United Kingdom Internal Market Bill
Lord Callanan ExcerptsMonday 23rd November 2020
(3 years, 5 months ago)
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Lord Callanan
“(8A) Before making regulations under subsection (7) the Secretary of State must consult the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland.”Member’s explanatory statement
This amendment would require the Secretary of State to consult the devolved administrations before making regulations amending the “legitimate aims” in Clause 8 (which can mean that provision does not count as indirectly discriminatory against goods).
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, I start by bringing to the attention of the House an inadvertent error that I made in one of my replies last Wednesday. In response to the noble Baroness, Lady Ritchie of Downpatrick, I misread my note on the relationship between the non-discrimination principle and employment law requirements, and got one word wrong. I should have said:
“If the employment law requirement were to meet that test, they would not be disapplied unless they had discriminatory effects.”
I reassure that House that my misspeaking in this case was, of course, entirely unintentional.
To be absolutely clear about this point, we have already delivered the relevant legislative measures to give effect to Article 2 of the protocol. I again assure noble Lords that the rights for individuals in Northern Ireland captured within the scope of the Article 2 commitment will continue to be protected going forward and will not be impacted by the outworkings of this Bill. Even if employment law requirements were in scope of the non-discrimination principle, which they would not generally be as they would have to relate to goods sold, they would not be disapplied unless they had discriminatory effects. As I said to the noble Baroness, Lady Ritchie, last week, I would be happy to facilitate a meeting between her and interested parties and the relevant Ministers and officials, and I stand by the commitment that I gave then.
On the subject of today’s groupings, the amendments in my name would ensure that the Government consult with the devolved Administrations when seeking to use powers. As we made clear in Committee, if the powers are required, we will of course engage with the devolved Administrations in the spirit of the devolution memorandum of understanding. We have been listening to colleagues in the House and appreciate that there is an appetite for these commitments to be included in the Bill. We are therefore introducing these amendments to put beyond doubt our commitment to consult each of the devolved Administrations if any of the relevant powers are used. The consultation requirements and the commitment behind them are clear. However, once consultation is undertaken, the right place for final decisions should be back in Parliament, where parliamentarians from all parts of the United Kingdom can debate and vote on the proposed use of these powers.
It is also worth noting the separate amendment we have tabled, requiring the Secretary of State to review and report to Parliament on the exercise and effectiveness of the powers in Parts 1 and 2 within five years. That will provide an additional degree of accountability and scrutiny, and will again involve consultation with the devolved Administrations—something that I know the House is keen on. For the reasons I have set out above, I hope that noble Lords will accept the amendments in my name, and agree that Amendments 18, 32 and 43 are therefore unnecessary.
Having set out the reasonable measures that Government have tabled, I turn to Amendments 15, 20, 34, and 46. These seek to add additional processes around devolved Administration consent before use of the relevant powers. We have been listening to noble Lords and appreciate the appetite for these commitments on devolved Administration engagement to be included in the Bill. As I have already explained, we are therefore seeking to amend this clause to require consultation with the devolved Administrations prior to use of the power, putting our commitment beyond doubt. As part of this, we will of course set out reasoning for seeking to use the powers, both to the devolved Administrations and to Parliament. We will also seek to reach agreement with the devolved Administrations wherever that is possible. Because of this, it seems to us that putting into legislation the process proposed by noble Lords in their amendments would be duplicative and unnecessary. For these reasons, I hope that the amendments we have already tabled address the concerns of noble Lords, so these amendments are unnecessary.
Amendment 16 requires the publication of the results of consultation on the exercise of the power in Clause 8. While this power was removed from the Bill last week, I will speak briefly about the Government’s position on the subject. The exercise of this power would require consultation with the devolved Administrations. They are perfectly capable of deciding to publish their responses if they so choose. It is not necessary to make that choice for them in this Bill. For these reasons, I ask the noble Baroness not to press that amendment either.
Amendments 26, 27 and 28 would require the Secretary of State to consult all three devolved Administrations before preparing, revising or withdrawing guidance on the operation of the UK market access principles. Amendment 27 specifically stipulates that the Secretary of State should seek the consent of the devolved Administrations. However, should formal consent not be received within a month, the Secretary of State may proceed none the less. This amendment further states that where the Secretary of State makes regulations without obtaining consent, he must publish a statement explaining why. The guidance is itself explanatory; it is important to note that it is not a power to make or amend regulations.
It goes without saying that as part of the guidance process we will engage with all the relevant stakeholders, including the devolved Administrations, because we are committed to helping regulators and traders understand the principles and make the best possible use of them. However, this guidance will not change the rules that apply, so the formal consent of the devolved Administrations should not be required. It is also unnecessary to have a legislative consultation process with the devolved Administrations alone in respect of the guidance, when the guidance will be explaining, not making, the law.
I hope that with those words I have reassured noble Lords on this matter and they feel able not to press their amendments. In the meantime, I beg to move.
Baroness Hayter of Kentish Town (Lab)
My Lords, first, I thank the Minister for his correction on the unforced error, I think it is called, in what happened on Wednesday. The noble Baroness, Lady Ritchie, will be speaking later and I am sure will comment on that; I hope the House can let her even if it is not specifically in this group. When the Minister responds, I would ask him to ensure the meeting that he has kindly offered takes place before Third Reading, so that if anything needed adjustments, we would be able to look at it at that point. As I say, I am absolutely certain that it was an unforced error, but it would be nice to have that clear.
We are pleased about parts of this, and certainly the review of the use of powers. It may seem odd to the House that we are continuing with these amendments, almost all of which—the guidance being the exception—set down how regulations should be made, even as the very power to make such regulations is about to be removed from the Bill. Nevertheless, we are in agreement with the Minister that it is helpful to deal with the amendments in his name and those in mine and others’ which deal with how these powers would be handled, should they be put in.
Therefore, it is helpful to have our Amendment 15, which I will formally move in due course, as well as Amendments 20, 24 and 26 in the Bill, so that the Commons and the Government will be well aware—assuming that our amendments are passed—that this House would expect any regulation about the functioning of a market across four nations to be made in partnership with those other three participants.
Amendment 15 and the others go further than what the Minister has offered in his. He has quite rightly added consultation; ours go further than that, but they do not hand a veto to any one of the devolved authorities. What they do is take further the welcome admission by the Government, in their Amendments 14, 19, 36 and 45, that it would be unthinkable to make regulations affecting devolved competences without consulting their Governments and legislatures. Our further step is to add some grip to the consultation by making it a proper involvement. The amendments say that the devolved authorities must either give their consent to the regulations within a month, or else the Government can continue but would have to explain to Parliament and the public why they were proceeding without agreement. This does not seem much to ask. It will not cause any delay, but it would ensure that there was no risk of any tokenism in the consultation. Instead, the devolved authorities will have to reply, and speedily, and the Government would simply have to explain why they wanted to proceed contrary to any of the devolved authorities’ views before proceeding.
Lord Callanan (Con)
My Lords, I am sure that noble Lords will be happy to know that I can be brief, because of course I set out the Government’s position on these matters in my opening remarks. However, to summarise, we feel that we have set out a comprehensive package of changes to the delegated powers in the Bill to address many of the concerns that have been raised about the role of the devolved Administrations. Of course, it is always a great regret for me to disappoint the noble Lord, Lord Liddle, but I have to say that on these matters I am able to go no further.
Devolved Administration consultation is now required by legislation prior to any use of the key powers in Parts 1 and 2. The Secretary of State will also be conducting a thorough review of the exercise and effectiveness of each of these powers within five years, which again will require consultation with the devolved Administrations. Our approach will ensure a high degree of transparency and scrutiny and will guarantee devolved Administration involvement whenever the powers are used or, indeed, reviewed. The alternative approaches proposed in the group would, in my view, overcomplicate these very clear commitments.
I shall reply briefly to the questions that were put to me. In response, first, to the noble Lord, Lord Hain, I can confirm that the policy statement he referred to is accurate. With regard to his second question, the design of the Bill is different from the EU single market because the Government’s approach does not simply copy out EU rules, and that means that the constraints under which we operate are different.
The noble Lord, Lord Foulkes, asked about the procedure for consultation. The Bill now requires that consultation should occur as a matter of fact before Ministers exercise their delegated powers. As is normal for such legislation, it does not spell out in great detail how this must be achieved, but we will engage with the devolved Administrations as part of the process of normal policy development such as, for example, sharing draft SIs and publications and co-operating on public-facing events wherever that is possible, and then in any case more formally before a decision is made.
The noble Lord, Lord Morrow, asked why we should consult with the Department for the Economy in Northern Ireland. I can tell him that the reference to the department is consistent with the precedent of the Northern Ireland devolution settlement. Finally, perhaps I may confirm yet again to the noble Baroness, Lady Ritchie, that I will urgently seek to facilitate a meeting for her and the interested parties that she requested.
With those commitments and answers to the, I hope that noble Lords will feel able to support the Government’s approach to this matter.
The Deputy Speaker (Baroness McIntosh of Hudnall) (Lab)
My Lords, I have received two requests to ask the Minister a short question. They are from the noble Lord, Lord Empey, and the noble Baroness, Lady McIntosh of Pickering.
Lord Empey (UUP)
Briefly, my Lords, a question has been raised in the House on a number of occasions: why are Welsh and Scottish Ministers referred to, but a Northern Ireland department is referred to? The reason is that, since 1921, power is devolved in Northern Ireland to the department, not to the Minister. The role of the Minister is to direct and control the department, but the department can still function without a Minister. It is a quirk that goes back 100 years, but it is there.
The noble Lord, Lord Morrow, made a relevant point. I do not know what the Minister means by “consistent with the devolution settlement”, because nothing in the settlement that I am aware of determines that this particular department is responsible. But, if you want a plural, because “Ministers” are referred to in the plural in Scotland and Wales, the only collective equivalent in Northern Ireland is the Executive—or, to meet the point made by the noble Lord, you could say, “Northern Ireland departments as appropriate”. But the reason for the difference is historic; it is not an error, as some people thought in the past. It is consistent with the fact that powers are devolved to the department and not to the Minister.
Lord Callanan (Con)
I of course thank the noble Lord for his help in answering the question more thoroughly than I did, and I can confirm my understanding that he is correct in what he says.
Baroness McIntosh of Pickering (Con)
My Lords, I am overwhelmed that my noble friend the Minister has accepted Amendment 14. Perhaps I may press him a little more on Amendment 16. If I understood him correctly, he said that it should be for all of the devolved Administrations to publish their responses to a consultation. I would beg to differ. It would be much better for all concerned, including myself, to find in one location on a national Westminster-based government website all the responses that have been published.
He did not comment—I would be grateful if he would—on why he would feel unable to give reasons for any decisions reached. I am grateful to the noble Lord, Lord Foulkes, who has also signed Amendment 16. Is there any problem the Government would have in giving reasons for any decisions if they were not prepared to accept the responses to the consultations from the devolved Administrations?
Lord Callanan (Con)
I will write to the noble Baroness with further information on that point.
Lord Callanan
“(4) Before making regulations under subsection (2) the Secretary of State must consult the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland.”Member’s explanatory statement
This amendment would require the Secretary of State to consult the devolved administrations before making regulations amending Schedule 1 (which contains exceptions from the rules about market access for goods).
Lord Stevenson of Balmacara (Lab) [V]
My Lords, this has been a very interesting debate for a number of reasons, which I shall come back to as I conclude. The noble Baroness, Lady Noakes, as she often does, focused on the key issue in play here: where we best situate the balance in an internal market that is as integrated as we currently have, which needs and respects clearly harmonised rules but also allows for joint processes which allow individual parts of the market to develop at different rates in different places. I think we agree that that is the key issue but differ on where the balance must lie and whether it has to be uniform as much as the Bill seems to suggest it will be.
The main interest in this debate has been in focusing our minds on areas that we have not really touched on in recent groups. We have looked at goods and services and at qualifications and how they might be harmonised, and we are coming back to services and qualifications later in our debates this evening. The points made by the noble Lord, Lord Wigley, about whether current policy might be adapted because of the impact of this Bill when it becomes an Act need an answer, and I would be grateful if the Minister could respond in particular to that point. Is there a particular hook in this Bill that will cause difficulties across the devolved authorities?
Secondly, on the point made by my noble friend Lord Hain, could it have an adverse effect on current processes so that, for instance, we would lose the local benefit policies to which he referred? Thirdly, on the point raised by my noble friend Lord Liddle, if there are good and valuable initiatives on local growth and support for sectors that are perhaps subsets of the national economy that are appropriate and best organised and run from a local point of view, how will they be affected by the way in which the Bill imposes a straitjacket on the various initiatives that we want to see come forward? I look forward to hearing from the Minister.
Lord Callanan (Con)
My Lords, as the Government set out in Committee, we intend to consult shortly and deliver measures on procurement through a wider package of procurement reform. The aim is for primary legislation to be made in the second Session. Therefore, I hope that this will offer some reassurance to noble Lords that this amendment is unnecessary, because the market access principles will not typically operate in the area of public procurement, as they are about how business is regulated. The procurement rules cover how public authorities carry out their procurement activities. Therefore, I reassure the noble Lords, Lord Wigley and Lord Liddle, the noble Baroness, Lady McIntosh, and others that there will be no impact on public procurement.
Turning to Amendment 23, we have obviously had these debates before; in fact, I recall having them during the passage of the various Brexit Bills with many of the same speakers. As we explained on previous occasions, the exclusions we have drafted for goods in Schedule 1 are narrow and tightly defined to protect the functioning of important policy areas. This protects the ability of the devolved Administrations and the UK Government to preserve the proper functioning of important policy areas, while at the same time avoiding any harmful or costly barriers to trade within the UK internal market.
More generally, I understand that this amendment is designed to strengthen the devolved Administrations’ ability to take different approaches to public policy related to aspects of the environment. We have made it clear that the Bill contains derogations for the protection of the life of humans, animals and plants, which aligns with protection of the environment in many cases.
Secondly, the Government support and respect the devolved Administrations’ right to set policy in their areas of devolved competence. The Government also recognise the benefits of locally targeted policy and the potential for policy innovation. For example, on the environment, between 2018 and 2019 the UK nations all introduced a ban on microbeads in rinse-off personal care products, working together to take a landmark step in the fight against plastic waste. There is no reason why the provisions in this Bill would hinder similar collaborative initiatives.
However, it is important to acknowledge the unprecedented and significant flow of powers to the devolved Administrations, as well as the incoming ability of the UK legislatures to create new policy in areas previously overseen by the EU. This Bill aims only to ensure frictionless trade, movement and investment between all nations of the UK. The policies that different parts of the UK choose to pursue in future is a matter for each Administration.
A number of noble Lords, including the noble Baronesses, Lady Boycott and Lady Randerson, raised yet again the sale of coal across the English-Welsh border, and my noble friend Lord Randall introduced the new issue of peat. The same thing applies in both cases: there is a clear distinction between sale and use. Under mutual recognition, the use of coal or, indeed, peat—it is probably a form of coal, is it not?—could be banned, regardless of its origin in the UK. Requirements related to the use of goods are not within the scope of the mutual recognition principle. If the requirement instead relates specifically to the sale of coal or peat, the interaction with mutual recognition is slightly more complex and depends on whether the requirement in question counts as a relevant requirement for the purposes of mutual recognition. Broadly speaking, mutual recognition captures requirements that are intrinsic to the good itself, such as requirements for the composition of the good, whereas non-discrimination captures, among other things, requirements for the circumstances or manner in which a good can be sold. I clarified these matters in detail in a letter to the noble Lords, Lord Purvis and Lord Fox; it is in the House Library, I think, if Members require further details.
My noble friend Lord Randall asked me about the situation in the EU and whether we could ban the sale and use of such things. As noble Lords know, the machinery in the EU is wholly different: for example, there are technical notification requirements through which a member state may be delayed in implementing its legislation; or, indeed, the European Commission may step in and open negotiations on a harmonising measure. Any derogation applied by a member state is open to challenge, of course; the Scottish Government had to fight very hard to get their minimum unit alcohol pricing accepted.
The system established under this Bill is different. Pricing and other manner of sale requirements are totally out of scope. Furthermore, requirements governing how a consumer can use a good that may originally have been caught by Article 34 of the Treaty on the Functioning of the European Union are also totally out of scope.
The noble Baroness, Lady Ritchie, asked whether the Bill is a threat to devolution. No: the proposals are designed to ensure that devolution can continue to work for everyone. All devolved policy areas will stay devolved. The proposals ensure only that there are no new barriers to UK internal trade.
The noble Baroness also asked about the Interparliamentary Forum on Brexit. Of course, the clue is in the name: it is an interparliamentary forum. Such decisions are for the legislatures rather than the UK Government to take forward directly, so it is not my place to comment on that.
For all the reasons I have set out, I hope the noble Lord feels able to withdraw his amendment.
