of the rest of Europe.

[Baroness Ritchie of Downpatrick (Non-Afl) [V]]

My Lords, can the Minister outline what discussions have taken place with the devolved Administrations to ensure that all workers throughout the UK have full employment rights? Will the recruitment practice of fire and rehire be outlawed once and for all?

[Lord Callanan (Con)]

I can indeed tell the noble Baroness that Ministers and officials from both my department and from the Department for Work and Pensions, hold regular meetings with counterparts in the devolved Administrations to discuss various employment-related issues, including regular reviews of the legislative framework.

[Baroness Donaghy (Lab) [V]]

The Statement upholding employment rights gives and takes away at the same time. Its praise for ACAS is right. I remind the House that I am a former chair and in receipt of an ACAS pension. As the Minister knows, the Certification Officer is part of the ACAS family, and the proposals in the Trade Union Act 2016 were of such concern that my party raised it at Report. They are not technical measures, as the Statement claims, and third-party claims are an invitation to anti-union newspapers to make mischief. Will the Minister be willing to discuss these points, particularly about the future of the Certification Office, to ensure that this really is about upholding employment rights, not about feeding red meat to his less enlightened colleagues?

[Lord Callanan (Con)]

This is not about feeding red meat to anybody. Some people may be vegetarian and not enjoy red meat. The noble Baroness may not like it, but the principle of the reforms was introduced in the Trade Union Act. We debated it at the time in this House, and the principle was passed then. This is merely the enactment of those provisions, which have previously been agreed.

[Baroness Bennett of Manor Castle (GP)]

My Lords, I draw on figures from The UK’s Enforcement Gap 2020 report by Unchecked. These are figures for the fall in staffing numbers between 2009 and 2019: the Equality and Human Rights Commission, 61%; the Employment Agency Standards Inspectorate, 57%; the Health and Safety Executive, 34%; Her Majesty’s Revenue and Customs, 16%. That has rightly been described as a collapse of enforcement. We are told we have to wait until the spending review—apparently what was exposed in Leicester is not a sufficient emergency to require emergency action from the Government—but will the Minister assure me that the department will be pushing in that spending review to at least get funding levels and staff members back to 2009 levels?

[Lord Callanan (Con)]

As I said earlier, of course we will provide the appropriate funding in the spending review. I do not know where the noble Baroness has got her figures from, but we have more than doubled the budget for minimum wage enforcement and compliance. It is now more than £27 million annually, up from £13.2 million in 2015-16. More than 400 HMRC staff are involved in the enforcement of the minimum wage. In 2021, HMRC concluded more than 2,700 minimum wage investigations and returned more than £16.7 million in arrears to more than 155,000 workers.

[Lord Sikka (Lab) [V]]

My Lords, in 2020, 347,000 workers did not receive the statutory minimum wage. That has been a persistent problem. The financial penalties have not had the desired effect and clearly need to be strengthened. Will the Minister introduce legislation stating that the penalty for each violation should be not less than the total remuneration of the directors of the offending business? If not, why not?

[Lord Callanan (Con)]

This builds on my answer to the previous question. Since 2015, the Government have ordered employers to repay more than £100 million to a million workers. Over the course of 2020-21, HMRC’s Promote team facilitated nearly 800,000 employers and workers to seek further information on the minimum wage. So there is considerable enforcement going on in this space, and I just do not recognise the picture painted by the noble Lord and the previous speaker.

[The Deputy Speaker (Baroness Garden of Frognal) (LD)]

My Lords, all speakers have now spoken. The next business is due to start in less than a minute, so I suggest that instead of adjourning the House, we all just sit quietly and compose other thoughts until 2.20 pm.

Carbon Budget Order 2021

Lord Callanan Excerpts

Thursday 10th June 2021 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Carbon Budget Order 2021.

Relevant documents: 1st Report of the Secondary Legislation Scrutiny Committee (Special attention drawn to the instrument)

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I beg to move that this draft order, which was laid before the House on 21 April 2021, be approved. The UK was the first country to enter legally binding long-term carbon budgets into legislation, introduced in 2008 as part of the Climate Change Act. Carbon budgets are set with a view to meeting our target of reducing the UK’s net emissions by at least 100% by 2050. So far, five carbon budgets have been set in law, setting our decarbonisation path through the last decade and the next.

