Retail Businesses: Financial Support

Lord Callanan Excerpts

Monday 21st September 2020 Lords Chamber

[Baroness Andrews (Lab) [V]]

My Lords, on behalf of my noble friend, and with his permission, I beg leave to ask the Question standing in his name on the Order Paper.

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

The Government amended the CBIL scheme on 30 July to exempt smaller businesses from elements of the undertaking in difficulty test. The British Business Bank has also clarified that if an applicant was not classified as such from the application date, but was so on 31 December 2019, they would, in principle, be eligible. By 16 August more than £53 billion had been approved through the loan schemes, including 60,409 loans worth £13.68 billion through CBILS.

[Baroness Andrews (Lab) [V]]

My Lords, the changes for small businesses that the Minister mentions are very welcome. Does he agree with me, however, that it is the larger stores that face the greatest difficulties? Over 13,000 stores have closed in the year to date and 125,000 retail staff have lost their jobs. One in three of retail staff are aged under 25, and 146,000 of them have lost their jobs in the last quarter. In the light of potential further restrictions, will the Government look urgently at providing more access to finance and at extending business rates relief and the furlough scheme, in a targeted way, to stem the further collapse of retail and, indeed, the high street itself?

[Lord Callanan (Con)]

We continue to keep all these things under review. I hope that the noble Baroness will appreciate that our response so far has been tremendous. The Bounce Back Loan Scheme has supported nearly 1.2 million loans; the Coronavirus Business Interruption Loan Scheme has supported more than 60,000 loans, worth £13.7 billion. There are, of course, always additional things we could be doing but I hope she will acknowledge that we have done a lot for this sector.

[Baroness McIntosh of Pickering (Con)]

My Lords, many of the businesses that have not been able to claim have also been impacted by the lack of insurance cover, even though they thought they were covered. Can my noble friend use his good offices to intervene to make sure that, at the very least, they can claim on the insurance for which they have paid premiums? Also, has he looked at the impact on the night-time economy—pubs, clubs, casinos and such—if the curfew imposed in certain areas is extended for any length of time?

[Lord Callanan (Con)]

Insurance cover is a matter of commercial contracts between providers and the insured; it would not be right for us to interfere in a contract that was lawfully made. My noble friend will understand that I am unable to comment on the possibility of any curfews at the moment.

[Lord Loomba (CB) [V]]

My Lords, as the pandemic continues to progress and more restrictive measures to counteract it are being considered, what assessment have the Government made of the long-term viability of financial support to help businesses survive for longer periods?

[Lord Callanan (Con)]

The noble Lord will be aware that, by 16 August, the Future Fund to help businesses had supported 590 investments with a total of £588 million.

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

My Lords, a number of measures aimed at preventing company insolvencies, included in the recent Corporate Insolvency and Governance Act, expire at the end of this month. What plans do the Government have to extend those provisions? Can the Minister set out the new timetable?

[Lord Callanan (Con)]

The noble Lord makes a good point. We are urgently considering the need to extend these measures and will announce a decision shortly.

[Baroness Burt of Solihull (LD)]

My Lords, that is very good news from the Minister. While we welcome the changes to the temporary framework and the definition of “undertakings in difficulty” earlier this year, the fact is that some small businesses are still falling through the cracks. What further work are the Government doing to ensure that businesses acutely impacted by Covid—especially retail—can access the finance they need to make it through?

[Lord Callanan (Con)]

I would hope that, through the changes we have announced, the vast majority of small businesses are able to access the finance they need, but of course, we keep these matters under constant review. We are aware that the schemes were put together very quickly, and there will always be some businesses that fall through the cracks, but the Chancellor is looking at these matters urgently.

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

My Lords, the Question in the name of the noble Lord, Lord Allen, illustrates the inequity in some areas of financial support following the spread of the virus. The Government have pre-empted my original question, of which I gave the Minister notice, requesting improved support for those self-isolating in the north-east. I would like to think that the £500 grant is a response to that. I welcome this additional support and ask if the grant also applies to those wanting to self-isolate on return from a listed foreign country.

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[Lord Callanan (Con)]

I thank the noble Lord for his support for our £500 payments. I hope that that will be sufficient at the moment but, as with all these schemes, we will keep it under review.

[Baroness Warsi (Con) [V]]

My Lords, I welcome the changes in July which now enable more struggling businesses to access the Government-backed CBILS loans. Have the Government, in the run-up to Brexit, engaged with UK businesses for whom EU public or private sector contracts are their only, or main, form of business? I have raised this question with my noble friend before, but I am increasingly concerned as we approach deadlines.

[Lord Callanan (Con)]

I know that my noble friend is concerned about this matter and she is right to raise it. We will continue to engage with the business sector to find out what we can do to help those who are increasingly reliant on EU contracts.

[Lord Holmes of Richmond (Non-Afl)]

My Lords, in general, what analysis have the Government undertaken of other member states’ use of state aid, what insights have been gained from that and what changes are the Government considering in the light of that?

[Lord Callanan (Con)]

We are, of course, willing to learn from the example of other countries. However, as my noble friend is aware, all existing member states, and the UK during its transition period, continue to operate under the same state aid framework.

[Lord Cotter (LD)]

My Lords, we are a nation of shopkeepers, and small outlets are the heart of our local community in Weston-super-Mare. Should the Government not have a special plan to help them? When can we expect one? Business rates are the predominant issue of concern.

[Lord Callanan (Con)]

My Lords, the noble Lord is right to be concerned about the high street, and I am sure that Weston-super-Mare is no exception. As he will no doubt be aware, we abolished business rates for 12 months for all eligible businesses in the retail, hospitality and leisure sectors. That support was worth almost £10 billion. We also gave local authorities grants worth £11 billion to distribute to help local businesses.

[Baroness Wheatcroft (Non-Afl) [V]]

My Lords, retail is a dynamic sector that was undergoing radical change even before Covid hit. The rise of internet shopping has changed the shape of retail. Does the Minister accept that there is no point in propping up retail businesses which would not have survived the course anyhow? Perhaps the Government ought to be looking at helping more community shops get under way so that, particularly in rural areas, people can get what they want on their doorsteps.

[Lord Callanan (Con)]

The noble Baroness is right to draw attention to the massive changes taking place in the retail sector, some of which were exacerbated by the Covid dynamic. There has been a lot of switching to online shopping, but many high street premises are engaged in online business as well. So, there is a vast range of innovative things happening throughout the sector.

[Lord Dholakia (LD)]

My Lords, a number of small retail businesses are owned by people from ethnic minority communities. What consultation has taken place with their professional bodies? Can the Minister produce a list so they can see how to survive the present crisis?

[Lord Callanan (Con)]

We continue to engage with professional organisations from all sectors. The Covid support schemes, including the loan guarantee schemes, are designed to be as accessible to as many businesses as possible, including, of course, BAME businesses.

[The Deputy Speaker (Lord Lexden) (Con)]

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

Energy: Hydrogen

Lord Callanan Excerpts

Thursday 17th September 2020 Lords Chamber

[Lord Oates]

To ask Her Majesty’s Government whether the Hydrogen Advisory Council will develop a fully-funded hydrogen strategy for the United Kingdom.