Lord Purvis of Tweed (LD)
My Lords, I am grateful for what the Minister said in referring to the noble Baroness, Lady Boycott, and to his correspondence with my noble friend Lord Fox and me.
I consulted the House of Lords Library on how the Minister’s letter referring to the sale of coal—not its use—interacts with the Air Quality (Domestic Solid Fuels Standards) (England) Regulations, which this House passed on 7 October and which are the governing legislation. The regulations specifically ban the supply and sale of coal and wet logs in England. One concern is that the Bill would not ban such sales if the goods originated in Wales, Scotland or Northern Ireland, where bans are not in place. That is clear; in fact, the Minister’s letter confirmed that this issue falls within the scope of mutual recognition. In addition, the other terms of the regulations bring this issue within the scope of indirect discrimination.
However, more concerning is that the regulations have been made but are not yet in effect—they come into effect on 1 May 2021—so the Bill will take effect before them. That is a requirement under this legislation, so the regulations the House passed banning the sale of coal and wet logs in England will have no effect because they are now within the scope of the Bill. Clause 5(3) states:
“A relevant requirement … is of no effect”.
Can the Minister clarify that, regardless of whether this is allowed or not, the ban in England will have no effect because of this legislation?
Lord Callanan (Con)
Again, it is about the difference between sale and use. England can proceed to ban a sale in England but if the sale is allowed in Wales, it could still take place under the mutual recognition principle; but, presumably, use would be prohibited. My letter explains this in great detail.
Lord Randall of Uxbridge (Con) [V]
I do not want to labour the point, but I am a little dense on this issue. As I understand it, my noble friend is saying that you could ban the use but not the sale of coal or peat, which is my particular interest. I wonder how that will be affected. I am sorry to labour this point—I am sure my noble friend has lots more important things to discuss—but I would be grateful for any elucidation he can give.
Lord Callanan (Con)
My noble friend is essentially right, but it would depend on whether it was legal for the good to be sold in the other nations of the United Kingdom. Again, the difference between sale and use is the important distinction here.
The Deputy Speaker (Lord Lexden) (Con)
I call the noble Lord, Lord Wigley, to conclude the debate.
Lord Wigley (PC) [V]
My Lords, first, I thank the dozen or so noble Lords who participated in this debate, which was very focused and has raised a number of issues that will need to be taken further. I was grateful to the noble Baroness, Lady Boycott, for introducing her amendment, many parts of which overlap with mine; I certainly support her amendment in its own right, irrespective of how it interplays with mine. I am sure that she and other colleagues will accept the principle of product miles being an important element in the consideration of environmental and economic policy.
I was taken by the references the noble Lord, Lord Liddle, made to regional policy in England. This was touched on by the noble Baroness, Lady McIntosh, as well. That is absolutely valid, because circumstances vary from area to area, certainly between the south-east and the north of England, and between other areas. Where there are different circumstances one needs different policies and mechanisms of government that can deliver those policies in line with the areas’ requirements.
Therefore, in advocating these powers for the three devolved nations, I also accept entirely the argument that there should be an ability to fine tune policy for the regions in England. It is for those regions to stand up and be counted, and to demand the powers to do so. After all, the facility in Wales of having our own Government has enabled us to take new initiatives that have helped to solve some problems—not all of them, but some of them. The noble Baroness, Lady Bennett, whose support and that of the Green group I welcome for both amendments, has underlined on a number of occasions the need for there to be devolution to the regions of England.
I listened carefully to the comments made by the noble Lord, Lord Empey, in particular, who raised a question that I do not think has been fully answered by the Minister regarding how the use of orders might be undertaken in Northern Ireland. That leads me on to the question, in responding to the Minster’s argument that there will be a separate policy statement on procurement reform, of whether that new policy and the legislation associated with it will be driven through by statutory instrument. We might be in a position where Wales and Scotland could, like Northern Ireland but for different reasons, be subject to that sort of policy.
What I want from the Minister before I conclude this short debate is some assurance that, in drawing up the consultation and procurement proposals he has in mind for a later stage, that will not go through the back door, which he is not admitting to doing through the front door in this Bill. I would be grateful if he could respond specifically on that question: that the procurement reform will not undermine the thrust of the argument we have had in the debate. I would be grateful for his comments on that before I conclude.
Lord Callanan (Con)
The Government intend to deliver measures on procurement through a wider package of procurement reform. The aim is for primary legislation to be made in the second Session, as I said in my answer. I hope that is enough reassurance for the noble Lord.
Lord Wigley (PC) [V]
I am grateful to the Minister for clarifying that this will happen in the second Session, but I very much hope that it will not open a totally different view of the devolved competencies and the balance of powers needed not only between the three devolved nations, but regionally in England. I hope that that can be given greater thought.
I will not press the amendment, but I believe that the approach encapsulated in it can be combined with some of the other amendments we have already passed that will be part of the revised Bill that goes back to the House of Commons. If that is the case, there may be opportunities for Welsh MPs to pick up this matter in the House of Commons so that we can come back to it again when we consider how the House of Commons responded to the Bill as it finds it. Having said that, I beg leave to withdraw the amendment.
Lord Callanan
“Duty to review the use of Part 1 amendment powers
(1) In this section “the Part 1 amendment powers” are the powers conferred by sections 6(5), 8(7) and 10(2) (powers to amend certain provisions of Part 1).(2) The Secretary of State must, during the permitted period—(a) carry out a review of any use that has been made of the Part 1 amendment powers,(b) prepare a report of the review, and(c) lay a copy of the report before Parliament. (3) In carrying out the review the Secretary of State must—(a) consult the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland;(b) consider any relevant reports made, or advice given, by the Competition and Markets Authority under Part 4; and(c) assess the impact and effectiveness of any changes made under the Part 1 amendment powers.(4) The permitted period is the period beginning with the third anniversary of the passing of this Act and ending with the fifth anniversary.(5) If any Part 1 amendment power has not been used by the time the review is carried out, this section has effect—(a) as if the report required by subsection (2), so far as relating to that power, is a report containing—(i) a statement to the effect that the power has not been used since it came into force, and(ii) such other information relating to that statement as the Secretary of State considers it appropriate to give, and(b) as if the requirements of subsection (3) did not apply in relation to that power.”Member’s explanatory statement
This new Clause would require the Secretary of State to carry out a review of, and to lay a report to Parliament about, the use made of the amendment powers in Part 1. The review cannot start within three years of Royal Assent, and the steps required would need to be completed within five years.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, this has been an interesting debate. It has revealed many gaps in our knowledge and understanding of the Bill, which, perhaps, is very comfortable for the Government. I would go a bit further than some of the previous speakers and say that the Government are making heavy weather of this part of the Bill, not displaying to their best advantage the knowledge and understanding they should have in this area. I presume that the starting point must have been that if there is to be an internal market, it must be regulated so that it works well. It is therefore necessary for the legislation to have regard to our services sector, which, as the noble Baroness, Lady Neville-Rolfe, said, accounts for some 65% of our economy. If that is right and it is such an important part of our economy, why is this Bill so sketchy about it? Do the Government not know much about our services sector? Is it not important that we get that right? The noble Baroness, Lady Noakes, again put her finger on it: is this just a protection against possible future unknowns? If so, does that explain why there is so little in the Bill itself to reflect that?
Others have made these points very well. The noble Lord, Lord Purvis, was right to say that we have to think harder than the Bill does about the way modern companies operate in providing goods. Companies are rarely without a service component, and the Bill does not deal with that bipartisan, hybrid approach. The noble Baroness, Lady Bowles, asked about services that are licensed or rented. In the virtual space of the internet, one is rarely talking about purchase. One is talking about usage, and there is nothing here about intellectual property, copyright or associated interests. What about those companies? Do they get affected by this legislation?
What sort of world are we living in if our Bills cannot embrace the fact that, in the digital world, services are not delivered by companies based in specific parts of the UK? That point was made by a number of speakers. Most operate in more than a single place, and it would be difficult to drill down to a point where the physical geography can be identified—the “brass plate” question that was raised earlier.
At the end of the day, it would be more helpful to the House if the lists given in Schedule 2 did not try to discriminate against services. The services listed in the schedule are not covered by the Bill, and it would be more of a challenge but more interesting for us if the Bill listed the services to which the Bill does apply, thereby making it easier to discuss this issue. I challenge the Minister to write to us before Third Reading with a comprehensive list of the services he believes are caught by this Bill and to explain to us, in simple language that we can understand, the impact the Bill will have if implemented.
Lord Callanan (Con)
I thank my noble friend for tabling this amendment, which seeks to clarify the extent to which we have considered how the provisions of the Bill in respect of services will work in practice. I shall endeavour to do my best to answer my noble friend’s concerns, because I know that she appreciates and promotes just how critical the services sector is to the United Kingdom, and I share that view. It is vital, constituting more than 80% of our GDP and four out of five jobs nationwide.
The principles of mutual recognition and non-discrimination in Part 2 underpin an internal market framework which will limit the emergence of new barriers following the return of powers from the EU. This will support UK businesses trading services in other parts of the UK, and authorities regulating these services. The Bill will complement the existing services regulatory framework while building in certainty for businesses and regulators.
The mutual recognition principle means that businesses authorised to provide services in one part of the United Kingdom will not need to satisfy further authorisation requirements to provide those services in the other parts of the United Kingdom. This principle of mutual recognition applies to authorisation requirements. It does not cover matters such as non-mandatory membership of organisations, which cannot prevent a service provider from offering a service but which might be desirable to join for other reasons.
A similar form of mutual recognition already operates as part of the existing UK-wide regulatory framework for services under the Provision of Services Regulations 2009. Regulators complying with that legislation will already be subject to the principle of mutual recognition. Similarly, the non-discrimination principle is a fundamental safeguard for businesses, ensuring equal opportunity for companies trading in the UK regardless of where in the UK that business is based, from where it provides services or where its staff are based.
As my noble friend Lady McIntosh highlighted, with the non-discrimination provision, regulators have until now had to follow rules in the Provision of Services Regulations 2009 which prevent discrimination towards service providers from other European Economic Area states. These rules will be revoked at the end of the year when the transition period comes to an end, as they will no longer be relevant to the UK’s situation. It is only right that rules that have previously prevented discrimination towards businesses from the other EEA states should now be applied to ensure the continued flow of services across our United Kingdom.
To help provide clarity, Clause 16 sets out a list of requirements and provisions that are neither regulatory nor authorisation requirements and therefore are not covered by the principles in Part 2. First, those requirements dealt with in other parts of the Bill—namely the mutual recognition principle in Part 1, which relates to goods, and provisions covered by Part 3, on professional qualifications—are not within scope of Part 2. This is because it is not desirable for one set of requirements to be subject to several rules from different parts of the Bill.
Secondly, existing requirements are out of scope because Part 2 applies only to new or substantively modified requirements that come into force, or otherwise come into effect, after this section comes into force. However, for the mutual recognition principle only, existing requirements will be brought within scope of the Bill where a corresponding authorisation requirement in another part of the UK introduces a new or substantively changed requirement.
Thirdly, a requirement which applies both to service providers and non-service providers is not in scope of Part 2. This part of the Bill is concerned only with the requirements which seek to regulate service providers and not all requirements which might affect service providers.
Finally, there are administrative requirements on service providers that we consider are reasonable in all circumstances, and therefore they are also not in scope of this part. Such administrative requirements could include, for example, where a service provider may be required to notify a local regulator of their presence, or where they are required to provide proof that they are in fact authorised to provide that service in another part of the UK. These requirements are necessary for regulators to continue operating effectively under the rules in this part, but it is our view that they are limited enough in scope so as not to create any unnecessary barriers to trade.
I can therefore assure my noble friend that the Government have considered carefully how the provisions in Part 2 will work in practice, and that Clause 16 is an essential part of their operation.
My noble friend asked whether penalties apply to businesses that are excluded from the Bill. If a given matter is out of scope of Parts 1 to 3, it is also by definition out of scope of the OIM’s functions and responsibilities.
My noble friend Lady McIntosh raised the four weeks’ consultation, as did a number of other noble Lords. The consultation followed the principles for a government consultation and represented an ambitious plan to engage businesses of all sizes across all four nations, as well as many academic experts and representatives of the devolved Administrations.
My noble friend Lady Neville-Rolfe asked also about Schedule 2, which lists a number of services with the aim of reflecting those outside the scope of the Provision of Services Regulations 2009, which is the current services framework. The Government also recognise that it is appropriate for legal services to be excluded from the provisions on the mutual recognition of services to reflect the separate legal systems in England, Wales, Scotland and Northern Ireland.
The noble Lord, Lord Purvis, asked whether service providers from the Isle of Man were subject to the measures in Part 2. The answer is no. Part 2 applies only to businesses and individuals that a have a permanent establishment in the United Kingdom as defined by the Corporation Tax Act 2010, which does not include of the Isle of Man. It is also the case for all Crown dependencies.
The noble Lord also asked when the services principles apply and when the goods principles apply. The services principles apply only where the goods principles do not. Only one set of principles will apply as to a particular requirement.
I hope that I have answered the questions of noble Lords and of my noble friend. I hope that she feels able to withdraw her amendment.
Baroness Neville-Rolfe (Con)
I thank noble Lords for an interesting debate and I am grateful for the support of my noble friend Lady McIntosh, the noble Baroness, Lady Bowles, and, of course, my noble friend Lady Noakes, who rightly pointed out the probing nature of this amendment, which I obviously do not seek to press. She also said that it was right that we include the services sector in the internal market, which is obvious from its very scale—a point that she, the noble Lord, Lord Stevenson, and the Minister emphasised—I think that it is about 80% of GDP. The Minister was also right to emphasise the value of mutual recognition and the loss of the EU-based services regulations of 2009, which to some extent we are trying to replace.
The single most important thing about the services element of the Bill, in Clause 16, is to understand the Government’s intentions, particularly in view of the minimal nature of consultation in framing it. My noble friend Lord Naseby was right to emphasise the importance and use of consultation. He also asked a question about the proposed registers which I am not sure we got a complete answer to.
The trouble is, we still do not know why these provisions are needed in individual cases—I gave some examples that I did not really get an answer to, such as hairdressers and other businesses—and why they vary from sector to sector. As the noble Lord, Lord Purvis, said, I am an optimist—I have been a strong supporter of the Government on this Bill against the advice of respected friends—but perhaps the Minister can kindly reflect on whether he can do anything further on services, with services now being so linked to goods as we have all agreed, to allay my fears. Some sectors, from property to restaurants, appear to face new regulations, possibly draconian, without much of awareness of it. The noble Lord, Lord Stevenson, suggested a letter outlining what was covered within the services sector. Perhaps the Minister could reflect a little further on how we might communicate this and reassure people about the value of these provisions in creating a single market with mutual recognition, which I strongly support. But we need to make sure that people understand what their duties are and that such duties are not overly draconian and will be sensibly enforced. I beg leave to withdraw the amendment.
Lord Callanan
“(5) Before making regulations under subsection (2) the Secretary of State must consult the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland.”Member’s explanatory statement
This amendment would require the Secretary of State to consult the devolved administrations before making regulations amending Schedule 2 (which contains exceptions from the rules about market access for services).
Lord Stevenson of Balmacara (Lab) [V]
My Lords, the general theme here, I suggest, is that we need the Minister to respond very clearly and precisely on this matter. My noble friend Lord Foulkes used the rather nice and elegant Scottish word “fankle” to describe where we are at, suggesting that this needs to be undone. I was going to use the Gaelic word “bùrach”. I suddenly thought that Hansard might have difficulty with it, so I checked it on a handy electronic device close to me—and came up with a rather interesting extension, which I leave with the Minister. You can use the word “bùrach”, which in Gaelic means a “right mess”, but I think a more appropriate term in this case is a “clusterbùrach” which, as the article on my device goes on to say, is
“a Scottish term for a hopelessly intractable mess made by hapless politicians.”
Lord Callanan (Con)
The noble Lord, Lord Stevenson, has been very helpful, adding to my knowledge of grammar. The north-east version of that would be “cluster”, followed by a word I cannot use in the House, which would not be “bùrach”. If only I had known, I would have brought my thesaurus along to aid noble Lords in their pursuit of these matters.
These amendments seek to ensure that the drafting of the non-discrimination clauses means that the discriminatory requirement is of no effect only to the extent that the requirement discriminates against the service provider in question. However, I am pleased to tell my noble friend Lady McIntosh that Amendment 39 is already addressed by this clause and is therefore unnecessary. In the case of Amendment 40, as this clause concerns indirect discrimination in the regulation of services, the amendment as drafted would make Clause 20 entirely inoperable and leave indirect discriminatory requirements to take effect.