This statutory instrument sets the sixth carbon budget, which will limit the net amount of UK greenhouse gas emissions for the period from 2033 to 2037. The Government are proposing to set the sixth carbon budget at 965 million tonnes of carbon dioxide equivalent, which would reduce greenhouse gas emissions by 78% by the 2033-37 budgetary period, compared to 1990 levels. This is in line with the latest science as the level recommended by our statutory expert advisory body, the Climate Change Committee, and is endorsed by the devolved Administrations.

This is a highly ambitious target and marks a decisive step towards net zero by 2050, achieving well over half of the emissions reductions required between now and 2050 in the next 15 years. It builds on the momentum of our new nationally determined contribution under the Paris Agreement to reduce emissions in 2030 by at least 68% compared to 1990 levels—the highest reduction target made by a major economy to date.

For the first time, the sixth carbon budget will also incorporate the UK’s share of international aviation and shipping emissions; an important part of the Government’s decarbonisation efforts will be to allow for these emissions to be accounted for consistently. We will bring forward the necessary legislative proposals to include these emissions formally, which we aim to do as soon as practicably possible and within one year.

Setting the level for carbon budget 6 is an important step on the path to meeting net zero but we recognise the need to put in place clear actions to meet it. Once the budget is set in law, we will bring forward further policies and proposals. The net-zero strategy, to be published before COP 26, will show how we intend to meet this ambitious target as well as our nationally determined contribution along the way, setting out the Government’s vision for transitioning to a net-zero economy by 2050.

We have already seen the effects of climate change on our planet. Without further preventive measures, this will only get worse. The arguments for decisive action are overwhelming and the consequences of inaction stark. It will lead to rising temperatures and sea levels, extreme weather, damaged ecosystems and reduced productivity of crops. Co-ordinated global action is critical to cutting emissions and mitigating the potentially catastrophic effects on the environment and economies across the world.

The sixth carbon budget demonstrates the UK’s continued leading role in tackling climate change. This target ensures that we are acting consistently with the Paris Agreement temperature goal: to limit global warming to well below 2 degrees centigrade and pursue efforts towards 1.5 degrees centigrade. Importantly, it will allow us to call credibly on others to increase their own efforts, including at this year’s COP 26 summit.

Our ambition to protect the planet goes hand in hand with supporting economic growth across the UK. Between 1990 and 2019, we have grown our economy by more than three-quarters. At the same time, we have cut emissions by more than 40%—again, faster than any other G7 country.

The UK continues to be world-leading in tackling climate change: for example, more than quadrupling renewable electricity generation since 2010, with low-carbon electricity overall now giving us more than 50% of our total generation. The net-zero transition has huge potential to support jobs in low-carbon industries, building on the Prime Minister’s 10-point plan which will mobilise £12 billion of government investment, and potentially three times as much from the private sector, to create and support up to 250,000 more green jobs by 2030.

The sixth carbon budget is a further demonstration of this Government’s dedication to the green industrial revolution and positions the UK as a global leader in green technologies of the future, such as carbon capture and hydrogen. We acknowledge there will be significant costs in reaching this target, but it is clear the cost of inaction is much higher. The Stern review estimated the impacts of unmitigated climate change to be equivalent to 5% to 20% of global GDP.

The net-zero transition also brings significant benefits and opportunities, such as economic growth and jobs in new green sectors, reducing air pollution, enhancing biodiversity and reducing the risks of catastrophic climate change. We expect costs to continue to fall as green technology advances, industries decarbonise and private sector investment grows. Setting the sixth carbon budget will provide a clear signal to businesses, investors and the international community on our efforts to decarbonise.

We understand that ambitious plans across all sectors of the economy are needed to reach our targets. These plans will build on strong recent progress, such as the Prime Minister’s 10-point plan, as well as sector strategies such as the Energy White Paper and the Industrial Decarbonisation Strategy. We will bring forward further bold proposals in the coming months, including a comprehensive net-zero strategy to cut emissions and create new jobs and industries across the country, going further and faster towards building a stronger, more resilient future and protecting our planet for this generation and those to come.