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

My Lords, the Hydrogen Advisory Council was established in July to formalise Government/industry engagement. The council and its working groups will inform the development of a UK hydrogen strategy, which will be published before COP 26 early next year. Similarly, those involved in the council and the working groups will of course play a role in its implementation. The strategy will include discussion around the costs associated with the expansion of the UK hydrogen economy and how these might be met.

[Lord Oates (LD)]

I thank the Minister for his reply. Will he join me in celebrating Britain’s leading role in hydrogen technology? We are making world-first hydrogen buses in Ballymena, Falkirk and Yorkshire, and world-first hydrogen boilers in Worcester and Preston, and building the world’s first green hydrogen gigafactory in Sheffield. Does he agree that, if we are to maintain our competitive edge, our hydrogen strategy must do three things: grow supply and demand in parallel, establish regional hydrogen hubs, and start with technologies that are available now and easy to scale up, such as hydrogen buses and trains?

[Lord Callanan (Con)]

The noble Lord is entirely correct. He makes a very good point that this is an important new developing technology that we will want to support as much as we can. The UK is well placed to play a leading role in all the areas that he mentions, and when the hydrogen strategy is published it will take account of all those factors.

[Viscount Hanworth (Lab)]

I understand that most of the hydrogen that is consumed in the UK is generated by the steam reformation of methane, whereby one molecule of methane and one of water produce three molecules of hydrogen and one of carbon monoxide, which rapidly becomes carbon dioxide. The process is therefore by no means carbon neutral. Moreover, it requires a substantial input of energy, which at present is liable to come from fossil fuels. Are the Government prepared to insist that in future the supply of hydrogen will be produced by electrolysis? Will they also take steps to ensure that there will be a regular supply of carbon-neutral electricity sufficient for the purpose? Can we be assured that the hydrogen strategy has a purpose beyond that of supplementing our dwindling supplies of natural gas?

[Lord Callanan (Con)]

The noble Viscount is of course referring to the different kinds of hydrogen, referred to as green and blue hydrogen. We take the view that both will be needed to meet the UK’s potential hydrogen demand by 2050. Blue hydrogen has a role to play in producing cost-effective low-carbon hydrogen at scale, but of course we will need to use carbon-capture technology along with it.

[Lord Teverson (LD)]

My Lords, as taxpayers we spend a lot of money paying renewable energy sources—solar, and particularly wind—not to produce when we do not need that energy. That is something we renewable energy advocates all feel slightly embarrassed about. Is this not a way to ensure that this never happens in future and that the surplus electricity generated at those peak times is used for the electrolysis method? That would ensure we were a hydrogen economy. Also, when are we going to get the energy White Paper?

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[Lord Callanan (Con)]

I can certainly agree with the noble Lord’s first point; he is entirely correct. The energy White Paper should be out towards the end of this year.

[Lord Howell of Guildford (Con) [V]]

My Lords, I declare my energy interests as in the register. Does my noble friend agree that hydrogen as an energy vector is an old story with an entirely new life nowadays? Has he noticed that Japan has declared its aim to be the world’s first hydrogen-based economy, safely using both green hydrogen from surplus renewable electricity, of which there is plenty, and blue hydrogen or hythane, already referred to, when mixed with natural gas? Could the very welcome new Hydrogen Advisory Council be encouraged to follow Japan closely or even rival that ambition?

[Lord Callanan (Con)]

The noble Lord is entirely correct that a number of other countries are developing hydrogen strategies. However, the Government believe that the UK is currently well placed and in the leading pack internationally. We are keeping pace with international developments and leading in a number of international fora on this subject.

[Baroness Meacher (CB) [V]]

My Lords, when around 80% of UK households have gas heating systems and these systems account for about 30% of the UK’s CO₂ emissions, will the Government’s hydrogen strategy include a commitment to introduce hydrogen-ready boilers for 2025? This would not only support our net-zero targets but sustain and create thousands of jobs, since we are of course home to companies such as Worcester Bosch and Baxi, which are making world-first hydrogen boilers.

[Lord Callanan (Con)]

The noble Baroness is entirely correct. We are planning to publish a heat and buildings strategy in due course, setting out the immediate actions we will take. We are already working with Baxi and Worcester Bosch, the companies she mentioned, on hydrogen-ready boilers. These have been developed under a £25 million pot of funding, which BEIS provided.

[Lord Grantchester (Lab)]

Hydrogen in transport is key to unlocking its wider use across the economy; there are some relatively quick and easy wins. The renewable transport fuel obligation already exists. Have the Government progressed plans to extend the RTFO guidance to include both green and blue hydrogen as vehicle fuels, with legislative changes to encourage the supply chain necessary to deploy hydrogen bus and train fleets?

[Lord Callanan (Con)]

We are closely examining all these matters. The noble Lord makes a good point and these matters will be addressed in the hydrogen strategy, when it is published in due course.

[Lord Bradshaw (LD) [V]]

I believe that industry is very anxiously awaiting the hydrogen strategy to which the Minister refers. As other noble Lords have said, green hydrogen, which does not produce CO₂, is relatively easy to make using the surplus energy we have, most of it from wind. The strategy must make great efforts in that direction.

[Lord Callanan (Con)]

Green hydrogen is relatively easy to make from electrolysis but it uses large amounts of electricity, so we need to work on improving the technology. However, these are all factors that we are already working on with industry in the Hydrogen Advisory Council, which will advise us on the next steps forward with the hydrogen strategy.

[Lord Truscott (Ind Lab)]

My Lords, I declare my interests as a former UK Energy Minister and as listed in the register. The need for a hydrogen strategy is now well overdue, as we have heard. Where is the promised £100 million low-carbon hydrogen production fund? Given that most of the new nuclear schemes have collapsed, how are the Government now going to achieve their low-carbon targets?

[Lord Callanan (Con)]

The noble Lord mentioned the £100 million of investment through the low-carbon hydrogen production fund. We are proceeding with that while also investing up to £121 million between 2015 and 2021 in hydrogen innovation. Yes, we are waiting for the strategy but also getting on with some of the key building blocks in advance of it.

[Lord Bourne of Aberystwyth (Con) [V]]

My Lords, will the Minister give an indication of when the specific terms of reference of the Hydrogen Advisory Council will be published? Will he confirm the welcome news that low-carbon hydrogen use at scale is a central plank of our hosting of COP 26 in Glasgow next year?

[Lord Callanan (Con)]

The Hydrogen Advisory Council has already been established and is meeting. My noble friend is entirely correct that hydrogen will play a key role in our decarbonisation efforts. We will want to set that out fully before the COP in 2021.

[Lord Ravensdale (CB) [V]]

My Lords, I declare my interests as in the register. Currently the major basis for hydrogen production, as other noble Lords have said, is steam methane reforming, of which CO₂ is a by-product. It requires the successful deployment of CCS, which is a high risk from an engineering and commercial perspective. Does the Minister agree that a drive in research and development towards non-methane reforming sources of production needs to be a major priority?