I start with Amendment 39, which obviously concerns direct discrimination. Direct discrimination is where a regulatory requirement treats a service provider less favourably than other service providers; the reason for that is their connection, or lack of connection, to a certain part of the United Kingdom. Clause 19 already limits the application of these measures—this addresses the point made by the noble Lord, Lord Purvis—so that only the affected service provider may benefit from the requirements having no effect. While I understand my noble friend’s concern, the definition of a regulatory requirement already ensures that only the offending requirement is of no effect. This amendment therefore replicates what is already drafted in Clause 19, so I am sure she will understand that I am unable to accept it.
Turning to Amendment 40, the test for indirect discrimination requires that a requirement is not directly discriminatory, and the amendment would mean that indirectly discriminatory requirements are of no effect only to the extent that they directly discriminate. This would render Clause 20 entirely ineffective. Therefore, I am sure that my noble friend will accept that I cannot accept either of her amendments for the reasons I have set out, and I hope that she will agree to withdraw them.
Lord Callanan
“(9A) Before making regulations under subsection (8) the Secretary of State must consult the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland.”Member’s explanatory statement
This amendment would require the Secretary of State to consult the devolved administrations before making regulations amending the “legitimate aims” in Clause 20 (which can mean that provision does not count as indirectly discriminatory against service providers).
Lord Callanan
“Duty to review the use of Part 2 amendment powers
(1) In this section “the Part 2 amendment powers” are the powers conferred by sections 17(2) and 20(8) (powers to amend certain provisions of Part 2).(2) The Secretary of State must, during the permitted period—(a) carry out a review of any use that has been made of the Part 2 amendment powers,(b) prepare a report of the review, and(c) lay a copy of the report before Parliament.(3) In carrying out the review the Secretary of State must—(a) consult the Scottish Ministers, the Welsh Ministers and the Department for the Economy in Northern Ireland; (b) consider any relevant reports made, or advice given, by the Competition and Markets Authority under Part 4; and(c) assess the impact and effectiveness of any changes made under the Part 2 amendment powers.(4) The permitted period is the period beginning with the third anniversary of the passing of this Act and ending with the fifth anniversary.(5) If either of the Part 2 amendment powers has not been used by the time the review is carried out, this section has effect—(a) as if the report required by subsection (2), so far as relating to that power, is a report containing—(i) a statement to the effect that the power has not been used since it came into force, and(ii) such other information relating to that statement as the Secretary of State considers it appropriate to give, and(b) as if the requirements of subsection (3) did not apply to that power.”Member’s explanatory statement
This new Clause would require the Secretary of State to carry out a review of, and to lay a report to Parliament about, the use made of the amendment powers in Part 2. The review cannot start within three years of Royal Assent, and the steps required would need to be completed within five years.
Lord Callanan
“(7) Section 22(2) does not apply in relation to provision that limits the ability to practise the profession, or any profession, of school teaching.”Member’s explanatory statement
This amendment adds school teaching to the professions the regulation of which is excluded from Clause 22.
Lord Callanan
“(2A) That objective includes, in particular, supporting the operation of the internal market—(a) in the interests of all parts of the United Kingdom, and(b) in the interests of consumers of goods and services as well as other classes of person with an interest in its operation.(2B) The CMA must also, in carrying out its functions under this Part, have regard to the need to act even-handedly as respects the relevant national authorities.”Member’s explanatory statement
This amendment would set out in more detail the considerations that the CMA (including while acting through the Office for the Internal Market) must have regard to in exercising its functions under Part 4.
Lord Callanan (Con)
My Lords, noble Lords will have noticed that we have listened carefully to the many constructive points put forward in Committee as well as from the devolved Administrations on the provisions in the Bill to establish the office for the internal market, tasked with overseeing the smooth operation of the internal market. As set out in my recent letter to colleagues on government amendments for Report, we have made a number of important changes throughout Part 4 to make it clear in statute that the OIM will work in the interests of all parts of the United Kingdom and for all Administrations on an equal basis. I believe that these changes take into careful consideration the points raised in Committee and put beyond any doubt concerns around the consumer focus of the OIM—I hope that the noble Baroness, Lady Hayter, will welcome this—and the devolved Administrations’ involvement in the OIM’s governance arrangements.
Amendments 56 and 57 ensure that there is an enhanced role for the devolved Administrations in OIM appointments, requiring Ministers to seek consent with all Administrations within a one-month timeframe. This builds on the model proposal developed by the Welsh Government and tabled by the noble Baroness, Lady Finlay, previously. We believe that this strikes a delicate balance by ensuring that the OIM can operate independently and that all Administrations can have a meaningful input in the appointments process. At the same time, we have been clear that it is essential that the OIM operates independently and at arm’s length from Ministers from all Administrations. Therefore, we do not believe that reserving the right for each Administration to make appointments to the CMA board as set out in Amendment 54 is the correct way forward. Likewise, it is important that appointments are made through fair and open competition, which is what our amendments ensure.
We believe that Amendment 57 and our changes made to Schedule 3 ensure a fair, independent and equitable process for all Administrations. It will ensure that consensus is always a first preference, but recognises that, if it is not reached, appointments can still proceed after an appropriate time has elapsed. This represents a pragmatic way forward and avoids the risk of prolonged deadlock over appointments that would prevent the OIM fulfilling its duties under the Bill.
We agree with previous arguments in Committee that all OIM appointees should reflect a range of expertise from all parts of the United Kingdom. That is why we have tabled Amendment 55, which clarifies this in the Bill, making clear the desirability that panel members have a variety of skills, knowledge and expertise. It is important to remember that the OIM will be a neutral custodian of the UK internal market through its non-binding reporting, advisory and monitoring functions. If there are potential concerns in future about how the OIM conducts its duties, Amendment 61 ensures that the CMA’s annual plans, proposals and performance reports are laid before the devolved legislatures as well as Parliament, ensuring equal scrutiny and oversight of these developments, which can be discussed between Ministers from all Administrations where that is appropriate.
Finally, I am aware that there has been considerable interest in this House in ensuring that the OIM operates in the interests of consumers. We have listened carefully to these discussions and are confident that our amendments throughout Part 4 resolve the concerns expressed and put it beyond all doubt that the OIM will operate in the interests of UK consumers.
For all the reasons I have set out, I hope that noble Lords can accept the Government’s amendments and consequently will not press their own. I beg to move.
Lord Thomas of Cwmgiedd (CB) [V]
I shall speak to Amendment 54 but, before doing so, I thank the Minister for the substantial progress that has been made in relation to the office for the internal market, and for the recognition that it is necessary for the strength of the union and for equality and fairness between the people of the four nations of the United Kingdom that that office has representations from all four nations. However, the purpose of Amendment 54 is that that principle should be applied to the Competition and Markets Authority. This is a non-ministerial department with very substantial powers, which it has exercised since its creation in 2013, but Part 4 of the Bill gives it further and more substantial powers and a role in the operation of the internal market. What precise form those powers will take may ultimately depend on further changes to the Bill, but there can be no doubt that the powers are substantial.
Amendment 54 is therefore a modest amendment, seeking to build upon what the Government have agreed to in relation to the office for the internal market. At present, the Competition and Markets Authority has its chair and members appointed by the Secretary of State and the panels under the Act. But it seems that there is no reason at all why the principles that have been brought to bear for the office for the internal market should not be applied to the CMA itself. As I shall try to explain in a moment, it is essential that the CMA should have representatives of each of the four nations.
It was said at a previous sitting that this would be politicising the body. That is not so. First, the CMA is an independent, non-ministerial department, and people appointed by the Secretary of State, including its chair, are independent. The persons under this provision would be independent in exactly the same way. They are not going to be representatives of the devolved Governments in exactly the same way that the persons appointed by the Secretary of State are not representatives of Her Majesty’s Government but independent people.
Secondly, it is very important to ensure that now that the CMA will have an important role in the internal market, it will have at least one member from each of the nations who understands the issues in the internal market as it affects that nation. Thirdly, the amendment will not politicise the position in any way because the appointment will be by an independent public appointment process, in the same way that the chair and members appointed by the Secretary of State are appointed by an independent appointments process. That is the purpose of the first amendment.
Amendment 58, which is also in this group, is now covered by government Amendment 57 if Amendment 54 is agreed to. Amendment 59 is agreed to be consequential on Amendment 54. Before explaining briefly my reasons for tabling Amendment 54, I wish to make it clear that at the appropriate time this evening, unless the Minister is prepared to come forward with some alternative proposals, I propose to take this amendment to a Division.
Baroness Hayter of Kentish Town (Lab)
I join others in thanking the Minister for some significant moves in the amendments that he has introduced today. As others have said, it is testament to his having listened. He sometimes thinks that means “listened at length”, but he listened, considered and responded, and we welcome all the changes. I am particularly pleased about the acknowledgement in the amendments of the interests of consumers in the mapping out of the new internal market. The House will be pleased about the recognition of the need for experience across the kingdom in the appointment of the OIM panel and the need to seek the consent of the devolved authorities to such appointments.
Similarly, we welcome, perhaps unsurprisingly, the new requirement for the CMA to lay its key documents before all four legislatures. It is possible that they already do it, albeit perhaps as a courtesy rather than a legal requirement. We also strongly welcome Amendments 56 and 57, which require devolved authorities to give their consent within a month to appointments to the OIM panel. We like that—consent within a month; we have heard it before. We pinched the idea from the Minister’s words, but it is a good one. As we proposed in our amendments, if the Government proceed with an appointment despite consent not being forthcoming, they will have to explain why they are doing so. Therefore, we will not move Amendment 59.
However, the Minister will not be surprised to hear that, although we welcome these changes, we would like to nudge them a little further. On Wednesday, as others have said, we will seek to move the OIM out of the CMA. Just in case it remains in the CMA, it is vital, as the noble and learned Lord, Lord Thomas of Cwmgiedd, and others have said, that the CMA, in accepting this new role, amends its structure to accommodate the change. It is impossible to think of any other national organisation, when its remit changes, not revisiting its governance and appointments. It should not just continue with business as usual when taking on a whole new responsibility.
Indeed, although we welcome Amendments 56 and 57, we were surprised that they did not apply to the CMA as well as to the OIM panel. For an overarching body with a purview of the development of the new internal market architecture, not having to feel the pulse of, understand and have input from the constituent parts is a little odd, to say the least. For all its board members to be appointed by just one of the four Governments is particularly hard to understand, because it is a body covering the competences of all four Governments. If it was covering only the reserve competences, one could understand, but it will cover powers that affect the area of all four Governments.
As was said by, I think, the noble Baroness, Lady Noakes, if you are appointed by one place you somehow feel like a representative from it. I must say something about other boards and committees that I have sat on. It may not be a board of this nature, but the National Consumer Council included someone from the Northern Ireland Consumer Council, as I think it was called, someone from the Welsh Consumer Council and someone from the Scottish Consumer Council, but once they got on the board, they had responsibility to it as a board member. Just because we brought in someone with different responsibilities, it did not suddenly make them a representative. Similarly, the chairs of the different sub-committees of the Financial Reporting Council sat on the board. They came with that experience but, once they sat on the whole-council board, their responsibilities included that.
It is slightly hard to say that just because people are appointed by different Governments, they are then answerable only to them. Given that they would be appointed by only one Government, and given that people are saying that if you are appointed by the Welsh Government, you are then a representative of the Welsh Government, surely if you are appointed by the UK Government you also are not independent. It does not quite make sense to me.
We will shortly vote on Amendment 54 in the name of the noble and learned Lord, Lord Thomas. The Opposition will be happy to support it, to ensure that the CMA really does act on behalf of the whole of the United Kingdom.
Lord Callanan (Con)
I can be brief, on the basis that I went through the amendments in detail in my opening remarks. I thank all noble Lords who took part in this debate very much.
I say to the noble Lord, Lord Wigley, and the noble and learned Lord, Lord Thomas, that the Bill is not a smonach at all. As I am from the north-east, I can say that, despite all this, I still consider them both marras and not at all workie tickets—I suspect that all this is driving our Hansard copywriters into a bit of a radgie.
I reiterate that my amendments to Part 4 will ensure beyond doubt that the OIM will operate in the interests of both UK consumers and all four Administrations on an equal basis. I thank my noble friend Lady Noakes in particular for her important observation that the CMA board appointments are there first and foremost to ensure that the organisation operates effectively.
I wish to emphasise strongly that changing the wider CMA structures would be wholly unnecessary and create a deeply unhelpful precedent in so far as DA appointees would have a say on reserved matters. In contrast, the OIM panel will undertake the work of the OIM. It is in that context that the government amendments have been brought forward. I believe that this directly addresses the points made in this House, ensuring that the devolved Administrations have greater involvement in OIM appointments. I therefore hope that the House will be able to accept these amendments.
There were a couple of questions. The noble Baroness, Lady Bowles, asked me to define the panel requirements. Amendment 55 makes clear the Government’s view that a balance of expertise in the round on the panel from which task groups are drawn is important. Schedule 3 makes it clear that such task groups must
“consist of at least three members”,
and therefore may contain more. We have argued consistently against a hard distinction between panel members and assigning specific members to specific parts of the UK. In my view, it would be a failure if there was seen to be an “English panel member” and a “Welsh panel member” who are then somehow adversarial.
Finally, I say in response to the noble Lord, Lord Bruce of Bennachie, that I have consistently made it clear that the functions of the OIM cover advice, monitoring and reporting only and cannot force regulatory change of any kind.
With those remarks, I hope—though without much expectation—that noble Lords will not press their amendments and I commend those in my name.
Baroness Finlay of Llandaff (CB) [V]
Does the Minister agree that good governance requires a balanced board but it also requires that each appointee fulfil the person specification as set out to ensure such balance, that they declare any interest in a relevant discussion and that they may have to withdraw during that discussion? That is all laid out for the running of an open and transparent process within a board as well as for an open and transparent appointments process. Does he further agree that it would be an incredibly narrow person specification that expected people to have only one skill, relating only to their devolved Administration experience, and that they would be coming forward with a broad range of skills to complement a balanced board?
Lord Callanan (Con)
There were a number of questions there, but of course I believe that there should be an open and transparent appointments process, and that individuals appointed should possess a broad range of skills—that seems self-evident.
Lord Callanan
““(2ZA) In making appointments under paragraphs (iv) and (v) of sub-paragraph (1)(b) the Secretary of State must have regard to the desirability of securing that— (a) a variety of skills, knowledge and experience is available among the members of the OIM panel, and(b) there is an appropriate balance among the members of that panel of persons who have skills, knowledge or experience relating to the operation of the United Kingdom internal market in different parts of the United Kingdom.”Member’s explanatory statement
The amendment would require the Secretary of State to have regard to the desirability of having a variety of skills, knowledge and experience in the Office for the Internal Market panel and for a balance between members with specific skills, knowledge or experience in the internal market as operating in different parts of the United Kingdom.
Lord Callanan
“Laying of annual documents before devolved legislatures
(1) Schedule 4 to the Enterprise and Regulatory Reform Act 2013 (the Competition and Markets Authority) is amended as follows.(2) In paragraph 12(3)(annual plan to be laid before Parliament), for “Parliament” substitute “—(a) Parliament,(b) the Scottish Parliament,(c) Senedd Cymru, and(d) the Northern Ireland Assembly”.(3) In paragraph 13(2)(proposals for annual plan to be laid before Parliament), for “Parliament” substitute “—(a) Parliament,(b) the Scottish Parliament,(c) Senedd Cymru, and(d) the Northern Ireland Assembly”.(4) In paragraph 14(3)(a)(performance report to be laid before Parliament), for “Parliament” substitute “—(i) Parliament,(ii) the Scottish Parliament,(iii) Senedd Cymru, and(iv) the Northern Ireland Assembly”.”Member’s explanatory statement
This new Clause would require the CMA to lay its annual plan, proposals for its annual plan and its performance report before the devolved legislatures as well as Parliament.
Fossil Fuels: Business
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The Lord Bishop of Salisbury
To ask Her Majesty’s Government, further to the report by the Transition Pathway Initiative Management Quality and Carbon Performance of Energy Companies: September 2020, published on 7 October, what steps they plan to take to encourage fossil fuel intensive businesses to accelerate their move to net zero carbon emissions.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, the Government have schemes worth nearly £2 billion operating or in development to support our vital energy-intensive industries to decarbonise. These schemes include the industrial energy transformation fund to help companies to reduce their fuel bills and transition to low-carbon technologies, and the industrial decarbonisation challenge to support industry with the development of low-carbon technologies in industrial clusters.
The Lord Bishop of Salisbury
I thank the Minister for his Answer. There have been some welcome and notable commitments, particularly by European oil and gas companies, but overall, the sector is not moving fast enough to align with the Paris agreement. How does the Minister see the Government supporting companies to move faster and have consistent standards for reporting all emissions from scopes 1, 2 and 3 so companies demonstrate alignment clearly in their reporting? I commend to the Minister the work of the Institutional Investors Group on Climate Change working with TPI to establish a net-zero standard. It would be marvellous if the Government supported these endeavours in the context of their presidency of COP.