I conclude by stressing the paramount importance of the sixth carbon budget in our efforts to cut emissions and strengthen our strong climate leadership ahead of COP 26. I hope noble Lords will support the statutory instrument. I commend this draft order to the Committee and beg to move.

--- Later in debate ---

[Lord Callanan (Con)]

First, let me thank noble Lords for their valuable contributions to the debate. I hope that I will be able to provide in my response all the necessary assurances that will enable noble Lords to approve the statutory instrument before us.

As I stated in my opening speech, this SI will set a world-leading target in line with the independent expert advice of the Climate Change Committee and is supported by all four Governments of the UK nations. Carbon budget 6 is an important step towards meeting our 2050 net-zero target, building on our NDC to reduce our emissions in 2030 by at least 68% compared to 1990 levels. It will strengthen our position as a global climate leader going into our G7 and COP 26 presidencies, highlighting our commitment to taking decisive action against climate change. In addition to showing the world that the UK is serious about protecting the health of our planet, it will help to seize the opportunities and benefits that the net-zero transition will bring, not only reducing the risks of catastrophic climate change but leading to economic growth and jobs in new green sectors. The UK can position itself as a global leader in green technologies of the future.

My noble friend Lord Lansley made a number of important points on how we will implement the range of ambitious policies that will be needed as we transition to net zero. He rightly highlighted the need for a clear focus on the delivery of new measures across, for example, carbon capture, energy efficiency and hydrogen. He also highlighted the importance of using all possible policy levers across government to meet our ambitious targets. I agree with him that targets are in and of themselves insufficient. Our net-zero strategy, which is to be published before COP 26, will set out bold proposals to make progress across the economy. We will also set out further proposals throughout the year—for example, our heat and buildings strategy and the transport decarbonisation plan. This will be a bold and ambitious programme of the co-ordinated action needed to end the UK’s road transport greenhouse gas emissions by 2050 and, at the same time, ensure that the transport sector plays its part in delivering our legally binding carbon budgets.

My noble friends Lord Lansley and Lord Moynihan raised the important issue of carbon pricing. The UK is a strong supporter of carbon pricing and a pioneer of carbon markets through both domestic action and our support for the uptake of carbon-pricing schemes around the world. Putting a price on carbon is recognised as an important element of climate change mitigation. It provides a cost-effective and technology-neutral way to reduce emissions, mobilising the private sector. It can of course also offer social and biodiversity benefits.

As COP president, the UK is fully committed to reaching a successful outcome on carbon trading rules at COP 26. This is a fundamental element of the Paris Agreement, enabling parties to co-operate to achieve higher ambition in both adaptation and mitigation actions. We will build on the good progress made at COP 25 in Madrid, working with all parties towards a successful outcome in Glasgow.

In response to my noble friend Lord Lilley, who rightly raised issues about the costs of the transition, I can say that the costs cited in the impact assessment include the full costs and benefits of the transition to net zero. I recognise that we need to manage the costs of this significant transition carefully but, overall, we expect the costs to be outweighed by significant benefits: reducing polluting emissions as well as bringing fuel savings and improvements to air quality and enhancing biodiversity.

It is of course important that we consider the impacts on the most vulnerable when decarbonising our homes. We are offering additional protections to the vulnerable and fuel poor. The expanded warm home discount and the energy company obligation will provide around £6 billion of support to low-income and vulnerable households between 2022 and 2026—an increase of more than £1.7 billion over that period. Over the last year, we have committed over £1 billion of energy-efficiency funding through the local authority delivery scheme, the home upgrade grant and the social housing decarbonisation fund. This will fund home improvements for low-income households now and over the next two years. Her Majesty’s Treasury is soon to publish its net-zero review and BEIS a call for evidence on energy consumer funding, fairness and affordability, on the costs of reaching net zero and ensuring fairness and affordability in the energy system. These will all inform the Government’s approach to achieving transition in a way that works for households, for businesses and, of course, for the public finances, while at the same time maximising our economic growth opportunities.