[Lord Callanan (Con)]

I agree that we need to look at all available technologies for the production of hydrogen, whether blue or green, including electrolysis and other methods. It will be a key fuel for our decarbonisation efforts and we need to consider all available technologies.

[Baroness Verma (Con)]

My Lords, I too refer to my interests in the register. I congratulate my noble friend on the fund for innovation but can he also tell me what work is being done with the construction industry for future builds, to try to ensure that the innovation we are investing in is deployed into the new build?

[Lord Callanan (Con)]

We will shortly set out a heat and buildings strategy, which will take account of these factors. As I mentioned earlier, we are already working with the boiler manufacturers through a £25 million fund to see how much hydrogen we can currently inject into the system. Experiments are taking place in various parts of the country to see how we can deploy hydrogen into the domestic gas networks. Obviously, we need to work with the boiler manufacturers to ensure that that works.

[The Lord Speaker (Lord Fowler)]

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

Maritime Industry

Lord Callanan Excerpts

Thursday 17th September 2020 Lords Chamber

[Lord Mountevans (CB) [V]]

My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I declare my maritime interests, as listed in the register.

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

The Chancellor has made it clear that one of his priorities is to make the UK a science superpower, including leading on the development of technologies that will support the Government’s ambition to reach net-zero carbon emissions by 2050. In the autumn, the comprehensive spending review will set out details of this historic investment, giving researchers and innovators confidence and ensuring that we can meet the objectives we have set out in the R&D roadmap.

[Lord Mountevans (CB) [V]]

I thank the Minister for his reply. The maritime industry has worked tirelessly during the Covid emergency to keep vital supply lines open, but this has come at a cost and businesses’ cash reserves are now heavily depleted. The industry has submitted a bid for £1 billion of government investment under the comprehensive spending review to kick-start decarbonisation. This would create nearly 75,000 jobs in the maritime industry, across every nation of the UK and especially in our coastal communities. It would help to position Britain as a world leader in maritime decarbonisation, which will be an enormous area of business. Does the Minister recognise the potential of this investment and would he be willing to meet me and industry representatives to explore these possibilities and opportunities?

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[Lord Callanan (Con)]

I agree with the noble Lord. The Government carry out their own research into the potential economic opportunities from low and zero-carbon emission shipping, and I recognise that this represents a historic opportunity for the UK. I would certainly be happy to organise a meeting for him, either with my department or the Department for Transport, whichever is the most appropriate.

[Lord Taylor of Warwick (Non-Afl) [V]]

[Inaudible.]—maritime still has a hurdle to climb. The recent Global Maritime Issues Monitor cited the World Maritime University’s research into workforce diversity, stating:

“Without increased diversity in the next 10 years, the pace of innovation in the maritime industry will be slow”.


This also applies to achieving net-zero emissions targets. The report made it clear that workforce diversity includes race and gender diversity and is relevant to the issue of net-zero targets. Therefore, what role do the Government have in promoting such diversity in the maritime industry?

[Lord Callanan (Con)]

The Government agree with the need to increase diversity in the maritime sector if it is to meet the challenges of the future. Of course, we need to embrace talent from everywhere. In support of this, we have been working actively with the sector to promote greater diversity. One notable success has been the Women in Maritime task force, established in 2018.

[Lord McColl of Dulwich (Con) [V]]

My Lords, could the Minister tell us how far on the research into the use of butane, methane and ammonia is? Although the use of ammonia creates zero harmful emissions, my shipping friends here in Norway tell me that using ammonia as a fuel creates a very unpleasant smell. Is that problem being addressed? Incidentally, does the Minister know that the noble Lord, Lord Mountevans, is very highly thought of in the maritime world, especially here in Norway?

[Lord Callanan (Con)]

Yes, I was aware of the high regard in which many Peers in this House, including the noble Lord, Lord Mountevans, are held in all countries, including Norway, I am sure. I agree with the noble Lord that the challenge of decarbonisation in the maritime sector is a great one and we are looking at a number of alternative fuels, one of which is ammonia.

[Baroness Boycott (CB) [V]]

My Lords, as we are a nation that imports so much food and uses the maritime system so extensively, what does the Minister think about the fact that we do not yet count the emissions from shipping in our carbon budgets? Can the Government tell me what plans they have to include the sector in the decarbonisation plans to reach net zero?

[Lord Callanan (Con)]

We count the emissions from domestic shipping in our carbon budget plans, but the noble Baroness is right, of course, that we need to work internationally—through the International Maritime Organization and other fora—to reduce the emissions from shipping worldwide.

[Lord Berkeley (Lab) [V]]

My Lords, the Minister mentioned that we should wait until the comprehensive spending review to see how much research money would go into this sector, but could he confirm that funding is going into the research and development of low-carbon ferries, which are very important in this country? Will the Government also support the construction of such a ferry at the recently rescued high-tech Appledore Shipyard for the Isles of Scilly to Penzance route, which would then replace the 43 year-old “Scillonian III”?

[Lord Callanan (Con)]

I know the noble Lord takes a close interest in developments on the Isles of Scilly; I have dealt with him in my previous jobs on similar matters. However, as I am sure he is aware, I cannot give specific spending commitments at this stage.

[Baroness Scott of Needham Market (LD) [V]]

My Lords, decarbonising the maritime sector is going to require concerted effort on a global scale. Can the Minister say what position the UK is taking within the IMO with regard to incentives for the sector to decarbonise and, in particular, a proposal to introduce a small tax on bunker fuel—which is currently untaxed—which could be used to build a fund to carry out more R&D into decarbonisation?

[Lord Callanan (Con)]

I know that, as one of the leading shipping nations, we are working closely with a number of other nations in the IMO to bring about a reduction in emissions from the maritime sector. I am not aware of our precise position on the matters that the noble Baroness mentions, so I will write to her on that.

[Baroness Gardner of Parkes (Con) [V]]

My Lords, we have heard a lot about the maritime industry and I strongly support that. However, I wonder what the position is on the air industry because, at the moment, there is a tremendous build-up from the public, who are waiting to be able to fly anywhere to get away from everything. It is a most important industry and I believe that it is complying with things like zero-emissions targets. However, the Government really must be aware of this need; how do they intend to meet it?

[Lord Callanan (Con)]

The ingenuity with which noble Lords extend these subjects far and wide never ceases to impress me, but the Question is on maritime emissions. The noble Baroness makes an important point about emissions from aircraft, which I am sure is duly noted.

[Lord Grantchester (Lab)]

The Government have repeatedly been asked to plug the gap of the exclusion of international aviation and shipping from the provisions of the Climate Change Act. In July, reports hinted that—at last—it was the Government’s intention to add shipping to its net-zero target but not until 2023. To take the question of the noble Baroness, Lady Boycott, a little further, I ask the Minister to explain the delay—especially after the Committee on Climate Change called for shipping to be formally included in the UK’s climate targets under the carbon budget?

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[Lord Callanan (Con)]

As I said, we already include domestic shipping but, of course, putting shipping in our carbon budgets is very much an international matter. We work with other countries to ensure that emissions are counted in the same way for every country, but I have noted the noble Lord’s points.