Lord Callanan (Con)
First, we welcome commitments from any company setting out its net-zero plans. We note the important and notable commitments from the oil and gas sector from the likes of Shell and BP. I endorse the right reverend Prelate’s comments about COP and the other matter he mentioned.
Lord Sarfraz (Con)
My Lords, significant investment will be required by energy-intensive industries moving to net zero. Will the Minister advise the House on efforts being made downstream to ensure that these businesses remain competitive in price-sensitive international markets where the competition might not play by the same rules?
Lord Callanan (Con)
The noble Lord makes a very good point. We recognise that currently the costs of decarbonisation technologies are very high in many industries and many businesses are unable to pass on the increased costs of decarbonisation to consumers. That is why we are working very closely with industry and addressing this is one of the key aims of our industrial decarbonisation strategy.
Baroness Young of Old Scone (Lab) [V]
My Lords, I declare an interest as a pensioner of the Environment Agency pension fund, which co-chairs the transition pathway initiative. The TPI report shows that no oil and gas company can yet claim to be aligned with the Paris agreement. Does the Minister agree that accelerating the phase out of petrol and diesel cars in the UK will do little to impact the global oil and gas market in which UK-based multinational oil and gas companies operate? Will he tell the House what real leverage there is in the Prime Minister’s 10-point plan on these global companies to drive faster and better delivery by the aim of Paris in their global operations?
Lord Callanan (Con)
In the transition, the North Sea will remain a strategic asset for the UK providing high-quality jobs. We are working closely with the sector to support its transition. The noble Baroness will get more details in the upcoming energy White Paper and the North Sea transition deal.
Baroness Sheehan (LD) [V]
My Lords, according to the UK extractive industries transparency initiative, between 2015 and 2017, the Treasury gave more money to oil companies than it took from them in taxes—quite shocking. Is it still the Government’s policy to extract every last drop from the North Sea, no matter what the cost to our economy and to the future of our planet?
Lord Callanan (Con)
As I just said in answer to a previous questioner, the North Sea is vital to our economy and the transition. We will work closely with those companies, and already have some world-leading commitments from many on how they are taking forward the decarbonisation agenda.
Lord Grantchester (Lab)
My Lords, now in its fourth year of monitoring, the Transition Pathway Initiative reports that companies make progress rather slowly and that only 18% are aligned with even the benchmark of below 2 degrees. It has also reported that climate science dictates that the pathway matters, not just the endpoint. Can the Minister explain why, in the scatter-gun 10-point environment plan, there is no mention of the oil and gas sector deal promised in the Conservative Party manifesto? It is meaningless without another of the missing strategy frameworks—the heat strategy.
Lord Callanan (Con)
I referred to the North Sea strategy deal in my previous answer. The noble Lord will have to be patient until it comes out, but we are publishing a number of these strategy documents over the next 11 months before the COP in Glasgow next year.
Lord Bourne of Aberystwyth (Con) [V]
My Lords, I very much welcome the Government’s 10-point green industrial revolution. What are we doing to lever private finance and what are the timescales for carbon capture and storage projects, specifically regarding Port Talbot, Teesside and Grangemouth?
Lord Callanan (Con)
My noble friend makes an extremely good point: we want to be a world leader in carbon capture usage and storage technologies. He will have noted the announcement of an extra £200 million to add to the £800 million already committed in the plan, for a total of £1 billion in this world-leading technology.
Lord Ravensdale (CB) [V]
My Lords, I declare my interests as in the register. I very much welcome the Government’s ambition for London to become the global centre of green finance and the announcement by the Task Force on Climate-related Financial Disclosures last week. Have the Government considered legislating to mandate financial institutions to align portfolios to net zero, as a way to incentivise fossil-fuel-intensive businesses to accelerate their moves towards this goal?
Lord Callanan (Con)
As the noble Lord referenced in his question, we are mandating climate information in financial disclosures. We welcome other commitments from the many banks and financial institutions that are already joining us on the path to net zero.
Lord Browne of Ladyton (Lab) [V]
My Lords, as the right reverend Prelate and other noble Lords have pointed out, this report shows that most energy companies are not on track. This means that, to an extent, we will be dependent on fossil fuels for energy beyond 2050. Robust plans for that are essential. What is the Government’s best estimate of the scale of the emissions challenge that this continuing dependency will create? As we heard, yesterday the Prime Minister unveiled a strategy to establish four carbon capture and storage clusters. If they operate at maximum capacity, will they meet a significant proportion of that challenge?
Lord Callanan (Con)
They will contribute to that challenge, but we need a number of different technologies and methods to meet our legally binding commitment to net zero. The noble Lord is right in that respect, and the 10-point plan is a useful contribution towards that objective.
Lord Teverson (LD)
My Lords, energy-intensive industries can only go so far in getting energy efficiency right. There is therefore a risk of carbon leakage from these organisations offshoring elsewhere in the world, which does nothing for global climate change. Are the Government considering a carbon border tax, as some of our European friends are, to make sure that that offshoring does not happen?
Lord Callanan (Con)
The noble Lord is right to highlight the difficulties of potential carbon leakage. There are many problems with a carbon border tax, of which the noble Lord will be aware—difficulties with the WTO, et cetera—but I leave announcements on taxes to the Chancellor.
The Earl of Caithness (Con)
My Lords, I welcome the 10-point plan that the Prime Minister announced yesterday, but ask my noble friend what discussions he has had with industry, particularly the producers of electric cars, to ensure that batteries, given their diversity, are fully recyclable throughout the country. We should not take away one problem just to replace it with another.
Lord Callanan (Con)
My noble friend is right to highlight the problem of recycling batteries. We are investigating the environmental opportunities of a transition to zero-emission vehicles, and are keen to encourage a circular economy in these vehicles, particularly for batteries. We are supporting the innovation infra- structure and regulatory environment required to create a proper battery recycling scheme.
The Deputy Speaker (The Earl of Kinnoull) (Non-Afl)
My Lords, all the supplementary questions have been asked and answered. We therefore move to the fourth Oral Question.
COP 26
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Baroness Boycott
To ask Her Majesty’s Government, further to the response by Lord Callanan on 20 October (HL Deb, col 1414), what plans they have for the campaigns taking place before COP 26 relating to behaviour change and the environment.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
In preparation for COP 26, the Cabinet Office set up a dedicated engagement team to facilitate engagement with businesses, wider civil society, cities and regions on COP 26. The brand, Together for Our Planet, was unveiled this month, marking the milestone of one year to COP 26. Many people from all over the UK are already doing their bit on climate change. The Together for Our Planet campaign will inspire more to join them.
Baroness Boycott (CB) [V]
I thank the Minister very much for that reply, but I would like to press a bit more for some details. Some 62% of the emission cuts needed to reach net zero require societal or behavioural change, so I would really like to know what areas this initiative will cover. Have the Government done any assessments of the areas likely to have the most impact? For example, will one of them be related to diet and, in particular, to a reduction of meat and dairy intake, which was recommended by the climate change committee? Of course, these are really ambitious proposals, which we are all very grateful for, but can the Minister tell me whether we have a big enough budget in order to deliver them over the course of the next 12 months?
Lord Callanan (Con)
The noble Baroness makes some valid points, but, as I am sure she is aware, all campaign spend will be released in line with the usual Cabinet Office spend data publications. The idea of the campaign is to work through partnerships where possible, but further support may be needed working with other groups, and we will endeavour to take the campaign forward in as many different areas as possible.
Lord Lilley (Con)
My Lords, I refer to my interests in the register. Before your Lordships’ House is submerged in a tsunami of uncosted virtue signalling, can the Minister confirm that zero carbon will cost trillions of pounds? In the privacy of this Chamber, may I raise the politics of this? The further north you go, the cooler it is and the higher people’s heating bills are. People’s incomes are lower, so more is absorbed by energy costs and more jobs depend on energy. If they are less receptive to campaigns telling them to become vegetarians, ride bikes and forgo foreign holidays while being unable to sell their cars in 10 years’ time, will this help retain the blue-wall seats?
Lord Callanan (Con)
I thank my noble friend for his question; I know he takes a close interest in these matters. The important thing to do is to convince people across the country that there are an awful lot of jobs riding on this as well, and that pursuing green initiatives, as we are doing with the 10-point plan that was announced today, will enable thousands of jobs to be created in many of the communities that he is talking about.
Lord Bird (CB)
My Lords, I am really pleased to hear that we are tying the green issue into the problems of today, with possibly 1.5 million people unemployed. I would like to see the Government grasp this moment and expand completely the green job market. That is the most practical thing we can do. The other practical thing we should do is convince most people that plastic and rubbish and the general environment that we live in need to be bought into by everybody, so we need much more vigorous education. We need schools to teach our children from the very beginning that we are in this perilous world, and it is all to do with nature. I agree with the noble Lord, Lord Lilley, that there are too many tick-boxing, simple things that do not really change people’s consciousness.
Lord Callanan (Con)
The noble Lord, then, will have welcomed our announcement today that will generate the tens of thousands of jobs to which he refers. The idea of the campaign, of course, is to try to educate and change behaviour.
Lord Reid of Cardowan (Lab)
My Lords, will the Minister not accept that the Prime Minister’s new 10-point plan is not a plan but a wish list of future developments based on undeveloped technology? It is not new, because it is largely recycled commitments and resources. Will he confirm that the actual new, additional amount is £4 billion—not £12 billion—which does not begin to address the scale of the problem and does not bear comparison with our colleagues in France, Germany and elsewhere?
Lord Callanan (Con)
I am not sure that the noble Lord is being entirely fair with his critique of the announcement. Many of the initiatives are based on new and existing technologies. We are building on many of the initiatives that we already have going, for instance the green homes grants system, which is proving so successful and popular and is building on an existing scheme. I think that noble Lords in many parts of the House would accept that we should go further on things such as hydrogen and elsewhere.
Baroness Sheehan (LD)
My Lords, the catastrophes of climate change are already with us. We need urgent action and must pull all available levers to stop putting even more greenhouse gases into the atmosphere. Will the Minister say why proven, here-today technologies, such as solar PV and onshore wind, have been ignored altogether in the 10-point plan?
Lord Callanan (Con)
Solar PV has made immense progress in this country and we are looking to see how we can build on that further. Onshore wind has, of course, been controversial in some cases, but with existing turbines it has proved to be successful. The main gains to be made, however, are through offshore wind, the costs of which have fallen dramatically.
Lord Grantchester (Lab)
My Lords, under the Paris Agreement, the nationally determined contributions outlining the UK’s commitment to reduce greenhouse gas emissions have focused on announcements to end the sale of new diesel and petrol cars by 2030. However, can the Minister explain how the scatter-gun approach of the 10-point plan will lead to effective behavioural change without a comprehensive transport strategy within an overall energy White Paper—both of which have yet to be published?
Lord Callanan (Con)
Well, the energy White Paper is forthcoming shortly; the noble Lord will have to have a little bit of patience on that. I think we have a Private Notice Question on the 10-point plan tomorrow, so that might be a more appropriate time to debate these matters.
The Earl of Caithness (Con)
My Lords, in order to obtain behavioural change, people need to understand what the problem is and how it should be tackled. Is the Minister aware of the recent survey that showed that more than 50% of Britons still do not understand recycling labels, despite some of them having been in existence for nearly 40 years?
Lord Callanan (Con)
My noble friend makes a very good point. I struggle to understand some of the labels myself, and have to look up the table to find out what has to go where—so his point is well made.
The Lord Bishop of Salisbury
My Lords, Ban Ki-moon, then General Secretary of the UN, said that the Paris climate change talks were the largest and most complex talks he had ever been part of. Some 12,000 people were in the discussions, with another nearly 50,000 gathered around them. What steps are the Government taking to ratchet up the engagement of the faith communities and other NGOs around the climate change talks that will take place in Glasgow, and what steps are they taking to strengthen the diplomatic efforts to make the talks more successful?
Lord Callanan (Con)
There is a huge diplomatic effort ongoing with all parts of the world to try to ensure the maximum success of those talks. I am sure that we will be very keen to involve faith communities and others in the run-up to the summit.
Baroness Blackstone (Ind Lab)
My Lords, Article 12 of the Paris Agreement says that signatories must
“co-operate in taking measures … to enhance climate change education … public awareness … participation and … access to information”.
What action have the Government taken, in particular with the Department for Education, to fulfil this, and to ensure that all signatories will have acted on it before COP 26 in Glasgow later next year?
Lord Callanan (Con)
That is the purpose of the campaign that we discussed earlier, and the Department for Education is fully on board with all of these campaigns.
Lord Teverson (LD) [V]
My Lords, the success of COP 26 is absolutely vital for the reputation of this country. One of the ways in which we could, perhaps, reinforce those efforts is by using parliamentarians to help get the message out, abroad and at home, of how important this conference is, and to help make it a success. We have almost 1,500 parliamentarians, but I do not see the Government trying to involve us. The majority of us believe that climate change is a crisis and that we need to solve it. How are parliamentarians going to be involved in the process of making COP 26 a success?
Lord Callanan (Con)
I am sorry if the noble Lord does not feel involved in the campaign, but parliamentarians, alongside members of the public, are all very welcome to get involved in all of these campaigns, because they require all of us to work together to achieve our aims.
Lord Lucas (Con) [V]
My Lords, as the original Question said, at the root of this there is a need to change our behaviours. Can the Minister tell me more about the Government’s plans to help us spend more of our holidays within the United Kingdom, rather than flying abroad? Much of our hospitality infrastructure has been gathering dust, to put it mildly, over the past 50 years as people have got used to Mediterranean and further-afield holidays. I am sure that the Government could find constructive ways to rapidly improve the level of our domestic tourism offering and ways of promoting it to our people.
Lord Callanan (Con)
My noble friend is tempting me on to dangerous ground with this question. I agree with him that it would be great if more people took their holidays using some of the excellent facilities that are provided for in this country. Of course, however, people should also be free to go on foreign holidays if they wish to do so. One of the purposes of the plan is to see how we can spend more on areas such as decarbonising jet fuel so that aeroplanes in the future will not be so polluting. Hopefully, when we get to our ambitious targets, people will be able to take advantage of excellent holidays either in the UK or, if they wish to do so, abroad.
The Deputy Speaker (Lord Faulkner of Worcester) (Lab)
My Lords, all supplementary questions have now been asked and we shall now move on to the next Question.
Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2020
Lord Callanan Excerpts(3 years, 5 months ago)
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Lord Callanan
That the draft Regulations laid before the House on 14 September and 30 September be approved.
Relevant document: 30th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 16 November.
United Kingdom Internal Market Bill
Lord Callanan ExcerptsWednesday 18th November 2020
(3 years, 5 months ago)
Lords ChamberRead Full debate United Kingdom Internal Market Act 2020 View all United Kingdom Internal Market Act 2020 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 150-II Second Marshalled list for Report - (18 Nov 2020)
Baroness Hayter of Kentish Town (Lab)
My Lords, as I have said before, the women in the House always get a bit nervous when we talk about Henry VIII. We have only to go outside and see what happened to some of Henry VIII’s women to remind us that we are a bit uncomfortable with him.
The debate has made clear why the amendments in the name of my noble friend Lady Andrews and fellow members of our always brilliant Delegated Powers Committee should be heeded. Indeed, the unanswered question, posed by my noble friend, is why the Government have not removed the powers in Clause 6 in the way that they have now agreed to remove them in Clause 3. Why the inconsistency? What is the difference between them? Our Delegated Powers Committee certainly did not distinguish between the two pillars of the internal market—market access and non-discrimination— so we do not understand why the Government have taken such a different view on those. Without a stunning, innovative answer—the Minister looks as though he may have one, but there was none such in his letter of 12 November to the Delegated Powers Committee—when we come to Amendment 7 a little later, we will throw our weight behind it to remove the sections which, as the noble Lord, Lord Beith, has just set out, give overwhelming power to Ministers. Furthermore, as my noble friend Lady Andrews says, if these are meant to be just backstop powers to correct as yet-unknown deficiencies, then, given that Clause 13 affects all parts of the UK, it should be for Parliament, not Ministers in Westminster, to make any correction, with the full panoply of safeguards that come with primary legislation for input from the two Houses as well as from the devolved legislatures.
It is really not good enough—in a Bill which, after all, they must have known for four years they would need—for the Government at this stage still to be so unsure that they have thought of everything and drafted correctly that they need to accord to themselves these extraordinary powers to amend important parts of what will then be an Act of Parliament. That was never the purpose of secondary legislation. Indeed, as the Minister will know, we feel that it is likely that the proposed use of these ministerial powers is more the result of the Government’s tendency to rely on them rather on than proper primary legislation on a wide variety of measures. Indeed, as the noble Baroness, Lady Meacher, noted, so common has this become that my noble friend Lady Taylor of Bolton wrote on behalf of the Constitution Committee to Mr Rees-Mogg on 9 November suggesting how to diminish the practice, while the noble Lords, Lord Hodgson and Lord Blencathra, from the Secondary Legislation Scrutiny Committee and the Delegated Powers and Regulatory Reform Committee respectively, similarly wrote to Mr Rees-Mogg on 10 November, specifically with concerns about “skeleton bills and skeleton provision”, noting his acknowledgement that delegated powers
“should not be ‘a tool to cover imperfect policy development’”
and reiterating the need for the Government “at all times” to
“fully justify the appropriateness of delegated powers”.