In response to the noble Lord, Lord Sarfraz, who asked about carbon off-sets, the UK is working through international fora to set the foundations for a credible global carbon trading system rooted in environmental integrity. As COP president, the UK is fully committed to reaching a successful negotiated outcome on carbon trading rules at COP 26. The UK’s international climate finance is strengthening the international carbon market, helping to reduce emissions and leverage additional investment.

In response to the noble Lord, Lord Oates, who highlighted the importance of delivery and some important considerations, again, we know that setting a target is only a first step and that further action is of course needed. Ahead of COP 26, we are setting out ambitious plans across many key sectors of the economy. These will build on strong recent progress on the Prime Minister’s 10-point plan and will culminate in our net-zero strategy, to be published later in the year.

I am pleased that the noble Lord welcomed the inclusion of international aviation and shipping in the carbon budget, as that of course allows for those emissions to be accounted for consistently with others. The Government take the matter of aviation and their commitments on the environment extremely seriously and the expansion of any airport must always be within the UK’s environmental obligations. By taking immediate steps to drive the uptake of sustainable aviation fuels and investments in R&D to develop zero-emission aircraft, and developing the infrastructure of the future at our airports and seaports, we will make the UK the home of green ships and green planes.

Through the Aerospace Growth Partnership, industry and government have made a joint funding commitment of £3.9 billion for aerospace research and development from 2013 through to 2026. This includes the FlyZero project to study in depth the potential for zero-emission aircraft. We are also investing £125 million in the future flight challenge to enable the use of new forms of green and autonomous aircraft. Further work on sustainable aviation fuels and air traffic control is co-ordinated by the Department for Transport and our partnership with industry through the Jet Zero Council. The Government are planning to consult shortly to update our position on aviation and climate change.

In response to the points made by the noble Lord, Lord Grantchester, who emphasised the points that a number of other noble Lords made about the importance of policy action, I agree that urgent action is needed to address the threat and help secure the UK’s long-term economic security. That is why we are committed to these world-leading targets, and we will bring forward further plans shortly to meet them.

The independent advisers, the Climate Change Committee, are clear that their recommendations have been explicitly designed to reflect the UK’s highest possible ambition within the UK’s particular capabilities as required by the Paris Agreement. Our sector decarbonisation strategies will contain further proposals to put us on track for meeting our carbon budgets and to provide clear direction for different sectors of the economy.

The comprehensive net-zero strategy ahead of COP 26 will set out the Government’s vision for transitioning to a net-zero economy. It will outline our path to meet net zero by 2050 and our emission targets along the way. We are in no doubt about the challenge that this target presents, but it is right that we pursue the highest possible ambition in the face of climate change. This target ensures that we are playing our part in meeting the Paris temperature goal, and we will be urging other countries to follow us and do the same. It is in line with the level recommended by the CCC and it is feasible to meet with substantial efforts across every sector of the economy.

I set out in my opening speech what we have already achieved, and we can make considerable progress in the power sector as we now boast the world’s largest offshore wind capacity. Now we look at the even greater benefits that net zero can bring, such as protecting the planet for future generations, through economic growth and jobs in the new green sectors. This statutory instrument will keep the UK on a credible path to meeting that 2050 net-zero target, seeing well over half of the emissions reduction needed by 2050 in the next 15 years. It will build on the recent momentum to capitalise on the vast opportunities of net zero and will strengthen our ability to urge countries to go further in delivering net zero globally. I commend the draft order to the Committee.

Motion agreed.

Contracts for Difference (Miscellaneous Amendments) Regulations 2021

Lord Callanan Excerpts

Thursday 10th June 2021 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Contracts for Difference (Miscellaneous Amendments) Regulations 2021

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, I beg to move that the draft Contracts for Difference (Miscellaneous Amendments) Regulations 2021, which were laid before the House on 12 May this year, be approved.