[Lord Greenway (CB) [V]]

My Lords, we have a proud history of innovation, especially in the marine field, and any help that the Government can give the shipping industry in this connection is most welcome. Without shipping, world trade would be a shadow of what it is today. Is not the real nub behind the Question to find a viable replacement for the modern combustion engine? Ships are very different from trains and cars and for a large ship—weighing several hundred thousand tonnes—to steam across the oceans of the world for over 20 years, a major solution is required. What are the Government doing to find this?

[Lord Callanan (Con)]

The noble Lord makes a valid point about the difficulties of decarbonising the maritime sector, and this is one reason why we are looking at alternative methods of propulsion. However, he is right to highlight the challenges.

[Lord Browne of Ladyton (Lab) [V]]

My Lords, the Minister will be familiar with the Accelerating the Low Carbon Transition report, published by Brookings in conjunction with the Energy Transitions Commission. It is a mine of useful information and includes this fact:

“The top 20 ports, located in just 12 countries and jurisdictions, control 45% of global container freight.”


In preparation for COP 26, what steps are the Government taking to bring these countries and jurisdictions together to discuss a common regulatory approach to shipping emissions?

[Lord Callanan (Con)]

The noble Lord makes an important point. We are working with a number of other countries through the International Maritime Organization, and we accept that the maritime sector has an R&D gap, with little investment in alternative fuels to date, which is holding back decarbonisation. Therefore, there is no question that the sector presents a great challenge for the net-zero efforts.

[The Lord Speaker (Lord Fowler)]

My Lords, the time allowed for this Question has elapsed.

REACH and CE

Lord Callanan Excerpts

Thursday 17th September 2020 Lords Chamber

[Lord Haskel]

To ask Her Majesty’s Government what progress they have made towards introducing (1) a regulation system for chemicals to replace the European Union’s Registration, Evaluation, Authorisation and Restriction of Chemicals regulations, and (2) a conformity assessed quality standard to replace the CE certification mark.

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

The preparations that we have made for the possibility of a no-deal exit mean that we are well placed to be ready with our own independent regulatory regime for chemicals by 1 January 2021. On that date, the UKCA marking will also be introduced as a replacement for the EU’s CE marking. Further details on that were published earlier this month.

[Lord Haskel (Lab) [V]]

The Minister is in great demand today, but I have to tell him that his proposed framework for the UK REACH is weaker than the one that it is replacing, yet, if we want frictionless trade, we must have common standards. The existing system has kept us safe and secure for many years and has protected our environment. Surely in the current circumstances, instead of pointless and risky duplication, our resources should be put into rebuilding our economy and preserving jobs. This can be helped by simply seeking associate membership of the scheme and not duplicating it. That is what the industry wants. Will the Government do it?

[Lord Callanan (Con)]

As I am sure the noble Lord is well aware, we have made it clear that seeking associate membership of the European Chemicals Agency would require us to accept the judgment and oversight of the European Court of Justice, which is not acceptable. Therefore, we will set up our own regime.

[Lord Foulkes of Cumnock (Lab Co-op) [V]]

My Lords, this is yet another burden of Brexit. Will the Minister tell the House what the cost will be to the Government and to businesses? Given the fiasco of test and trace, will he give an absolute guarantee that the regime will be up and running by 1 January?

[Lord Callanan (Con)]

Yes, I can give the noble Lord that guarantee. We will keep the transition to UK REACH as simple as possible. We have put in place measures to minimise the cost to businesses and maintain access to both the EU and the UK market.

[Baroness Wheatcroft (Non-Afl) [V]]

My Lords, can the Minister tell the House how many different EU product regulation systems currently govern UK trade with the EU and what progress the Government have made in providing some sort of replacement for them?

[Lord Callanan (Con)]

I can tell my noble friend that there are a number of distinct EU regulatory regimes, including bespoke regimes for chemicals, automotive products, aerospace products, cosmetics and medicines, as well as the CE marking regime, which covers a range of goods. Some but not all of these include registration requirements. Cosmetics and medical devices, as well as chemicals, are examples of areas that include registration or notification requirements. I can confirm that all the necessary regulation and systems will be in place for 1 January 2021.

[Baroness Altmann (Con)]

My Lords, I understand that the UK agency replacing REACH will spend £13 million a year and employ about 40 staff, to replace an agency with more than 600 staff and a budget of more than €100 million. As the UK’s new database of chemical safety will not have access to the EU’s chemical safety database, is there a risk, about which my noble friend might be able to reassure the House, that we might not be equipped to counter the potential for unscrupulous manufacturers to dump products on the UK market that fail to meet the safety standards?

[Lord Callanan (Con)]

We are aware of the possibility, but of course we are working hard to make sure that does not happen. The registration requirements in the UK will be as strict as they were previously; we are seeking to duplicate many aspects of the previous regime. Of course, we are seeking during the negotiations a data-sharing agreement with the European Chemicals Agency which will reduce the costs and burdens of the new scheme.

[Lord Fox (LD)]

My Lords, the Government have been flexible. They have listened and proposed lengthening the registration time for chemicals under British REACH, which I think is welcomed by the industry. However, the cost of registering chemicals has not been addressed. That additional red tape will cost British industry at least £1 billion—that is its estimate. This is money being spent on re-registering chemicals today that cannot be spent on creating jobs for tomorrow. Can the Minister undertake to be similarly flexible when looking at costs and redouble efforts with his department and other departments to address this tax on British business?

[Lord Callanan (Con)]

As I said in previous answers, we are endeavouring to be as flexible as possible to keep the transition as simple as possible and to reduce the costs. As I said, we are seeking a data-sharing agreement with the European Chemicals Agency which will make the registration process relatively straight- forward.

[Baroness McIntosh of Pickering (Con)]

My Lords, the EU Environment Sub-Committee wrote to my noble friend before the summer. Can he confirm today whether he shares my concern at the risk of a lack of oversight of the decision-making process within UK REACH? Can he further confirm what significant resources will be made available to the Health and Safety Executive to give it the tools it needs to manage effectively a new regulation regime?

[Lord Callanan (Con)]

We have put in place a new UK REACH IT system, closely modelled on the European system to make the process as simple and as easily replicable as possible. The HSE has been provided with the appropriate resources to police the new system.

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

My Lords, can the Minister confirm that, when the transition period ends, health and environmental protection in Northern Ireland in respect of chemical and pesticide imports will be considerably better than in the rest of the United Kingdom because Northern Ireland will still be covered by the existing EU REACH rules and regulations under the withdrawal agreement?

[Lord Callanan (Con)]

No. We intend the system in the UK to be as safe and as effective as the EU REACH system.

[Baroness Bowles of Berkhamsted (LD) [V]]

Under the Northern Ireland protocol, the process for Northern Ireland businesses moving goods to and from the EU under EU REACH will not change. What does that mean for goods going from Britain to Northern Ireland? Will Northern Ireland businesses have to grandfather their EU registrations into UK REACH?