I fail to hear such justification for these particular powers. Therefore, while welcoming the Government’s support for Amendment 2, we will support Amendments 7, 12 and the others in this group.
I am delighted that, because of the acceptance of Amendment 2, my Amendment 4 is pre-empted. For those who do not follow all this, Amendment 4 would have amended subsections (8) to (11), which was a regulation-making power. We were seeking to give the delegated legislatures a say over that. But clearly, as those powers have come out, my Amendment 4 luckily is pre-empted and not needed. However, we will return to similar amendments next week. For the moment, we welcome the moves of the Government on Amendment 2 and, in due course, unless the Minister comes up with a stunning answer in the next few minutes, we will support Amendment 7 in its place.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
I thank everybody who has spoken in the debate so far. Just before we start, let me give my personal support—not a matter for the Government—to the gruesome twosome, the unholy alliance between the noble Lords, Lord Foulkes and Lord Cormack. I hope that we can get back to full and proper debate in this Chamber as quickly as possible. I do not know about other noble Lords, but I quite miss the heckling from the noble Lord, Lord Foulkes; it adds a bit of interest and spice to our debates. I am sure that the noble Baroness, Lady Jones, copes very well with debate in this Chamber, of which she is a noted exponent.
The Government have listened closely to the concerns from colleagues from all sides of the House and outlined in the DPRRC report. I thank your Lordships for the helpful debates that we had, and I hope noble Lords will think that I have responded at least to some of the points that were made. As I set out in my letter to colleagues last week, we listened closely to all your Lordships’ comments and, after further reflection, we are proposing a number of changes in line with many of those comments to how these powers will operate. The amendments will remove powers that are now, on further reflection, considered non-essential and will provide the fullest transparency and accountability in the use of those that remain. We hope that the package of changes proposed will address the concerns that were raised and provide some reassurance that the Government take their responsibilities seriously in administering these powers.
I understand from the comments of the noble Baronesses, Lady Hayter and Lady Andrews, and others that noble Lords intend to divide the House on this issue tonight. I hope that they will consider carefully what we hope will be very welcome steps before voting in a way that will have quite far-reaching consequences for the operation of the UK internal markets. Given that there are no other groupings today and next week on the delegated powers more generally, I hope that noble Lords will allow me to discuss this grouping in a little more detail.
First, the amendment in the name of the noble Baroness, Lady Andrews, will remove the ability of the Secretary of State to amend the list of statutory requirements that are in scope of the mutual recognition principle for goods. While our position remains that the majority of the powers in the Bill are essential, as I said, in this particular case we are now content that the removal of the power will not substantially undermine the operation and flexibility of the internal market system. Therefore, we have removed the power—I have added my name to the amendment from the noble Baroness, Lady Andrews—in combination with further changes on transparency and accountability that we are proposing.
Lord Foulkes of Cumnock (Lab Co-op)
My Lords, at a time when the role and, indeed, the very existence of this House is under increasing scrutiny, would the Minister agree that the fact that he has put his name to Amendment 2, and that he and the Government have accepted the spirit of many of the amendments that were moved in Committee, underlines the value of this second Chamber as a revising Chamber and that that is something that should be broadcast widely?
Lord Callanan (Con)
I agree with the noble Lord, actually. If you look at the degree of scrutiny with which this House has portrayed this Bill, as opposed to the degree of scrutiny in the other place, you see the value of the debates we have here.
Baroness Andrews (Lab) [V]
I am very grateful indeed to everyone who has taken part in this debate, particularly those noble Lords who signed my amendments. It has been a very useful and illuminating debate. I am grateful to the Minister for his detailed responses and, particularly, the information he has provided on the review. Retrospective reviews are always too late to improve or perfect what has happened, but I understand that this is a useful step forward, and I look forward to more detail.
I am afraid I am unable to accept his explanation of the difference between Amendments 2 and 7 in relation to the two clauses. I was struck by the use of the term “non-essential” powers, which was applied to Amendment 2 to Clause 3 and which has enabled the Government to sign the amendment, but made them unable, in the same sense, to apply the same logic to Clause 6.
Very briefly, I will read what the Delegated Powers Committee report actually said about Clause 6, which deals with non-discrimination:
“It suffers from similar defects”
to Clause 5. The report continues:
“The Government say … that the power in Clause 6(5) is necessary to ‘future-proof’ the operation of the non-discrimination principle. They might have said ‘to completely re-write’ the non-discrimination principle.”
We believe that the extreme degree of freedom that these powers give Ministers to go back almost to the drawing board and rewrite their own legislation by way of secondary legislation is so dangerous. Although the Minister has made a case for the distinction, I am afraid it is not one I can accept. Therefore, he will not be surprised when I say that I shall press Amendment 7 to a vote when we reach its place on the Marshalled List.
I say again that I am extremely grateful that the Government have responded so positively to the arguments of the DPRRC, the Constitution Committee and your Lordships, supported Amendment 2 and brought forward these other amendments, as outlined by the Minister this afternoon and in his letter. I beg to move.
Lord Stevenson of Balmacara (Lab) [V]
My Lords, the noble Baroness, Lady McIntosh, and my noble friend Lord Foulkes have made the case clearly around the issue raised in Clause 5(3), and I hope the Minister will be able to respond. I join them in thanking the Scottish Law Commission for its considerable work in scrutinising some of the detail of the Bill—as always, it has been very helpful. I put on record our thanks to the noble Baroness, Lady Ritchie, for her very comprehensive and clear explanation of Amendment 24 in her name, and to others who have spoken.
We on this side had the benefit of a presentation by the Equality and Human Rights Commission and the Northern Ireland Human Rights Commission on this point, and I was seized by the fact that this is very important indeed to them and a matter that really has to be dealt with. The ground has been covered very fully and I just want to make sure that it is clear that we support this important amendment. It is designed to ensure that the non-discrimination principle in Clause 5 cannot be used to challenge the statutory provisions introduced in Northern Ireland after the end of the transition period to fulfil the obligation set out in Article 2 of the Northern Ireland protocol. That is relatively easy to say, but it is rather difficult to see how it translates into legislation. I hope that, when he responds, the Minister will be able to give us clarity on this.
As my noble friend Lord Hain said, the stakes here are very high. If you have not been to Northern Ireland, it is sometimes very difficult to get why it is so important to the people there and to the institutions that have to operate within Northern Ireland. There is a very widespread respect for human rights and equalities issues in Northern Ireland; it is something that comes up in conversations wherever you have them, in relation to employment, services, goods and operating in the commercial sector in Northern Ireland. Once you have had that conversation, and once it has been explained to you why it is so important, it is very clear that this is a matter that cannot be left. It is up to the Government to explain now how it is going to happen, and I look forward to hearing from the Minister.
Lord Callanan (Con)
My Lords, I thank all noble Lords who have contributed to this debate.
Amendment 6, in the names of my noble friend Lady McIntosh and the noble Lord, Lord Foulkes, seeks to clarify the meaning of Clause 5(3). This subsection explains that
“A relevant requirement … is of no effect in the destination part if, and to the extent that, it directly or indirectly discriminates against the incoming goods.”
This wording was chosen by the Government because it targets discrimination, while leaving intact other elements of a regulation that may be perfectly useful or serviceable. For example, consider the case of one requirement covering two products. One of those products is not discriminated against, but the other faces indirect discrimination due to the particular market structure for that product. Clause 5 ensures that the regulation of the product which is not facing discrimination continues. This would not be the case if the requirement were struck down in its entirety when any part of it is discriminatory.
This amendment gives rise to a risk that a court would read this as attempting to oust its jurisdiction on normal grounds of challenge. That is clearly not the intention of this provision, which is to target the mischief of discrimination without going further or interfering with other legislation. I am sure that it goes without saying that we would not want to invoke any such confusion, nor do I think that that is what my noble friend and the noble Lord are trying to achieve. For these reasons, I hope that my noble friend will feel able to withdraw her amendment.
On Amendment 24, from the noble Baroness, Lady Ritchie, and others, I am very happy to accept a letter from the noble Baroness, and I will ensure that it gets a full reply. The Government are fully committed to Article 2 of the protocol—that goes without saying. We have demonstrated this by making the necessary amendments to the Northern Ireland Act to establish the dedicated mechanism and by working closely with the Northern Ireland Human Rights Commission and the Equality Commission for Northern Ireland to operationalise the dedicated mechanism, ready for the end of the transition period.
The Article 2 commitment is about protecting the specific rights that individuals are afforded under the Belfast/Good Friday agreement and non-discrimination in this regard. It is supported by six EU equality directives that are all designed to tackle discrimination because of specified protected characteristics of individuals and to promote equal treatment. It will be part of the role of both commissions, through the dedicated mechanism structure, to monitor, advise, report on and enforce the Article 2 commitment and report to the Government and the Executive Office in Northern Ireland in this regard.
As I have said, we have already delivered the relevant legislative measures to give effect to Article 2 of the protocol, and no further amendments are required in this regard. I can assure noble Lords that the rights for individuals in Northern Ireland captured within the scope of the Article 2 commitment will continue to be protected going forward and will not be impacted by the outworkings of this Bill.
In reply to the noble Baroness, Lady Suttie, I can say that, for statutory requirements to be relevant requirements under Clause 6, they must be requirements that apply to, or in relation to, goods sold in the nation in question. If the employment law requirement were to meet that test, they would not be disapplied because they had discriminatory effects.
I hope that, with those assurances, that the noble Baroness, Lady Ritchie, will not press Amendment 24.
The Deputy Speaker (Baroness Garden of Frognal) (LD)
I call the Baroness, Lady McIntosh of Pickering.
Lord Callanan (Con)
In short, I addressed the point made by the noble Baroness, Lady Suttie. No, I do not believe that this will be a problem. We will, of course, keep it under review if any such problem were to be relevant. We think that we have already legislated to ensure these requirements and that, therefore, this amendment is unnecessary.
The Deputy Speaker (Baroness Garden of Frognal) (LD)
I have just received a message that the noble Baroness, Lady Ritchie, would like to speak briefly.
Baroness Ritchie of Downpatrick (Non-Afl) [V]
My Lords, I would like to ask the Minister a further question. In my submission, and the submission of the noble Baroness, Lady Suttie, we specifically asked the Minister for a meeting for the Northern Ireland Human Rights Commission and the Equality Commission, along with the signatories of Amendment 24, to further discuss the outworkings of Clauses 5 and 6 and Clause 11, and also the complex nature of our amendment and the problems that could ensue as a result of the outworkings. I would greatly appreciate it if the Minister could accede to our request.
Lord Callanan (Con)
The noble Baroness also asked me if I would receive a letter, and I said that I would do so. That is probably the best course of action. If she writes to me with her concerns, we will, of course, look at it. I am not sure that I am the right Minister for any such meeting to take place. I am a Minister in BEIS, which is responsible for this Bill, but many of its aspects are, of course, being handled by other government departments. I will certainly seek to put her in touch with the correct and relevant officials and Ministers.
The Deputy Speaker (Baroness Garden of Frognal) (LD)
I think that I am now safe to call the noble Baroness, Lady McIntosh of Pickering.
Lord Naseby (Con)
My Lords, I respect the views of the noble Baroness who has just spoken, but I have to say that there is little in what she said that I agree with. Amendments 21, 48 and 49 are quite different from Amendments 10 and 11. They go, in my judgment, way beyond what is necessary for a successful free trade market. Really they amount to micromanaging, and on the whole Her Majesty’s Government in any form, whether it be devolved or central, certainly are not terribly good at managing commercial activities. So I suggest that those amendments are unacceptable.
Amendment 11 is one that I warm to because the environment is absolutely crucial. In that context we include climate change, which we know is affecting every nation in the world, so that is a very serious area. Whether this amendment is the right one or not is almost for the Government to decide. I care deeply about the environment. I am privileged to live outside London. I shall drive home tonight, 50 miles to Bedfordshire, and it is a very nice environment there. It is essentially a horticultural one, which brings me to the point that horticulture is changing, not least because we are looking to achieve a fair degree of import substitution. All sorts of new challenges arise from that. We virtually gave up in the glasshouse world, losing out to Holland. There is all sorts of experimentation going on—growing vegetables just in water and so on—but this is not the time to go into that.
I do worry that there are products at the margin, where there is always somebody lobbying against them. Smoking has been mentioned. I have never smoked, but I accept the current situation in which people have the right to smoke if they wish to, and there are clear frameworks in which they can follow that. Pesticides are important in the horticultural world because they affect yields; again, that is a controversial area. So I will listen to my noble friend, particularly on Amendment 11, about which I have a reasonably open mind. I know that the environment is absolutely crucial, but I do not want to see areas of our society and our market squeezed out because of some heavy lobbying from one particular group who do not like the particular industry involved.
Lord Callanan (Con)
My Lords, Amendments 10, 11 and 41 would expand the list of legitimate aims used to justify where statutory requirements in one part of the UK can indirectly discriminate against goods or services from another part of the UK. So I will start by saying that the Bill provides an updated, coherent market structure which will help to avoid future complexities and prevent costs being passed on to customers through an increase in prices or a decrease in choices. An expansive list of legitimate aims would increase the potential discrimination faced by businesses or service providers, eroding the benefits of the internal market and creating damaging costs and internal barriers to trade.
The current list in the Bill is targeted to allow nations to meet their respective goals while avoiding unnecessary damage to the internal market—a point that was well made by my noble friend Lady Neville-Rolfe. For example, the Bill already includes the protection of public, plant and animal health, and in some cases, of course, this will align with the protection of the environment. However—I cannot stress this enough—the Government have repeatedly committed to maintaining our world-leading standards across a number of different areas, whether that is in consumer protection, the environment, social and labour standards or public, animal and plant health. The Bill does not undermine the great strides that we have taken in these areas, and we will continue to be at the forefront of improving and protecting our high standards.
Under this Bill, the devolved Administrations will retain the right to legislate in devolved policy areas. Legislative innovation remains a central feature and, indeed, a strength of our union. The Government are committed to ensuring that this power of innovation does not lead to any worry about a possible lowering of standards, by both working with the devolved Administrations via the common frameworks programme and by continuing to uphold our own commitment to the highest possible standards. It is important to remember that the market access principles do not prevent the UK Government or the devolved Administrations adopting divergent rules for goods or services.
Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2020
Lord Callanan Excerpts(3 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Callanan
That the Grand Committee do consider the Consumer Protection (Enforcement) (Amendment etc.) (EU Exit) Regulations 2020.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, the regulations were laid before the House on 14 September 2020. Our negotiations with the EU continue. As previously set out, we want a relationship with the EU based on friendly co-operation between sovereign equals and centred on a trading relationship based on free trade. These draft regulations form part of the important and necessary work being done to update our legislative framework in readiness for the end of the transition period. This will ensure that retained EU legislation continues to work effectively here in the UK.
The primary purpose of this statutory instrument is to update the 2019 EU exit regulations on consumer protection enforcement given changes in EU and domestic law since those regulations were considered and approved by this House on 15 January 2019. This SI does not alter the approach of the 2019 exit regulations; it merely enables them to work given those changes.
The 2019 exit regulations dealt with the collective redress regime for consumer protection laws. This regime applies where the infringement of certain consumer protection laws causes harm to the collective interests of consumers. It deals with systemic infringements of consumer law rather than any individual disputes.
The EU’s Consumer Protection Cooperation Regulation, known as the CPC Regulation, provides for reciprocal arrangements between enforcement bodies in member states, such as the UK’s CMA. It allows them to investigate and, if requested by an enforcer in another member state, to take action to end cross-border infringements of EU consumer law which harm the collective interests of consumers.
In the UK, the Enterprise Act 2002 allows enforcers to seek court orders to ensure the cessation of and, where appropriate, redress for infringements causing collective harm. The 2019 exit regulations revoke the CPC Regulation, which will not apply to the UK once the UK is no longer bound by EU law. The revocation is also necessary to prevent UK enforcers being obliged to assist their EU counterparts while, of course, EU enforcers are not under the same obligation. The 2019 exit regulations also amend the 2002 Act to allow the domestic collective redress regime to function effectively once EU law no longer applies in the UK. Those regulations replace the concept of a Community infringement—the breach of consumer protection laws in the EEA—with a Schedule 13 infringement for breaches of UK consumer protection laws.
Since the 2019 exit regulations were made, a new EU CPC Regulation, the 2017 CPC Regulation, has come into force. This statutory instrument updates the 2019 exit regulations so that they revoke this new CPC Regulation. This new exit regulation ensures that the UK collective redress regime will continue to apply to those retained EU-derived consumer protection laws to which the 2017 CPC Regulation has been extended.