This draft instrument makes a number of amendments to three separate contracts for difference regulations: the Contracts for Difference (Definition of Eligible Generator) Regulations, the Electricity Market Reform (General) Regulations and the Contracts for Difference (Allocation) Regulations. These amendments will help to support the ambition for the next contracts for difference auction, planned to open in December this year, and will make progress towards our 2050 net-zero target.

The amendments include adding and removing technologies from the list of technologies eligible to compete in a contracts for difference round, strengthening the supply chain plan process and extending the delivery years that can be set for successful projects. They also include some small technical amendments to the non-delivery disincentive rules and capacity cap rules, as well as technical changes to improve the operation and clarity of the allocation regulations. We are proposing these legislative amendments following two public consultations of 13 and nine weeks respectively, in 2020 and earlier this year, during which our proposals received broad support.

The CfD scheme is designed to offer long-term price stabilisation to new low-carbon generators, allowing investment to come forward at a lower cost of capital and therefore at a lower cost to consumers. The scheme typically sees support contracts awarded in a competitive auction process, which has been successful in driving substantial deployment of renewables at scale in Great Britain while rapidly reducing costs to electricity consumers.

The most recent allocation round in 2019 saw contracts awarded to 5.8 gigawatts of new renewable energy projects, with the costs of offshore wind falling by around 30% from the previous allocation round in 2017. This is the first time that renewables are expected to come online below predicted market prices—meaning, of course, a better deal for consumers. The next CfD auction, which is the fourth to date, is planned to open in December 2021. It will be available to both established technologies, such as solar PV and onshore wind, and less established technologies, such as floating offshore wind. Offshore wind will sit in its own newly created third pot.

In October 2020, the Prime Minister announced new plans to accelerate the UK’s progress towards net-zero emissions while making the UK a world leader in clean wind energy. This included the ambition to secure up to 12 gigawatts of renewable electricity capacity in this round, subject to the pipeline of projects expected to bid, which is double that secured in the last round held in 2019. We are laying these amendments today to give certainty to businesses about the basis on which projects will be eligible to take part in the next CfD scheme in advance of the round opening in December.

CfD applicants with a capacity of 300 megawatts or more are currently required to present a supply chain statement to the EMR Delivery Body as part of their application. A statement is provided if a developer can demonstrate to the Secretary of State’s satisfaction that the project will make a material contribution to the development of relevant supply chains. The aim of the policy is to encourage the effective development of open and competitive supply chains and the promotion of innovation and skills in the low-carbon electricity generating sector. The Government believe that the current policy approach needs to be strengthened to boost competitiveness and productivity in places that stand to benefit the most and to harness innovation and invest in skills while driving progress towards the UK’s 2050 net-zero target.

These regulations revise the criteria that the Secretary of State must consider when assessing an application for a supply chain statement. In addition, they create a new stage in the process, requiring a CfD generator to apply for a supply chain implementation statement to demonstrate the extent to which they have delivered on the commitments set out in their original supply chain statement, setting out the process for providing or refusing a supply chain implementation statement.

This supply chain implementation statement will enable an CfD generator to fulfil an operational condition precedent required under a CfD contract. The Low Carbon Contracts Company, as CfD counterparty, may terminate the CfD if this operational condition precedent is not fulfilled by the CfD long-stop date. This requirement will be inserted into the CfD standard terms and conditions for new CfDs awarded from the fourth allocation round.

Biomass conversions have played a material role in helping to meet the UK’s 2020 renewables targets by replacing coal-fired power stations with renewable energy generation. However, as electricity generation has become less carbon intensive, we have reviewed the role of biomass conversions. These regulations remove biomass conversion projects from the list of technologies eligible to apply for a CfD in future allocation rounds.

Allocation rounds, and their associated budgets, can be made available only for projects commissioning in set periods, known as delivery years, which are set before each round opens. In order to run allocation rounds with delivery years after 31 March 2026 and to further provide necessary flexibility to support the level of ambition needed to meet the 2050 net-zero target, we are extending the CfD scheme delivery years until 31 March 2035.

The Government have confirmed a series of more ambitious targets for offshore wind, including a boost to the Government’s previous target to deliver up to 30 gigawatts of offshore wind to delivering 40 gigawatts by 2030, and a new ambition for 1 gigawatt of this 40 gigawatts target to come from floating offshore wind. This is due to widespread agreement that floating offshore wind will play an important role in helping the UK to meet its longer-term decarbonisation targets.