[Lord Callanan (Con)]

Under the terms of the Northern Ireland protocol, Northern Ireland will remain aligned with all relevant EU rules relating to the placing on the market of manufactured goods and with the EU REACH system.

[Lord German (LD)]

My Lords, the UKCA marking will not be applicable in Northern Ireland, whereas the CE marking will be, as well as the UKNI marking. Can the Minister afford the House some advice? What advice would he give to suppliers and traders working in the United Kingdom and producing in Great Britain if they might see their goods popping up in a shop in Northern Ireland? Should they register both with the CE marking and the UKCA marking to ensure that their goods can be marketed not only in Northern Ireland but across the European Union?

[Lord Callanan (Con)]

If those traders wanted to sell their goods into the European Union market, because that was the system they had, they would have to be CE marked. They would have to comply with similar standards if they wanted to sell them in the North American market.

[The Deputy Speaker (Lord McNicol of West Kilbride) (Lab)]

My Lords, all supplementary questions have been asked. We now move to the fourth Oral Question.

Square Kilometre Array Observatory (Immunities and Privileges) Order 2020

Lord Callanan Excerpts

Thursday 17th September 2020 Lords Chamber

Moved by

[Lord Callanan]

That the draft Order and Regulations laid before the House on 13 and 14 July be approved. Considered in Grand Committee on 14 September.

Motions agreed.

Alternative Dispute Resolution for Consumer Disputes (Extension of Time Limits for Legal Proceedings) (Amendment etc.) (EU Exit) Regulations 2020

Lord Callanan Excerpts

Wednesday 16th September 2020 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Alternative Dispute Resolution for Consumer Disputes (Extension of Time Limits for Legal Proceedings) (Amendment etc.) (EU Exit) Regulations 2020.

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

My Lords, these regulations were laid before the House on 29 June 2020.

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 agreements like those the EU has concluded with a range of other international partners. We will have a relationship with our European friends inspired by our shared history and values. These regulations form part of the important and necessary programme of work being done to ensure that retained EU legislation continues to work effectively and as intended in the UK immediately after the transition period.

Consumers in the UK enjoy a strong framework of statutory rights which enable them to enter into contracts with traders safe in the knowledge that they are protected by the law. These rights help to maintain a fair balance between consumers and business and, in most cases, help consumers to resolve disputes with traders directly. Where resolution cannot be achieved directly with the business, we know that consumers would prefer to have alternative methods of tackling disputes that do not involve the cost or complexities associated with court action.

Alternative dispute resolution, known as ADR, provides a strong alternative to court action by enabling parties to settle a dispute in a favourable manner with the help of an independent third party. ADR is often quicker and cheaper than legal proceedings and, depending on the type used, can produce binding decisions.

I emphasise that these draft regulations have no impact on our access to, or the quality of, ADR in the UK. They also do not alter wider substantive consumer rights and protections available to UK residents, which also remain unchanged.

The regulations are narrow in scope and primarily concerned with the extension of the time limit for bringing court proceedings. They will amend four pieces of legislation which implement EU ADR directives that will no longer apply to the UK following the end of the transition period. The four pieces of legislation currently provide a short extension to the statutory time limit for bringing court proceedings where a consumer is engaged in non-binding ADR with a trader. These extensions allow the ADR procedure to conclude and provide parties with a conditional eight- week grace period to launch legal proceedings if they are not satisfied with the outcome of the ADR procedure. This ensures that parties do not lose their ability to pursue legal action if the time limit for doing so expires during or just after the completion of the ADR procedure.

It is important to highlight that these extensions to the time limit will continue to apply following the transition period but, as a result of this SI, extensions will apply only where the consumer is resident in the UK and the ADR provider is approved under the UK’s ADR regulation. If both conditions are met, the time limits for initiating legal proceedings when engaged in ADR will continue to be extended for UK-resident consumers, irrespective of whether they are interacting with a trader based in the UK or the EU.

The regulations substantively mirror the changes made by the equality exit regulations, which this House has already approved, to Section 140AA of the Equality Act 2010, which provides for extensions of time limits in the case of claims of discrimination relating to consumer disputes. The instrument before the Committee today is designed to ensure that a consistent approach is taken across the statute book to all rules on extensions of time limits deriving from the ADR directive.

These regulations will have no detrimental impact on the majority of disputes involving UK-resident consumers. They also do not otherwise affect the ability of any consumer, whether living in the UK or the EU, to apply to the UK courts or to use ADR as a means of dispute resolution with a trader. Moreover, transitional provisions have been included to ensure that any extensions that have begun before the regulations come into force continue to apply.

My departmental officials have undertaken the appropriate assessment of the regulations’ impact on businesses and relevant bodies. This showed that any impact is likely to be negligible because these amendments do not bring about a wider policy change or impose any new liabilities or obligations on any relevant business, organisations or persons.

In conclusion, the regulations are a necessary and appropriate use of the powers in the withdrawal Act to ensure that this area of law continues to operate as intended after the transition period. I therefore commend them to the Committee.

--- Later in debate ---

[Lord Callanan (Con)]

I thank all noble Lords for their valuable contributions to this brief debate.

I reiterate that these regulations are extremely limited in their scope, to only the short-term extensions of the time limit for court proceedings for consumer disputes. They do not remove the ability for any consumer, whether resident in the UK or the EU, to use ADR in the UK or to access our courts. Disputes involving consumers resident in the UK should not be affected, and the transitional provisions avoid disruption in any case where consumers have commenced ADR proceedings before the draft regulations came into force.

These amendments are necessary as a result of the ADR directive ceasing to apply in the UK when we leave the EU and to prevent inconsistency in the statute book given the changes already made by the equality exit regulations. If these amendments are not made, EU consumers may continue to benefit from the possibility of an extension which might not be available to UK consumers within the arrangements in place in remaining member states.

The Government remain firmly committed to maintaining the high standards from which UK consumers have benefited for many years, and these regulations do not hinder these in the slightest. I reassure the noble Lord, Lord Kirkhope, that our high standards are not and never have been dependent on EU membership. The UK has often led and in most cases goes well beyond the minimum requirements set out by EU consumer law. We also have many excellent consumer advice organisations that guide consumers in pursuing complaints against traders. All of this suggests that for the majority of consumers the current framework works well.

I can also reassure the noble Lords, Lord Mann and Lord Stevenson, that nothing in these regulations has any effect on existing consumer rights, whether the return of faulty goods or refunds for travel or airline tickets. They are all dealt with under separate legislation. It remains the case that many suppliers have offered vouchers for holidays, flights, et cetera, but it is entirely up to consumers whether they choose to accept them. There are separate regulatory and statutory frameworks governing those rights. I reiterate that none of that is affected by this SI.

This legislation is limited purely to the additional time for consumers seeking redress. It allows for short-term extensions to the time limits for court proceedings where that is necessary to give the parties the opportunity to resolve their differences through non-binding ADR. It enables the existing rights to an extension to work effectively after the end of the transition period. We are proud that Britain’s consumer protection regime is among the most robust in the world; the UK has a strong history of protecting consumers in its own right. UK consumers will of course continue to enjoy excellent rights after transition.