This statutory instrument also ensures that the 2019 exit regulations amend the new material added to the 2002 Act by the CPC implementation regulations. That new material includes express online interface powers under which the Competition and Markets Authority can seek court orders requiring the removal of online content from, or restriction of access to, websites. This statutory instrument will ensure that the 2019 exit regulations amend that Act as it stands now, and the improvements made to that Act are therefore retained. None of these changes alters the approach of the 2019 exit regulations.
This SI also makes a number of other changes to EU exit regulations relating to consumer protection. First, it makes a small number of changes to two previous UK-wide exit regulations that amend legislation relating to crystal glass, footwear and textiles. These are specified in the Northern Ireland protocol. These changes ensure that those regulations do not impact on the operation of the Northern Ireland protocol.
Secondly, this SI makes technical changes to replace references to “exit day” with “IP completion day”, which will now be 31 December 2020, and is necessary in the context of the transitional provisions of those exit regulations.
Finally, this statutory instrument makes some minor amendments to clarify drafting in the Enterprise Act 2002. This is in response to the 14th report for this Session by the Joint Committee on Statutory Instruments in relation to this year’s regulations implementing the new CPC Regulation.
My departmental officials have undertaken the appropriate assessment of the impacts of this instrument on businesses and relevant bodies. This showed there is likely to be a negligible impact on business. These amendments do not bring about a wider policy change or impose any new liabilities or obligations on any relevant business, organisations or persons.
Although consumer protection is devolved in Northern Ireland, following consultation, the Department for the Economy, Northern Ireland, has agreed for the SI to include Northern Ireland provisions which relate to areas that are devolved to Northern Ireland. Consumer protection is reserved for Scotland and Wales, although officials in both the Scottish and Welsh Governments have also been advised of these regulations and they have raised no objection.
This instrument is a sensible and necessary use of the powers of the withdrawal Act which will ensure that the law in this area continues to function effectively after the end of the transition period. I therefore commend the regulations to the Committee.
Lord Callanan (Con)
I thank all noble Lords and noble Baronesses who contributed to this debate.
Of course, the UK has left the EU to take back control on these and other matters and make decisions as a sovereign independent state. As I said in my opening speech, since the 2019 exit regulations on consumer protection enforcement were made, a new CPC regulation has come into force. This statutory instrument is therefore necessary to update the 2019 exit regulations so that the new CPC regulation is revoked. As I also said earlier, it also makes a small number of changes to two other exit regulations so that they do not have an impact on the operation of the Northern Ireland protocol. These amendments will allow the domestic collective redress regime to function effectively once EU law no longer applies in the UK. They will prevent UK enforcers being required to assist EU counterparts who are not under the same obligation. I reiterate that none of these changes alters the approach of the 2019 exit regulations.
I can confirm for the noble Baroness, Lady Hayter, that we have one of the strongest consumer protection regimes in Europe. It ensures that consumers’ interests are safeguarded with a comprehensive set of consumer rights and through strong advocates for consumer interests and other well-developed advice services. Of course, we remain firmly committed to the strong consumer rights and high standards that have benefited UK consumers for many years; these regulations do not change that. The political declaration between the UK and EU sets out the parties’ determination to continue working together to safeguard high standards of consumer protection; the UK remains fully committed to this undertaking.
We are continuing and enhancing global co-operation on consumer protection through our trade policy and through the CMA continuing to take an active role in many international fora. Our recently signed trade agreement with Japan illustrates this and includes consumer co-operation measures that go beyond those in the EU-Japan agreement, for instance.
My noble friends Lord Moynihan and Lord Naseby and the noble Baroness, Lady Hayter, referred to the ticket resale market and the importance of co-operation with the EU; I know that my noble friend Lord Moynihan in particular has been an extremely influential voice on this issue. The CMA has already taken enforcement action under UK consumer law against foreign-based secondary ticketing websites, such as Viagogo and StubHub, and enforcements of these provisions do not rely on the CPC network.
The domestic enforcement powers that we currently have will be retained. For instance, a new online interface order remains available to our enforcers; among other things, it allows a court to order the removal of content or restrict access to websites and software used by traders in selling services. Effective co-operation on consumer protection will be an important part of the UK’s future relationship and is of course in the interests of all parties. The CMA will continue to take an active role in many of the international fora that regulate these matters. We will look at the CMA’s powers of enforcement, but they are separate from this instrument; my department is engaging directly with the CMA on that question.
The noble Lord, Lord Empey, and the noble Baroness, Lady Ritchie, asked about the EU’s role in making consumer law in Northern Ireland. These regulations will ensure that three specific EU-derived laws—relating to crystal glass, footwear and textiles—continue to apply as required under the Northern Ireland protocol. Most consumer protection law is not affected by the protocol. Going forward, the UK Government will set the rules overall, subject to commitments in the protocol.
My noble friend Lord Naseby asked about footwear and related issues. In Great Britain, these regulations will continue to be subject to amendments made by previous exit SIs, which are largely narrow and technical, as the Northern Ireland protocol does not apply in this area. Substantial divergence in the GB and Northern Ireland protocol rules is not currently envisaged.
I will reply in writing to my noble friend Lord Naseby’s question on the definition of small and micro-businesses.
My noble friend Lord Bowness noted the complexity of the rules. I agree with him on this one. It is a technical area, but we have had a good discussion today. We have produced a substantial amount of explanatory material, but if he does not feel he has enough and wants to write to me, I would be happy to send him even more of it if he wishes for some bedtime reading.
We want consumers and businesses to continue to feel confident and empowered in cross-border transactions. The Government have committed to fund the UK European Consumer Centre for at least another year after the transition period ends to help consumers resolve cross-border disputes. We will use this time to assess the most effective way to provide consumers with advice about cross-border purchases in future.
My noble friend also raised passenger rights, which, as I am sure he understands, is not addressed by the instrument. As he probably also understands, consumer protection for flight passengers is a matter being considered by the Department for Transport. I know that he is in correspondence about it with my noble friend Lady Vere, who is a Minister in that department.
The noble Baroness, Lady Ritchie of Downpatrick, asked about protection for older people at risk of scamming. We have worked closely with Citizens Advice to run a National Consumer Week to help raise awareness of scams. I totally agree that this is a vital piece of work. On her point about consultation with Northern Ireland, this has been central to the formation of the SI, as I indicated. We will of course continue to engage with Northern Ireland and the other devolved Administrations, as the noble Baroness, Lady Hayter, asked, in response to the future development of consumer law.
On the rectification of problems raised by the JCSI on the previous 2020 regulations, we are satisfied that the redrafting of the previous regulations reported by the JCSI now satisfactorily deals with its concerns. It has of course received the usual pre-laying quality assurance procedures.
My noble friend Lord Randall asked about domestic consumer law. This will be retained in full as a result of a series of these exit-related SIs and, of course, by our domestic legislation regime, which, as he notes, in many cases already exceeds that required by EU rules.
The noble Baroness, Lady Hayter, further asked about devolved issues. I mentioned that we contacted the Northern Ireland Government on these measures and no concerns were raised. The Department for the Economy confirmed its agreement on 28 April. Although consumer protection is of course reserved in Scotland and Wales, officials in both the Scottish and Welsh Governments have been advised about these regulations and have not raised any objections. Northern Ireland has consumer protection and enforcement devolved to it, as I said. Consumer protection is reserved for Scotland and Wales, but we always look to engage with these devolved bodies on any new measures required.
Finally, the noble Baroness asked about engagement with Which? I have certainly spoken to it about other matters, but not these particular regulations. We hold regular discussions with it and others, such as Citizens Advice, to help shape our consumer policy and, in particular, to understand the impact of the current pandemic on consumers. It will continue to be a vital stakeholder for the work of my department.
In conclusion, these regulations will ensure our consumer rights framework continues to function effectively once the EU CPC regulation ceases to apply to the UK. With that, I commend the regulations to the Committee.
Competition (Amendment etc.) (EU Exit) Regulations 2020
Lord Callanan Excerpts(3 years, 5 months ago)
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Lord Callanan
That the Grand Committee do consider the Competition (Amendment etc.) (EU Exit) Regulations 2020.
Relevant document: 30th 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, the Competition (Amendment etc.) (EU Exit) Regulations 2020 were laid before the House on 30 September 2020.
From 1 January 2021, the UK’s competition regime will no longer be integrated with the EU’s competition system. Instead, it will function on a stand-alone basis as provided for by the Competition (Amendment etc.) (EU Exit) Regulations 2019, which were approved by Parliament in 2019 to prepare for EU withdrawal. Those regulations will come into force at the end of the transition period, but first they require amendment to reflect the terms of the withdrawal agreement. The purpose of the regulations put before your Lordships today is to implement the UK’s obligations on competition law under the withdrawal agreement and to deliver a separate and sovereign UK competition regime at the end of the transition period. The content of the regulations is therefore separate from both ongoing trade negotiations with the EU and the Government’s consideration of ways to enhance competition in the UK.
So what do the regulations do? They address three broad topics. The first two topics relate to the jurisdiction of anti-trust and merger cases at the end of the transition period. While the UK was a member state of the European Union, the European Commission had jurisdiction to investigate the UK effects of certain anti-trust and merger cases instead of UK competition authorities. This system has continued during the transition period. This means that there will be a limited set of anti-trust and merger cases that relate to the UK which were opened by the European Commission but not completed before the end of the transition period. These cases are dealt with by Article 92 of the withdrawal agreement. I shall refer to them collectively as live EU cases. Article 92 gives the European Commission competence to conclude live EU cases. These cases will be completed under the law that applied to them when they were opened. This arrangement ensures that competition cases which straddle the end of the transition period will be brought to an orderly conclusion, in turn giving legal certainty to UK businesses, regulatory authorities and courts.
The third topic addressed by the regulations relates to commitments accepted and remedies imposed by the European Commission in connection with its anti-trust and merger cases. These commitments and remedies often relate to multiple EU member states, including the UK, and the European Commission is normally best placed to secure compliance with them. In accordance with Article 95 of the withdrawal agreement, the European Commission will remain responsible for the monitoring and enforcement of the UK aspects of such commitments and remedies. However, this responsibility can, by mutual agreement, be transferred from the European Commission to the UK’s competition authorities.
I will now briefly explain the main changes made by the regulations in relation to these three topics. First, with respect to the European Commission’s investigations of live EU anti-trust cases, the regulations amend transitional arrangements made in 2019 to reflect the Commission’s continued jurisdiction over these cases. The amendments ensure that the Competition and Markets Authority can assist the Commission in its investigations of live EU anti-trust cases in the way it currently can under the Competition Act. To implement fully the legal effect of the withdrawal agreement, the regulations restrict the CMA from investigating the UK aspects of a live EU anti-trust case until the Commission’s case has concluded. This reproduces an effect similar to that which arises currently under EU law. The CMA will of course be free to investigate the UK aspects of any anti-competitive behaviour that occurs after the end of the transition period.
Decisions of the European Commission and the Court of Justice of the European Union made in relation to live EU anti-trust cases will be binding in the UK for the purposes of private claims seeking follow-on damages for a breach of competition law. The regulations ensure that UK authorities must consider any relevant penalty issued by an EU body in a live EU anti-trust case when deciding the amount of a penalty to be issued under UK law.
Secondly, the European Commission will continue to have exclusive competence over live EU merger cases, including in relation to any UK elements of the case. This means that, except in certain circumstances, the CMA will not have jurisdiction to review a merger after the end of the transition period if the European Commission began its own review of the merger on behalf of the UK before the end of the transition period. The exception to this rule is where the European Commission is re-examining a merger case following a successful appeal but is not considering the UK aspects of the merger in its re-examination. To prevent an enforcement gap emerging in the UK, the regulations ensure that the CMA can investigate the merger in these circumstances. The regulations amend the transitional arrangements made in 2019 to reflect the European Commission’s jurisdiction over live EU merger cases.
With respect to the transferred UK aspects of EU commitments and remedies, the regulations give to the CMA monitoring and enforcement powers to secure continued compliance with them. These powers are modelled on the CMA’s existing powers to monitor and enforce domestic commitments and remedies. The powers will apply also to sector regulators that enforce competition law concurrently with the CMA.
In addition to the changes made in relation to these three topics, the regulations make technical amendments to the 2019 regulations so that appropriate reference is made to the end of the transition period. Finally, as with the approach taken by the 2019 regulations, the regulations revoke a recent EU regulation on investment screening, which will have no practical effect on the UK beyond the end of the transition period because it relates to information-sharing between EU member states.
The provisions on competition law contained in the withdrawal agreement mean that the UK will move smoothly to a separate and sovereign competition regime. The regulations make only those changes which are necessary to give effect to these provisions and to ensure that the UK’s competition regime functions as intended by the regulations that Parliament approved in 2019. The regulations will provide legal certainty for the UK’s businesses, the CMA and the UK courts. I therefore commend the regulations to the Grand Committee.
Lord Callanan (Con)
First, I thank all noble Lords for their contributions to the debate. I remind everyone who contributed that these regulations are required to give full and operable effect to a policy that Parliament has already approved in the form of both the withdrawal agreement and the Competition (Amendment etc.) (EU Exit) Regulations 2019.
My noble friends Lord Lansley and Lady Neville-Rolfe asked about the threshold for market shares in vertical agreements. At the end of the transition period, the Secretary of State will have the power to make regulations to vary or revoke a retained block exemption or to replace it with a block exemption order under the Competition Act, acting in consultation with the CMA, of course. In each case, it will be for the CMA to consider what the relevant geographic and product market will be, and it will have guidance on the factors that it needs to consider.
My noble friend Lord Lansley also asked about the position on foreign investment screening in comparison to the NSI Bill. He also asked whether the Government were considering further measures on foreign investment screening, especially with regard to national security. The answer is that the EU regulation revoked by these regulations relates principally to co-operation between member states on the screening of foreign direct investments. The NSI Bill relates to powers to protect national security in investments, and of course there will be ample opportunity to discuss that Bill in much greater detail when it comes to your Lordships’ House.
As always, I listened with great interest to the noble Baroness, Lady Bennett. She ranged far and wide over whether or not the market economy is right, prisons, care homes and council houses. It was all extremely interesting but totally irrelevant to this SI.
My noble friend Lady McIntosh asked about proposals to protect consumer rights after the end of the transition period. The issues of roaming charges and so on are also interesting but are not covered by these regulations. She also asked about positions on appeals under live cases after the transition period—will UK companies be able to rely on the CJEU or on UK bodies? The answer to that question is yes; currently EU law will continue to apply in relation to all live EU cases, and this regulation concerns only the small number of cases that are live at the end of the transition period. UK companies that are subject to merger or anti-trust investigations and decisions in those cases will, of course, be able to appeal any decisions to the CJEU.
My noble friend also asked about UK companies facing red tape, as I think she referred to it, at the end of the transition period. Of course, the UK has left the European Union and, at the end of the transition period, will cease to be part of the EU’s competition system. This means that there will be some instances of parallel scrutiny by both UK and EU competition authorities, as is normal in any sovereign competition regime. The same thing would happen with companies that are jointly operable also in the United States. The regulations and the withdrawal agreement set out clearly whether the CMA or the European Commission has jurisdiction over a particular case.
My noble friend Lady McIntosh asked about assurances that UK companies will not be doubly penalised. With respect to those few live cases, the CMA will take into account any penalties issued by the Commission in these cases, which reflect the position which applies during the UK’s membership of the EU in relation to a case examined by the Commission and also, lately, after that considered by the CMA.
My noble friend Lady Neville-Rolfe asked about the position of the CMA’s chair. She will be aware that Jonathan Scott was appointed as the interim chair on 9 October, and shortly my department will launch a recruitment process for a new permanent chair. She also asked whether a variety of skills are required in the CMA. Of course, the CMA is a highly regarded competition body and will continue to play an important role in fulfilling its statutory function of promoting competition for the benefit of consumers, drawing on its already wide-ranging and broad set of skills from across the public and private sectors.
The noble Baroness, Lady Bowles, asked about the likely reasons for choosing whether enforcement of EU commitments and remedies will stay with the EU or the UK. Of course, it will be for the European Commission and the UK’s competition authorities to discuss between them whether it might be suitable to transfer responsibilities to monitor and enforce any EU remedies and commitments.
Lastly, the noble Lord, Lord Stevenson, asked about the status of the CMA under the EU CFTA. These regulations are about the handling of those few live cases at the end of the transition period. Of course, they are not negotiations; negotiations are ongoing, and the noble Lord will quite understand that I am currently unable to comment on the status of those discussions and on the future relationship but, suffice to say, the CMA exists in UK statute and is a world-renowned regulator and functions as our independent competition regulator.