This technology is in an earlier phase of development, making it currently more costly than offshore wind that is attached to the seabed. It is therefore appropriate for floating offshore wind projects to be recognised as a distinct technology within the CfD scheme; one subject to its own administrative maximum strike price and eligible to take part in pot 2 auctions alongside other less-established technologies. These regulations therefore establish floating offshore wind projects as a category of technology eligible to take part in the CfD scheme and compete alongside other less-established technologies. In doing so, we deliver on one of our manifesto commitments.

The UK’s new 2050 net-zero emissions and carbon budget 6 targets mean that we will continue to require substantial amounts of new, low-carbon power sources to be built before 2050. These changes ensure that CfD allocation rounds can best support an increase in the pace of deployment of new renewable electricity generation needed to achieve our ambitions while continuing to consider value for money for consumers. Subject to the will of Parliament, these arrangements will come into force on the day after the regulations are made. I commend the regulations to the House.

--- Later in debate ---

[Lord Callanan (Con)]

I thank both noble Lords, the gallant duo, for turning up to debate an important statutory instrument this afternoon. As I set out in my opening speech, decarbonising the power sector is a vital part of the UK’s effort to meet its world-leading net-zero target. While we cannot, of course, predict exactly what the generating mix will look like in 2050, we can be fairly confident that renewables will play a key role alongside firm or flexible low-carbon generating capacity, such as carbon capture, usage and storage technology and nuclear power. Net zero defines what we must achieve by 2050 but, as pointed out in the previous debate, not how to get there. We must take the necessary decisions now to deliver the resilient, low-cost, low-carbon power system that we will need to reach net zero.

The noble Lord, Lord Oates, asked about the circumstances should a developer not obtain a supply chain plan statement. If a developer fails to make ambitious, feasible and measurable commitments in a supply chain plan, it may not receive an SCP statement. However, it will have the opportunity to resubmit its application before the auction begins. Subsequently we expect that commitments made should be met. If a developer fails to implement the majority of its commitments in a supply chain plan, its CfD contract may be terminated. However, the termination of a CfD contract is very much a last resort. The purpose of the monitoring process is to support the implementation of a supply chain plan commitment that developers have freely entered into. It is in the best interests of both the Government and the developer that that chain plan commitments are implemented.

In response to the question on making explicit powers under the budget revision, we are seeking to make explicit our existing powers and not to add any new powers. Although in the May 2020 consultation we proposed making changes to clarify our ability to amend the overall budget—meaning the monetary budget—and add the ability to amend a supply cap, on reflection, we consider that we already have the power to amend the capacity cap due to the fact that the definition of “overall budget” includes both the monetary and capacity budget. Therefore, both proposed changes would make explicit existing powers which, although they exist, we consider not clear enough for stakeholders.

The noble Lord also asked about soft constraints. When deciding whether a capacity cap—maximum or minimum—should apply as a soft or hard constraint in an allocation round, we will consider what we are trying to achieve from the round generally or for specific individual technologies, including in terms of how much new capacity is supported. We also want to ensure value for money by creating competitive tension between bidders.

The noble Lord, Lord Grantchester, asked about the strike price for FOW. We will publish specific allocation round parameters in due course. We typically announce the auction parameters four to six months in advance in a draft budget notice and draft allocation framework although, of course, the exact timing differs between rounds.

On the noble Lord’s question about SCP guidance, that has been published in draft and a final version will be published in the next couple of months. The noble Lord asked a couple of other questions but, if he will forgive me, I will write to him with more detailed answers.

The changes in these regulations are varied but they are essential to ensure that CfD allocation rounds can best support the increase in the pace of renewable deployment needed to achieve our net-zero ambitions, while continuing to consider value for money for consumers. They must be made now ahead of the next CfD allocation round, which is planned for December this year, so that developers have certainty as to who will be eligible to take part and on what basis. I therefore commend the regulations to the Committee.

Motion agreed.