The noble Lord, Lord Kirkhope, raised the important question of how the Government will guarantee that consumers will be protected when buying from EU-based traders post implementation period. This point was also made by the noble Lord, Lord Stevenson, with his reference to “the big A”. The noble Lord raised the important point of how consumers will obtain redress in the UK courts from traders based in the EU following the transition period.

Consumers resident in the EU will continue to be able to resolve disputes with UK businesses directly, will be able to use ADR as long as the ADR provider is available to them, and will retain access to the UK courts. EU-based companies selling their products or services in UK-regulated markets must comply with all UK regulatory requirements. In the regulated sectors, this would include compliance with sectoral rules and requirements around the offer of ADR or other forms of redress to their customers. In future we want a relationship with the EU based on friendly co-operation between sovereign equals, centred on a trading relationship based on free trade agreements like those the EU has concluded with a range of other international partners.

The noble Lord, Lord Stevenson, asked about the scope of ADR. My department has announced its intention to review various areas of the consumer enforcement landscape. We intend to bring forward a package of reform to make it easier and quicker for consumers to use ADR services. On his question about engagement with the devolved bodies, this is a consumer protection measure and is reserved, except for Northern Ireland. That has driven the focus of our engagement. As I said, we want a relationship with the EU based on friendly co-operation.

The noble Baroness, Lady Bowles, asked about statistics. Over 2.5 million disputes have been resolved through ADR in the past six years. BEIS research found that 80% of consumers who used ADR procedures thought their problem would not have been resolved without it. We consider that a success story. We will always closely examine areas of the dispute resolution landscape which are not working for consumers and lay out our proposals for reform.

The draft regulations we are considering today do not dilute consumer rights and protections by any means, and merely form part of a programme of legislation required to ensure that retained EU law is workable and free of deficiencies after the end of the transition period. With that, I commend these draft regulations to the Committee.

Motion agreed.

European Structural and Investment Funds Common Provisions and Common Provision Rules etc. (Amendment) (EU Exit) (Revocation) Regulations 2020

Lord Callanan Excerpts

Wednesday 16th September 2020 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the European Structural and Investment Funds Common Provisions and Common Provision Rules etc. (Amendment) (EU Exit) (Revocation) Regulations 2020.

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

My Lords, the EU regulations for structural funds and the cohesion fund are designed to reduce social and economic disparities in the EU and are the main funding tools designed to deliver the EU’s cohesion policy. They come under the wider family of European structural and investment funds. These EU regulations set out the rules governing these funds and give powers to the member state to ensure the operability of eligible projects.

More than half of EU funding is channelled through the European structural and investment funds. They are jointly managed by the European Commission and the EU member states. BEIS sets the policy and co-ordinates the management of four of these funds across the UK: the European Regional Development Fund, ERDF, which includes European Territorial Co-operation funding—ETC; the European Social Fund—ESF; the European Agricultural Fund for Rural Development—EAFRD; and the European Maritime and Fisheries Fund, or EMFF.

The UK has been allocated about £9.5 billion of funding under structural funds for the 2014-20 period. The funds currently support growth, low carbon, transport, research, innovation, small businesses, employment opportunities and social inclusion. Structural fund programmes are managed and delivered by government organisations designated as managing authorities—MAs—which in essence are delivery bodies for the funds in England and the devolved Administrations and are responsible for drawing up operational programmes. These programmes set out the levels of funding available for certain activities and how the programmes will be run within the parameters set by the EU regulations.

The Department for Business, Energy and Industrial Strategy—BEIS—is the co-ordinating body for ESIFs in the UK. In England, the managing authorities for the European Regional Development Fund and the European Social Fund are, respectively, the Ministry of Housing, Communities and Local Government and the Department for Work and Pensions. The devolved Administrations and Her Majesty’s Government of Gibraltar administer ERDF and ESF in their respective areas. The Department for Environment Food and Rural Affairs manages the agricultural funds—EAFRD—in England, and the devolved Administrations in their areas, apart from EMFF which is run across the UK by the Marine Management Organisation, an executive non-departmental public body sponsored by Defra. Gibraltar receives a small allocation of about €10 million —£8.8 million—from the European Regional Development Fund and the European Social Fund for 2014-20 and has agreed operational programmes with the European Commission to implement them. It also takes part in two transnational programmes.

The need for continued regional investment in the event of a no-deal exit and the nature of the projects supported by these funds led to the introduction of legislation so that these funds could operate domestically under a no deal until their planned closure, even though they would cease to be funded by the EU in such circumstances. As the UK subsequently signed the withdrawal agreement, which maintains the EU regulations for European Structural and Investment Funds until programme closure, which could be until 2026, given that programmes run until 2023 and then generally take two to three years to wind up, SI 625 contradicts the intent and purpose of the withdrawal agreement.

This instrument is being laid in order to revoke the aforementioned SI 625/2019, which was made on 18 March 2019. That SI disapplied retained EU law in relation to the European Regional Development Fund, the European Social Fund and the European Territorial Cooperation Fund to ensure that the programmes could continue in a no-deal scenario. Under the withdrawal agreement, these regulations can still apply in the UK, despite the UK not being a member state. Now that the withdrawal agreement has been signed by the UK and made into law through the European Union (Withdrawal Agreement) Act 2020, the original statutory instrument, 625/2019, is therefore no longer required and should be repealed in order not to confuse the statute book.

The EU withdrawal agreement Act 2020 allows the UK to continue to apply EU Regulation 1303/2013, supplementary funds, specific regulations and associated delegated and implementing legislation for the European structural and investment funds through until the end of the current programme. It is proposed that the UK shared prosperity fund will be set up as the domestic successor to the European structural and investment funds for new programmes.

In conclusion, it is therefore necessary to revoke the original no-deal statutory instrument 625/2019 to remove conflict with the provisions of the EU withdrawal Act. The UK will continue to participate in European structural and investment funds programmes until their closure, and delivery continues through the managing authorities and devolved Administrations. Therefore, in order to remove any confusion from the statute book as the no-deal guarantee for funding is now not required, I commend this regulation to the Committee.

--- Later in debate ---

[Lord Callanan (Con)]

I thank noble Lords again for their valuable contributions to this short debate. Now that the UK has left the European Union, one of the opportunities that we have is to design and implement our own regional funding programmes. Through the UK shared prosperity fund, the Government can cut out bureaucracy and create a fund that invests in UK priorities and is easier for local authorities and areas to access.

I know that there have been queries on our future participation in EU programmes but, to reiterate, the UK will not participate in any future ESIF programmes, apart from the PEACE PLUS programme mentioned by the noble Baroness, Lady Ritchie. The UK Government have committed to contributing to PEACE PLUS until 2027, as part of their unwavering commitment to uphold the hard-won peace in Northern Ireland following Brexit. PEACE PLUS will succeed the current PEACE scheme, which has helped promote economic and social progress in Northern Ireland and the border region of Ireland since 1995. The current programme, run with funding from the UK, Ireland and the EU, will end in 2020. The Special EU Programmes Body will continue to act as managing authority for these PEACE PLUS programmes. Discussions around shaping the proposal and the wider regulations are ongoing and the UK is participating in these.