The changes I have described today will give legal clarity to UK businesses and those authorities that enforce competition law in the UK. I reiterate again that these regulations do not bring forward new competition policy, but rather ensure that policy which has already been agreed by Parliament functions in the way that Parliament intended. While, of course, these regulations are technical in nature, without them the UK would fail to implement its obligations on competition law under the withdrawal agreement. The regulations made in 2019 to create a stand-alone competition regime would also contain references that are now inaccurate in light of the withdrawal agreement. Therefore, those inconsistencies between provisions on competition law in the withdrawal agreement and UK competition law would cause significant uncertainty for UK business, the CMA and the UK courts. These regulations will complete the process of preparing the UK’s statute book for this purpose, and, therefore, I commend these draft regulations to the Committee.
Covid-19: Vaccine Taskforce
Lord Callanan Excerpts(3 years, 6 months ago)
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Baroness Hayter of Kentish Town
To ask Her Majesty’s Government what assessment they have made of (1) the appointment process of the chair of the United Kingdom’s Vaccine Taskforce, (2) the code of conduct setting out the framework within which this postholder works, and (3) the budget for the Vaccine Taskforce.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
The UK has worked at unprecedented pace and scale to ensure public access to a safe, effective vaccine as soon as one becomes available. Kate Bingham was appointed by the Prime Minister and is subject to all the usual principles and codes of conduct for board members of public bodies. She is very well qualified for the role of chair, having worked in the biotech and life sciences sector for 30 years.
Baroness Hayter of Kentish Town (Lab) [V]
Indeed, Boris Johnson has just showered praise on Kate Bingham, but I am surprised the Minister says she had to sign a code of conduct regarding confidentiality, since she seems to have given certain things away to a private seminar, or conflict of interests, since we read in the Times that she may benefit financially from a vaccine development. She has also charged more than £500,000 for eight press officers. Who is the accounting officer who signed off this expenditure?
Lord Callanan (Con)
There are a number of questions there, but the presentation she did focused on publicly available information and said little that expert delegates at the conference could not have deduced for themselves. Her attendance at that conference was approved and sanctioned by officials. The presentation was put together by officials. The noble Baroness should be aware she is unpaid for her role, and the recruitment process for the consultants she referred to was contracted by the Vaccine Taskforce for a time-limited period in line with existing public sector recruitment practices and frameworks. The details of all that will be published in due course.
Baroness Armstrong of Hill Top (Lab) [V]
My Lords, where in the code that covers the appointment of the vaccine tsar it is made acceptable to brief companies that stand to profit from information before ensuring Parliament is told?
Lord Callanan (Con)
I think I just answered that point in my previous answer, but the presentation focused on publicly available information and said little that expert delegates at the conference could not have deduced for themselves. Her attendance at this seminar was approved by officials, and the presentation was signed off by officials.
Lord Scriven (LD)
My Lords, Kate Bingham asked for Admiral Associates to be brought in. Angus Collingwood- Cameron, the director of Admiral Associates, is also a director of Dominic Cummings’ in-laws’ country estate and runs a caviar company which he says he is
“happy to advise on indulgence.”
If this is not gross indulgence, to give a single source tender of £650,000 for PR work, when his own department has more than 100 people working in communications, what specific tasks and messaging has been provided by Admiral Associates that his own team of communication professionals does not have the skills or knowledge to deliver?
Lord Callanan (Con)
The noble Lord is making baseless accusations there. The first thing to point out is that Dominic Cummings had no role whatever in any of these procurement processes or appointments. The specialist communications support was contracted by the Vaccine Taskforce. Details of all arrangements and all firms and contract labour used by the task force will be published in due course with the usual transparency arrangements.
Lord Bilimoria (CB) [V]
My Lords, the whole world is delighted with the news of the Pfizer BioNTech vaccine announced yesterday. Does the Minister agree that credit needs to go to Kate Bingham and the Vaccine Taskforce for operating at such speed to procure, at scale, a range of vaccines in development around the world, including the Pfizer BioNTech vaccine? Does he also agree that business should have a prominent and critical role in rolling out and distributing the vaccines across the UK in the months to come?
Lord Callanan (Con)
I agree with the noble Lord; I think the Vaccine Taskforce has done a great job, and I think the announcement this morning is testament to that. Let me reiterate that she has taken on this role of chair in an unpaid capacity in the true spirit of public service. It has invested in something like six vaccines— 350 million doses have been secured—to try to pick one of the vaccines that will be effective. The task force is doing a great job, and we will see that in due course.
Lord Campbell-Savours (Lab) [V]
My Lords, we are not being told the full story. The bottom line is quite simple: what was the real reason Kate Bingham was picked to do this job when she clearly had a conflict of interests, as has already been stated by my noble friend Lady Armstrong? Why did she give the contract to Admiral Associates? There is something we are not being told. Are there undisclosed relationships at play here, which are subsequently going to be revealed when the Minister makes the Statement he has twice promised us during this Question Time?
Lord Callanan (Con)
She has declared all her relevant conflicts of interest in line with normal public sector appointments, and they have all been managed and agreed with officials in my department. She was not responsible for appointing Admiral PR; it was done under normal civil service procurement procedures by officials.
Lord Rooker (Lab) [V]
My Lords, the Minister has mentioned the task force several times. Who is on the task force? Why do we not know their names? Who appointed the task force? I have seen a reference to a vice-chair, but I understand that, when someone asked about this under freedom of information, all they got was a list of redacted sheets of paper. It is quite important to know who is on the task force to see their expertise, how they were appointed, why they were chosen and what interests they have. The Minister said more than once that Kate Bingham is unpaid; she can afford to be unpaid because, as he made quite clear, she is still working in the sector that she is currently governing. That is quite a serious issue. Is the Minister not somewhat uneasy that not a single Conservative Peer has come forward today to ask a question that supports the Government? I have never known such a case in my experience. He can answer what he chooses, or choose not to answer.
Lord Callanan (Con)
The noble Lord, Lord Bilimoria, was supportive, and he is not a Conservative Peer but an independent Cross-Bencher. The task force consists of a number of specialists in their fields from the Civil Service, the military and private sector organisations, all attempting to get the UK a vaccine that will solve the Covid problem. I would have thought the noble Lord would welcome that.
The Deputy Speaker (Lord Haskel) (Lab)
My Lords, all supplementary questions have been asked.
United Kingdom Internal Market Bill
Lord Callanan ExcerptsMonday 9th November 2020
(3 years, 6 months ago)
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Lord Stevenson of Balmacara (Lab) [V]
My Lords, I thank the noble Baroness, Lady Rawlings, for introducing her amendment. She made her case extremely well: R&D is important, and the Government could easily, with advantage, accept all three of the amendments as they stand. However, her introductory speech raised all the issues that have subsequently been picked up by other speakers, because we are facing what appears to be another black hole in this Bill. The noble and learned Lord, Lord Thomas, the noble Baroness, Lady Finlay, the noble Lord, Lord Fox and I have signed up to an amendment more in frustration than any genuine feeling that the existing clause is wrong, although the noble and learned Lord, Lord Thomas, does make a very good case for how the procedures adopted there are not the ones that should be seen in the final version of this Bill.
The question really seems to be about what our state aid regime is going to be. Is it going to be central or devolved in terms of both its process and delivery? Is there going to be a central body that will be charged with making sure that all those participants who benefit from state aid do so on a fair and open basis, and are they going to be able to review and make recommendations for how it is taken forward?
It seems to me this is another area where common frameworks have an opportunity to provide the solution to a problem the Government are facing. I hope that whichever way we go on this, time will be taken to make sure we get it right, do it properly and come forward with something that will justify the effort that has been placed in it, because it will be worth it.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, I thank noble Lords who have taken part in this debate. I recognise that the hour is late, so I will attempt to be as brief as possible. I begin by setting out why Clause 50 should stand part of the Bill, before moving on to discuss Amendments 169A, 169B and 169C.
Clause 50 reserves for the UK Parliament the exclusive ability to legislate for a UK subsidy control regime in future. The Government have always been clear in their view that the regulation of state aid, which is the EU approach to subsidy control, is a reserved matter. Let me say in reply to the noble Lord, Lord Fox, that the devolved Administrations have never previously been able to set their own subsidy control reviews, as this was covered by the EU state aid framework. Now we have left the EU, we have an opportunity to design our own subsidy control regime that works for the UK economy.
It is important, in our view, that there continues to be a uniform position across the United Kingdom. Reserving will ensure we take a coherent and consistent approach to the way public authorities within the UK subsidise businesses, supporting the smooth functioning of the UK’s internal market. A unified approach will reduce uncertainty for UK businesses and prevent additional costs in supply chains and to consumers.
Also in reply to the noble Lord, Lord Fox, I say this reservation does not impact the devolved Administrations’ existing spending powers. The devolved Administrations will continue to make decisions about devolved spending on subsidies—how much, to whom and for what—within any future UK-wide subsidy control regime.
The Government announced in September that the UK will follow World Trade Organization rules for subsidy control from 1 January. These are internationally recognised common standards for subsidies. Before the end of the year, the Government will publish guidance for UK public authorities to explain these rules and any related commitments the Government have agreed in fair trade agreements. We will also publish a consultation in the coming months on whether we should go further than those existing commitments, including whether or not legislation is necessary, because we want a modern system for supporting British business in a way that fulfils our interests. We do not want a return to the 1970s approach of Government trying to run the economy or bailing out unsustainable companies. We will take the necessary time to listen closely to all those with an interest in this subject.
UK government officials have been meeting, and will continue to meet, their devolved Administration counterparts on a regular basis. We are keen to ensure that the devolved Administrations are involved in the upcoming consultation process. I hope that noble Lords will agree that this approach is the best, and indeed the only, way to ensure that the whole of the UK can benefit from having a consistent and coherent system of subsidy control, which is necessary to support the smooth running of the UK internal market. I therefore commend that Clause 50 stands part of the Bill. I hope that I have answered at least some of the questions from the noble Lord, Lord Fox. If not, I will write to him to confirm the other points.
I turn to Amendments 169A, 169B and 169C, in the name of my noble friend Lady Rawlings. They seek to amend the definition of a subsidy for the purpose of their reservation. They would add to this definition that a subsidy will also include “research and development grants”. The interpretation provisions contained in Clause 50 set out what is classed as a subsidy for the purpose of this reservation. We define a subsidy as including assistance provided to a person, directly or indirectly, financially or otherwise. The definition includes examples of this assistance as income or price support, grants, loans and guarantees.
For the purpose of the reservation of subsidy control, the definition of a subsidy is deliberately broad to ensure that we have sufficient scope to design a future domestic regime that meets the needs of the United Kingdom. To ensure that we cover a broad range of financial interventions, the definition is not currently limited by reference to any specific policy purpose or sector. Subsidies may be given for a variety of purposes, and it would be anomalous to single out just one of them here. The current wording in the clause already encompasses assistance provided to a person directly or indirectly by way of grants and is therefore sufficient to cover research and development grants as my noble friend intends. Therefore, the Government do not think that the amendments are legally necessary. I hope that, in the light of that information, my noble friend will be able to withdraw her amendment.
The Deputy Chairman of Committees (Lord Alderdice) (LD)
I have received a request to speak after the Minister from the noble Lord, Lord Fox.
Lord Fox (LD)
With every answer, there come more questions, I am afraid. The Minister sought to explain that the devolved authorities will still be able to spend the money—I think those were the words that he used—but I am interested to know to which money he is referring. How in future will they get their hands on the money? Will there be a competitive bidding process? Is it part of the formula? Is that the money that he is talking about? Perhaps he could outline what he means by “the money”, because it is not entirely clear to me. He is looking at me as though I am being slightly stupid and I shall be very happy to be educated by him in writing rather than verbally.
Lord Callanan (Con)
I certainly did not intend to imply that at all and I apologise if the noble Lord got that impression. I was talking about the existing block grants that the devolved Administrations have. It is their existing spending power—the money that they spend at the moment. They will continue to make decisions about their devolved spending on subsidies, as they do at the moment—how much, to whom and for what—within any future UK-wide subsidy control regime if, following consultation, the Government and Parliament decide that we want to legislate in this space. I hope that I have resolved the noble Lord’s question; if not, I will certainly write to him.
Baroness Rawlings (Con) [V]
My Lords, I thank the Minister for his courteous and careful reply, and I thank all noble Lords who have spoken to these amendments, for and against. I am sorry that at this late hour several of your Lordships have, understandably, withdrawn.
I am most grateful to the noble and learned Lord, Lord Thomas. I take his point on the devolved matters and thank him for his very interesting contribution. I thank the noble Baroness, Lady Finlay, for her probing remarks, as always, and my noble friend Lord Trenchard, who fully understood what I am trying to do. I am most grateful to him for his kind words. I thank the noble Lord, Lord Fox, for his support. The noble Lord, Lord Stevenson, always makes good points and always asks even better questions.
My noble friend the Minister said that state aid was a reserved matter but we can design our own. I was not quite clear about that. I was even less clear on his explanation of why R&D should not be included; I feel that it is too important not to be included.
To conclude, these modest amendments are hardly revolutionary and are purely intended to help the Government in any future contracts so that we are less likely to lose out; it is a shame that the Government are not able to accept them. I hope that there may be some other way. I may return to the subject of research and development on Report. Having said that, for the time being, I beg leave to withdraw my amendment.
United Kingdom Internal Market Bill
Lord Callanan ExcerptsWednesday 4th November 2020
(3 years, 6 months ago)
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Lord Stevenson of Balmacara (Lab) [V]
My Lords, this debate has raised some interesting and important issues. I have listened with care to all the speakers and particularly to the contribution of the noble Baroness, Lady McIntosh, based on information provided by the Scottish Law Commission, whose help I also acknowledge. I look forward to the Minister’s response. The noble Baroness, Lady Bowles of Berkhamsted, raised a number of issues to which I wish to return. Other speakers have made small but important points on SMEs and the role of Northern Ireland.
The noble Lord, Lord Fox, picked up on the recent letter from Ministers about university fees, particularly in Scotland, and questioned whether this could constitute indirect discrimination. This was also raised in an earlier group. Like the noble Lord, I wonder why this could not be better dealt with by the common frameworks approach. This should be applied to all aspects of managed divergence, in relation not just to goods but also to services and the regulation of professions. We will return to this on Report.
In respect of the amendments tabled by the noble Baroness, Lady Bowles of Berkhamsted, the powers included in Clauses 38,39 and 40 are quite extensive and detailed. Do they go beyond the existing powers of the CMA? Are they new because of the responsibilities that will accrue to the CMA or the office for the internal market under this Bill? Or do they simply repeat existing powers reframed in some way to suit the new circumstances? I would appreciate the Minister’s response. As other speakers have said, this additional activity is very detailed and gives specific examples of what can and cannot be done and how it is to operate. Does this not play to the concerns raised by the noble Baroness, Lady Noakes, in an earlier amendment that asking the CMA to extend its focus and the range of its work might blur the good work it does at the moment? Does the Minister accept that there might be a problem here?
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, I thank all noble Lords who have taken part in this debate. The noble Lord, Lord Fox, raised issues around university tuition fees and water services. As he said, I have written to him and to the noble Lord, Lord Purvis, about the points they raised in earlier debates. I am told that these letters have been submitted to the Library but there may be a slight delay in their publication. I confirm what I said there about the exemption in the legislation for public services. More details are set out in the letters. If for some reason they have not yet been published, the noble Lords, Lord Fox and Lord Purvis, should get in touch with my office, which will be happy to furnish them with a copy.
Lord Fox (LD)
I much appreciate the Minister’s answer. The questions I asked about university tuition fees were in the light of having read his letter, which my noble friend Lord Purvis made available to me—there is no need to send it to me. In it the Minister states that,
“we are aware of the questions raised in relation to university services and how they may interact with the Bill”,
which is good. The letter continues:
“We have the power to amend the exclusions Schedule and will keep the area of higher education under close review.”
It therefore seems that the Government are planning to do that after Report. My point is that it would be a boon to our process on the Bill if the Government were to consult before Report and come back with something that I am sure, given what the Minister said, would merely fulfil their ambition for the Bill while settling concerns in the university sector.
Lord Callanan (Con)
I thought that I had put the matter to rest by writing the letter to the noble Lord, Lord Purvis, on which the noble Lord, Lord Fox, has commented. In our view, there is no doubt that the regulation of tuition fees is outside the scope of the Bill and, therefore, beyond the scope of the office for the internal market’s functions. But as the letter to him confirmed, we will keep the matter under review and not hesitate to take action if there is a problem, which we do not believe exists.
The Deputy Chairman of Committees (Baroness Henig) (Lab)
The noble Lord, Lord Stevenson, and the noble Baroness, Lady Neville-Rolfe, also wish to speak after the Minister.
Lord Stevenson of Balmacara (Lab) [V]
I asked the Minister a specific question on whether the framing of Clauses 38 to 40 was exactly the same, or differed from, the existing powers of the CMA. He did not answer that. I do not want to delay us too much today but perhaps he could write to me about it.