The noble Lord, Lord Foulkes of Cumnock, in his usual combative tone, asked about timings for the allocations. I assure him, the noble Baronesses, Lady Bowles of Berkhamsted and Lady Altmann, and other noble Lords that the 2019 Conservative manifesto—of which the noble Lord, Lord Foulkes, is a strong supporter —committed to at least matching the funding for EU structural funds to each nation in the United Kingdom. In response to their questions, I say again to the noble Lord, Lord Foulkes, and the noble Baronesses, Lady Bowles, Lady Kramer and Lady Ritchie, that final decisions on the allocation of the UK shared prosperity fund will be taken following the cross-government spending review, which is in progress. When that is completed, we will have further announcements to make. The Government have been working closely with interested parties across the UK, while developing the fund.

In response to my noble friend Lord Naseby, who asked whether it is the Government’s intention to apply for new projects for the remaining three and a half months, I say yes. The Government will be signing new projects during 2020 to make the most of the available European funding, which is recycled British funding in real terms. On the question from the noble Lord about Wales, I assure him that the SI indeed applies to Wales. On his question about ERDF and ESF, £9.5 billion is the agreed amount of EU funding for ERDF and ESF for the 2014-20 multiannual financial framework.

The noble Baroness, Lady Ritchie of Downpatrick, asked how it will be resourced. The intention is for the fund to be resourced centrally and then allocated to the devolved Administrations. The noble Baroness and other noble Lords also asked about co-operation with other devolved Administrations. It will operate across the UK, and UK government officials regularly speak to their counterparts in the devolved Administrations to discuss any updates to their concerns or queries about the proposed fund. Similarly, Ministers also meet their counterparts in the devolved Administrations. I assure all noble Lords that these matters are raised regularly, and that Ministers from the devolved Administrations regularly air their concerns.

The noble Baroness, Lady Altmann, asked whether the sums agreed under the withdrawal agreement could be withheld. The answer is no. Article 138 of the withdrawal agreement states that the UK will continue to have access to European structural funds until the end of the current multiannual financial framework funding cycle. Funding to the UK SPF will be realigned to match domestic priorities, with a focus on investing in people.

There were also multiple queries about how the new fund would be operated and whether it would target by need. As I said, it will be driven by domestic priorities with a focus on investing in people. It will, at a minimum, match current levels of funding to each nation from the structural funds. We strongly believe that leaving the European Union provides us with a fresh opportunity to create a fund that invests in our priorities and targets funding where we decide it is most needed, while maintaining support for businesses and communities.

My noble friend Lady McIntosh of Pickering asked about rural areas. The European agricultural fund for rural development is outside the scope of this SI. The original SI, which it revokes, repealed regulations for the European regional development fund, the European Social Fund and the European territorial co-operation fund only.

The noble Baroness, Lady Kramer, asked about the impacts of Covid-19. We will continue working closely as one United Kingdom to understand the changing needs of local and regional economies. In our response to the impact of Covid-19, including the role the UK SPF will play, we have a great opportunity to design a fund driven by domestic priorities. As I said earlier, the decisions on the quantum of the fund will be made through the spending review.

I know that all queries have been about the shared prosperity fund. I have tried to aid noble Lords by responding to them, but they have nothing to do with the statutory instrument, which revokes the original no-deal instrument to ensure that our legislation is compatible with the arrangements set out under Article 138 of the withdrawal agreement. If the original no-deal SI were not repealed, it would confuse the statute book and cause potential conflict with these provisions. The Government fully recognise the role that structural funds play in supporting vital jobs and growth opportunities across the UK. I commend this SI to the Committee.

Motion agreed.

Renewable Energy

Lord Callanan Excerpts

Tuesday 15th September 2020 Lords Chamber

[Lord Ravensdale]

To ask Her Majesty’s Government what assessment they have made of the updated recommendations from the National Infrastructure Commission that the United Kingdom should aim to meet two-thirds of its electricity needs using renewable energy sources by 2030.

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

My Lords, we welcome the recent NIC report and will consider its recommendations. The Government are committed to reaching net zero through a sustainable, diverse and resilient energy system. This will require significantly increased renewables deployment. Renewables are on track to deliver the majority of electricity by 2030, having reached nearly 50% in the first quarter of this year. The energy White Paper will set out plans to further accelerate renewables deployment.

[Lord Ravensdale (CB)]

I declare my interests, as set out in the register. I thank the Minister for that response. Given the NIC’s findings that increased earlier investment in renewables can be delivered at the same overall cost, meeting half only of total demand by 2030, and will not increase costs for consumers, can the Minister give assurances that the Government will prioritise investment in the UK’s world-leading renewables sector in the forthcoming spending review?

[Lord Callanan (Con)]

The noble Lord will understand that the spending review is of course a matter for the Treasury and that I cannot comment ahead of its decisions. However, we are prioritising investment in the renewables sector. We are accelerating new capacity through the contracts for difference scheme, which gives us certainty to drive private sector investment and has been very successful in driving down costs.

[Lord Berkeley (Lab) [V]]

I am grateful to the Minister for that Answer. Do the Government have any plans to go above the 65% renewables target in this NIC report? Secondly—[Inaudible]—the Government not to build any more nuclear power stations. Based on Hinkley Point’s mushrooming costs, which are even higher than HS2’s, they would do better to carry on with more renewables, as the report shows that their costs are coming down significantly.

[Lord Callanan (Con)]

I think I caught most of that question. The noble Lord is correct that renewables such as wind and solar are now some of the cheapest forms of generation per unit. These technologies are key to meeting net zero but will need to be complemented by other sources of power, including nuclear, which are available when the wind does not blow and the sun does not shine.

[Lord Holmes of Richmond (Non-Afl)]

My Lords, what are the Government doing to support and scale UK advanced nuclear technologies, including AMRs, and will they consider classifying certain nuclear as renewable?

[Lord Callanan (Con)]

My noble friend makes a very good point. The Government recognise nuclear’s potential to support the transition to net zero, as a proven continuous low-carbon energy source. AMRs in particular could support the deep decarbonisation of industry in future.

[Lord Howell of Guildford (Con) [V]]

My Lords, I declare my interests, as in the register. Presumably, the Government accept the NIC’s view that

“renewables alone cannot create a resilient energy system for future decades”.

Following the excellent point made by the noble Lord, Lord Holmes, how many additional nuclear power plants, large or small, are now planned to keep us on the pathway to zero net emissions, prevent power cuts and, I hope, reduce crushing energy bills? Can we have some precision in the plans for this area?

--- Later in debate ---

[Lord Callanan (Con)]

My noble friend speaks with great authority on this point, but it is important to say that renewables will be key to meeting our net-zero targets. However, as I said earlier, they will need to be complemented by sources of power such as nuclear and gas, with carbon capture and storage, and additional flexibility such as batteries and interconnection. We should be prepared to support further new nuclear projects in the years ahead.