Lord Callanan (Con)
I would be happy to write to the noble Lord but, as I said, the powers to date have functioned effectively and are based on the CMA’s existing powers.
Baroness Neville-Rolfe (Con)
I have another couple of points for clarification by my noble friend. First, does legal privilege apply to in-house counsel, provided that they are properly qualified lawyers? I would be happy for the Minister to write to me about that. Secondly, he referred in the debate about small business to Clause 32(4), and helpfully explained that the CMA will advise on regulatory proposals before laws are made, which provides an opportunity for small business interests to be taken into account. However, my concern was also about enforcement of the law, which would bear particularly harshly on small businesses that do not have the same fancy legal departments as others. I am not sure that the clause deals with that but would be delighted if I was wrong.
Lord Callanan (Con)
On my noble friend’s first question, she will notice that Clause 38(8) states:
“A notice under subsection (2) or (3) may not require a person … to produce or provide any document or information which the person could not be compelled to produce, or give in evidence, in civil proceedings before the court”.
I hope that that resolves the matter. I will write to her on her second point.
Baroness McIntosh of Pickering (Con)
I thank everyone who has contributed, including my noble friend the Minister in summing up the debate. We had an excellent discussion on the issues, and I am grateful to the noble Baroness, Lady Bowles, for raising them because they are pertinent. I am slightly confused as to why it is necessary to include in the Bill powers that already exist. We are told that they are not new, yet my noble friend will not agree to include in the Bill a matter that is already causing alarm.
I am grateful to the noble Baroness, Lady Ritchie, for alerting me to the Constitution Committee report in that regard. It has highlighted its concern and received a verbal undertaking from the Lord Chancellor. I should repeat that we are referring to the Law Society of Scotland, not the Scottish Law Commission. If both the committee of this House and the Law Society of Scotland are concerned, that verbal reassurance is not enough. I may well reflect on the matter and come back on Report. However, for the moment, I am grateful for having had the opportunity to debate this matter and I beg leave to withdraw the amendment.
Baroness Hayter of Kentish Town (Lab)
My Lords, this debate is perhaps even more important than some of the others that we have had. The real advantage of a stand part debate is that one can question the purpose of a clause rather than getting down into the weeds of amendments.
The issue that the noble Baroness, Lady Bowles, has raised is fundamental to how we have been looking at this. She asked—these are actually my words, although the noble Baroness, Lady Neville-Rolfe, said much the same—whether the competition regime was appropriate for work on the internal market. I am sorry that the noble Lord, Lord Callanan, gave away in an earlier debate that this may have been written hastily over the summer; it certainly sounds like a cut-and-paste job, done without stopping to think. Just because it is the same organisation at the same address in Holborn, or wherever the CMA is these days, you cannot just cut and paste it; as the noble Lord, Lord Fox, was saying, it is about the culture of that organisation as well as whether the structure is available. There is a fundamental question here, which my noble friend Lord Stevenson dealt with under Amendment 115, of whether the OIM should be within this framework, as well as the even broader subject of whether these sorts of penalties are appropriate for such a different role.
There are some specific issues in these clauses, such as whether it is appropriate for the Government to be able to amend the list of exclusions without any involvement of the devolved authorities. We have discussed such matters before, but under this legislation the fixing of penalties could again be altered without any involvement of the devolved authorities. This is serious stuff. They are a part of the overall governance and working of the new internal market, yet the Bill is written as if this is simply a Westminster responsibility.
I come to what the noble Baroness, Lady Neville-Rolfe, was saying: exactly what is covered by these clauses? In an earlier debate I asked the Minister to set out what services were covered, but obviously I was mumbling at the time because he wrote me a very nice letter on 2 November telling me about the services that are excluded, which of course already exist in the Bill. The question that I was trying to ask is: what services will be covered? I still cannot get a handle on that. This is really important given what has been said about whether the demands and penalties applying to services that are covered are appropriate.
Obviously I was not very clear about what I wanted but I had talked about housing and whether someone organising a register of housing would count as a service. I was talking about landlords but the letter refers to social housing. We are talking not about social housing but about landlords of private housing. I am involved with another part of the Government, the Ministry of Housing, Communities and Local Government, in chairing something to try to set up a code for property agents for when the Government are ready to fulfil what they have already promised—that is, to set up a regulator of property agents. They are already a service but the circumstances are different—buying and selling a house in Scotland is very different from England; if you buy there, you tend to go to a solicitor rather than an estate agent—so there are different ways of a service being developed or in existence. Once they are regulated, perhaps property agents will count as a profession, which is a different issue, but before then, as a service, are they going to be covered by these sorts of requirements?
If that is the case—and this is the main thrust of what I want to say on this group— how will these services know that they are covered by this provision? It is important for anyone risking breaking the law, in the sense of civil law, and being charged a penalty to know that that law applies to them. If they do not define what they are doing as a service and therefore do not know that they are captured by this provision, they may find it difficult to understand that they could be required to provide information. I can imagine that this could really affect property agencies. They need to know that it covers them, which is quite an issue, but it is also unclear to me whether the level of penalties is appropriate for this area. For a small housing management group, for example, this daily rate of £15,000 will basically wipe out its business if it has an £80,000 annual turnover. We are talking about levels of penalty.
It seems to me that those agents are covered by this, but I am unclear about the appeals process. If they are asked a question, how do they know that it has legal force behind it? Even if they are told that—most of these people will of course not have lawyers —and there is a penalty, do they have any appeal? I could not find one in the Bill but I am sure the Minister will be able to tell me; it is quite unusual to have a penalty without any sort of appeal. I could not work this out but I am sure the Minister will.
My main ask is: can we know the sort of services that will be covered? Perhaps we could hear more—not in legal language but in language that I can understand—about how they would know and about their rights to appeal any fixed penalty.
Lord Callanan (Con)
I thank all noble Lords who have taken part in this debate. I apologise to the noble Baroness, Lady Hayter, if she found my letter disappointing; I will try to do better next time. The noble and learned Lord, Lord Falconer, looks disapproving; I am not going to write him any more letters if that is the case.
With regard to exclusions on services, all services subject to the authorisation requirements or the regulatory requirements are affected under the Bill unless they are specifically excluded from some or part of the rules under Part 2. I hope that that clarifies the noble Baroness’s question—if not, I will be happy to write her another letter. She is shaking her head in disbelief.
I say to the noble Baroness, Lady Bowles, with regard to her question on consultation, that we consulted on the general office, what enforcement provisions there should be and whether or not it should be included as part of an arm’s-length body. Once we had made the decision that it should be located within the CMA, there was of course extensive discussion between officials and the CMA on the powers and how they will be enforced. I say to my noble friend Lord Tyrie that I am of course aware of the proposals that he refers to on the CMA and I will be happy to take another look at them.
Addressing the specific questions on this clause stand part debate, I will set out the rationale for these clauses. Clause 38, as I believe we already discussed in the previous group, sets out the powers that the Competition and Markets Authority will have to gather information in support of its monitoring, advisory and reporting functions. As I said previously, in order to carry out its functions the OIM must have access to high-quality information to produce accurate, relevant and credible reports. Clause 38 will ensure that the CMA is able to require the assistance of third parties to perform its functions and is able to independently gather evidence in a timely manner.
I hope that the noble Baroness, Lady Bowles, agrees with me that presenting analysis based on partial or inaccurate information could be detrimental to the regulatory decisions taken as a result of OIM reporting and monitoring and would damage the reputation of the OIM among many key stakeholders in these fields. The powers in this clause are therefore put on a strong statutory footing. They will ensure that the reporting that the OIM undertakes will be as effective and comprehensive as possible for the benefit of policy-makers in the UK Government and the devolved Administrations, significantly strengthening existing stakeholders’ ability to navigate the new UK internal market.
Clause 39 describes what action the CMA is able to take in response to non-compliance with the information requests described in Clause 38. As noble Lords said, the CMA has existing powers under the Enterprise Act 2002 regarding non-compliance with its information requests. This is necessary to enable the CMA to carry out its functions effectively. As with Clause 38, the provision for the OIM in Clause 39 is modelled on those powers. The clause will allow the CMA to determine the most appropriate policy approach and the amount of any financial penalty to be imposed within the limits that have been prescribed. The clause also sets out the conditions where financial penalties may not be imposed because more than four weeks has expired since the CMA exercised its relevant functions.
Clause 40 sets the parameters that the CMA should consider for financial penalties in cases of non-compliance with an information-gathering request notice. Let me first say that I understand the concerns of noble Lords, but the preference and expectation will always be that information gathering is on a voluntary basis. The Government do not anticipate that the CMA will need regularly to fall back on the information-gathering and non-compliance powers. However, it is important to ensure that this facility is available to the CMA to detail how penalties will be set. As with other provisions, the Government have chosen to mirror the relevant provisions of the Enterprise Act 2002.
I can say to the noble Lord, Lord Tyrie, and my noble friend Lady Neville-Rolfe that the Secretary of State will make regulations specifying the maximum amounts in practice within the specified ceilings for these penalties in consultation with the CMA and other interested parties. I can confirm for the benefit of the noble Baroness, Lady Hayter, that the devolved Administrations will of course be consulted as part of this. In addition, and as noted in our debates on previous groups, I confirm to the noble Baroness, Lady Bowles, and the noble Lord, Lord Tyrie, that the CMA will not be able to issue a financial penalty against the UK Government or any devolved Government. Let me be very clear about that. Let me also assure the noble Baroness, Lady Bowles, that the Government are committed to not taking any steps to bring in the financial penalties until there is credible evidence that there is a need do so, so we will not commence these provisions without that credible need being demonstrated.
I will deal with a couple of other questions. The noble Baroness, Lady Bowles, asked about third-party requests. Such requests would be permissible if they were within the scope of Clause 31 and the CMA thought that they were appropriate. As I confirmed earlier, the White Paper invited consultation responses on how the functions to be delivered should be implemented as well as on whether an existing arm’s-length body should deliver them or bespoke arrangements should be established. As is obvious, we decided after that consultation that the OIM should be situated within the CMA.
With the reasons I have set out, I hope that I have been able to reassure noble Lords on their legitimate concerns and on why this clause should stand part of the Bill. I hope that the noble Baroness will feel able to withdraw her amendment.
The Deputy Chairman of Committees (Baroness Henig) (Lab)
I have had a request to speak after the Minister from the noble Lord, Lord Fox.
Lord Callanan (Con)
With regard to the noble Lord’s first question, I understand why his cleaning abilities might not be up to standard and he might not get his tea. With regard to the questions asked by the noble Baroness, Lady Bowles, on reasonableness, we certainly do not intend to create disparity within the CMA over the functions it carries out and the processes it follows.
To be serious, of course I understand the difference between being asked to do something voluntarily and being asked to do something voluntarily with the back-up of potential penalties. The powers and penalties in question are similar to those used by the CMA for its existing functions, such as conducting market studies. This will ensure consistency in the way that the CMA, under its existing and its OIM capacities, interacts with stakeholders across all its functions. We do not intend to commence the powers on fines until it is proved that they are necessary, as I said.
The Deputy Chairman of Committees (Baroness Henig) (Lab)
I have had a request to speak from the noble Baroness, Lady Neville-Rolfe.
Baroness Neville-Rolfe (Con)
I thank my noble friend for his assurance on commencement. He did not answer my specific questions, but I think that the answer in general terms was that the Government have taken the same powers as the CMA has on competition and applied them pro rata. Perhaps I can pick up something that the noble Lord, Lord Stevenson, said earlier. I wonder whether we could look at this line by line to see whether things are or are not all the same; that would be a helpful Committee-type process.
I really got up to ask a question about examples. The Minister helpfully gave an example of a penalty regulation—he said that he might make regulations with penalties under £30,000, perhaps at a lower level for particular things—but I am confused about what kind of regulations are going to be made here. That may be an impossible question to answer but if my noble friend could give us some more examples, perhaps ones that are in draft or have gone out to consultation, it would be incredibly helpful.
Lord Callanan (Con)
I referred in my earlier speech to the need to make regulations setting the maximum penalty, which the Secretary of State will do, but I will write to my noble friend if there are any other examples of regulations that we feel we may need to make.
The Deputy Chairman of Committees (Baroness Henig) (Lab)
Does the noble Baroness, Lady Bowles, wish to respond to any of the points made?
Lord Fox (LD)
My Lords, at the outset I should say that, because of my past but discontinued interests, I will not be speaking to the specifics of the example that the noble Baroness, Lady Hayter, brought up; rather, I will speak generally on this issue.
I speak to support the spirit of this amendment. It is a shame that the noble Lord, Lord Tyrie, is not still here because I would have welcomed his view on this issue. As the noble Baroness, Lady Neville-Rolfe, said, there are examples of Secretaries of State who wanted to do more but were constrained, and Cadbury is a good example of that.
However, after two dozen or more hours in Committee, I find myself at last coming to agree with something that the noble Lord, Lord Naseby, said, and that is that this issue goes wider than simply the nature of the Bill. The noble Baroness, Lady Neville-Rolfe, said the same thing. It is an important issue, so we should be thankful that the noble Baroness, Lady Hayter, has brought it up. It is clearly inadequate; the Secretary of State needs a better armoury to assess the public interest and deal with what will undoubtedly be, as the noble Lord, Lord Naseby, said, a flood of potential acquisitions and hostile takeovers.
This may not be the right Bill to be doing it in, but it is a big issue. That said, it also opens up the question of how the new office for the internal market relates to the Secretary of State and the CMA when it is dealing with a hostile takeover that the Secretary of State has called in. As the Bill stands now, allowing for the fact that the Minister may not accept the amendment, how do the Government envision the interactivity between the office for the internal market, the CMA and a hostile takeover bid that the Secretary of State has called in? Who does what, and where?
Lord Callanan (Con)
I thank the noble Baroness, Lady Hayter, for her amendment. I understand her concerns but, as I am sure she is aware, the internal market Bill is concerned with protecting the flow of goods and services across the UK after the end of the transition period. It is not concerned with the general merger regime, nor with Ministers’ powers to intervene in mergers. Noble Lords should be aware that they will have the opportunity to debate these matters further in the Government’s forthcoming national security and investment Bill.
Lord Callanan (Con)
It is forthcoming. Noble Lords will know that I cannot go further in terms of dates. It was flagged up in the Queen’s Speech and is forthcoming.
The grounds for ministerial intervention in mergers are deliberately precise and limited, in order to maximise transparency and predictability for businesses. The effect of the amendment would be to broaden the grounds upon which Ministers may make a public interest intervention in mergers. This would constitute a significant change to the UK’s approach to merger control which, as noble Lords observed, currently puts the emphasis on competition-based assessments by the Competition and Markets Authority, with narrow and specific grounds for ministerial intervention.
It is not clear how such a change would materially assist with the effective operation of the UK internal market which is, of course, the focus of this part of the Bill. The CMA already has significant powers and expertise to investigate the benefits and risks of mergers in relation to competition. An excessively broad power to intervene in the affairs of investors, shareholders and company boards risks stifling competition, innovation and creativity. This could lead to worse outcomes for both businesses and consumers, as well as stifling inward investment. For these reasons, I cannot accept the amendment and hope that the noble Baroness will withdraw it.
Before I sit down, I will answer the other question which the noble Baroness asked about the previous group. The power for the Secretary of State to specify the maximum penalties for breach of information-gathering notices will be brought in by negative SI. This mirrors Section 111(4) of the Enterprise Act 2002.
Baroness Hayter of Kentish Town (Lab)
The Minister is very polite. What he really wanted to say to me was: “Nice try”. There is a serious point here. As I said in my introduction, I know that the basic power is outwith the scope of this Bill, but there is some urgency to this question. The noble Baroness, Lady Ritchie, used the words “greater protections are needed against hostile takeovers”. They may not be exclusively from outwith the UK, but those are some of the ones where there have been particular problems. I think it is agreed that, as the noble Baroness, Lady Neville-Rolfe, said, there is a weakness in our armour because you cannot argue against them on the grounds of competition. I thank the noble Lord, Lord Naseby. The problem is that it is not within the tools of the CMA. It cannot use as a ground the need to either respond to public policy or promote particular industries. If it does not affect competition, it is not within its powers.
This does need to be added. The noble Lord, Lord Fox, is right that this is perhaps not quite the right mechanism, but we are delighted to know that there is a Bill coming and I look forward to the Minister accepting an equivalent to Amendment 153 at that point. I will, needless to say, use today’s Hansard to support that amendment to get this in then. I look forward to the noble Lord, Lord Naseby, and other noble Lords supporting me at that time.
I wanted to table the amendment to this Bill because of the changes there will be when we have got the internal market growing and we are looking for new investments. Even those who think everything is going to be wonderful after Brexit know that we are going to need a lot of support to get the economy going again after Covid. There is a slight weakness, so it would have been nice to have been able to put this clause in at this point. It was a nice try, but I beg leave to withdraw the amendment.