[Lord Oates (LD)]

Does the Minister agree with the National Infrastructure Commission that hydrogen has a key role to play in meeting our net-zero targets, not least as a storage medium for intermittent renewables? Will the Government therefore ensure that we invest in the hydrogen economy on a similar scale to competitors such as Germany, so that we maintain our leading edge in green hydrogen technologies and do not, once again, miss the bus?

[Lord Callanan (Con)]

The noble Lord makes a very good point. I hope we will see more hydrogen-powered buses in the front so that we do not miss them. We have an excellent hydrogen strategy. We are investing considerable sums in developing hydrogen. We will have further announcements to make on the subject.

[Viscount Trenchard (Con) [V]]

Does the Minister not regret that the recommendations fail to take account of the importance of nuclear power as a reliable, firm, low-carbon baseload element in our energy mix? Should the Government not immediately inform the Japanese Government and Hitachi that they consider it of the utmost importance to revive the Horizon nuclear power station project at Wylfa, Ynys Môn? Will my noble friend also confirm that the Government still intend to contribute to its funding through the construction phase, which would greatly lower the cost of electricity generated? Given the likelihood that Hitachi will cancel the project tomorrow, should the Government not acquire the Horizon site to preserve options for its future?

[Lord Callanan (Con)]

As I said in previous answers, I agree with my noble friend that new nuclear can play a role as we seek to transition to net zero. It is the only technology that is currently proven, and can be deployed on a sufficiently large scale, to provide continuous low-carbon power. We will be prepared to support further new nuclear projects in the years ahead if they can show that they provide value for money. We continue to engage with all developers.

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

My Lords, I suggest that the Government might like to encourage small-scale hydrotherapy—sorry, hydroelectric. I have seen a small village in Colombia supported by a mere drop of eight metres, giving 3 kilowatts. There are many hills above our coastline. Should we not be encouraging more people to use water as a source of electricity?

[Lord Callanan (Con)]

The noble Lord might want to re-ask his question on hydrotherapy to my noble friend Lord Bethell, who is answering the next Question. We acknowledge the valuable contribution of hydropower to the UK energy mix over many decades. Most hydropower capacity was of course installed in Scotland last century, with smaller amounts in Wales and England. Most of these installations are still operating and still successful. They account for almost 2% of total electricity generation.

[Lord Grantchester (Lab)]

This important report challenges the Government to raise their ambitions to meet the climate emergency and stimulate a green recovery. As the Minister said, renewables accounted for a record 47% of generation in the first quarter of 2020. What impediments does he foresee to meeting the recommendation that 65% of UK electricity should be delivered using renewable energy sources by 2030? How can they be overcome?

[Lord Callanan (Con)]

As the noble Lord said, we have a tremendous record in deployment of renewables. Renewable capacity in the UK has gone from less than 9 gigawatts at the start of 2010 to almost 47 gigawatts at the start of 2020. We certainly hope to increase that rapid deployment.

[Lord Bradshaw (LD) [V]]

Could the Minister talk about the future of interconnectors and whether more are planned to give the security of supply to which he referred?

[Lord Callanan (Con)]

As the noble Lord correctly said, a number of very successful interconnector projects already exist and will exist in the future. We think they will make a valuable contribution to our energy mix and to providing security of supply.

[Lord Harries of Pentregarth (CB) [V]]

At the moment, solar power provides only 2.2% of our energy needs. What are the Government doing to increase this percentage? In particular, why are they not doing more to encourage householders to install solar panels on their roofs?

[Lord Callanan (Con)]

The noble and right reverend Lord is right that solar will play a critical role in the mix. A number of projects have already been approved and are ongoing. I am sure we will receive further bids for solar power projects in the contracts for difference auction next year.

[Baroness McIntosh of Pickering (Con) [V]]

My Lords, I will press my noble friend to say whether the figure he very kindly gave the House includes energy from waste, whether he will look to increase the contribution that it makes to renewable forms of energy, and in particular whether its benefits will be shared with local communities.

[Lord Callanan (Con)]

The figures I gave were on total renewable capacity, but my noble friend makes a good point. A number of waste-to-energy schemes have been highly successful. We of course have to recognise that various communities have some concerns. We will always seek to work with local communities to make sure that any further projects are acceptable to them.

[The Lord Speaker (Lord Fowler)]

My Lords, all supplementary questions have been asked. We now move to the second Oral Question.

Square Kilometre Array Observatory (Immunities and Privileges) Order 2020

Lord Callanan Excerpts

Monday 14th September 2020 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Square Kilometre Array Observatory (Immunities and Privileges) Order 2020.

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

My Lords, the draft order was laid before the House on 14 July 2020 under the affirmative procedure. It confers immunities, privileges, reliefs and exemptions on this new intergovernmental organisation, the Square Kilometre Array Observatory, or SKAO, under the International Organisations Act 1968. If Parliament agrees, it would complete the UK’s ratification of the convention which was signed in March 2019 and laid in Parliament in July of that year under the Constitutional Reform and Governance Act 2010.

Before I go into the detail of the order, I want to set the subject in context by saying a few words about the Square Kilometre Array project that the SKAO is being established to deliver and operate. The Square Kilometre Array, or SKA, is an international mega-science project to build the world’s largest and most sensitive radio telescope. It is a truly global effort involving 11 member countries and participation of around 100 organisations across a total of 20 countries. The SKA is one of the most ambitious international science projects of the 21st century.

Co-located in South Africa and Western Australia, the SKA will use hundreds of dishes and thousands of antennas connected by optical fibre to monitor the sky in unprecedented detail. Many times faster and significantly more sensitive than any current radio telescope, and of a scale never seen before, it will enable scientists to test some of the key questions in physics and about the nature of the universe. For example, was Einstein right about gravity? What is dark energy and why is it so important in our universe? And where did magnetism come from?

The SKA will deliver significant technological advances in data processing and opportunities for business innovation. It will help to inspire the next generation of scientists and engineers.

The SKAO will be the intergovernmental organisation building and managing the SKA. Based in the UK at the Jodrell Bank Observatory, it will manage the construction, operation and data processing of the telescopes. The SKA is a flagship project for the UK Government and underlines our commitment to worldwide partnerships as part of our modern industrial strategy ambition to make sure that the UK remains a global leader in science, research and innovation.

The UK Government have already committed £100 million to the construction of the SKA—we are one of the largest contributors—and a further £85 million for running costs over a 10-year period to 2026-27. This investment gives the UK a leading role in the project during the construction and operation phases. The investment and the UK’s hosting of this new intergovernmental organisation at its Jodrell Bank HQ are a demonstration of our world-leading position and influence in radio astronomy and wider scientific collaboration and exploration.

Let me now turn to the details of the order. As I have mentioned, the convention was formally laid in Parliament under the Constitutional Reform and Governance Act 2010 in July last year and was completed in October. The order is part of the UK’s ratification and provides the privileges and immunities to enable the SKAO to function as an intergovernmental organisation in the United Kingdom. It is standard practice for intergovernmental organisations and their staff to be accorded privileges and immunities by the member states.

I reassure noble Lords that the privileges and immunities afforded to officers of the SKAO in the UK are limited to those required for them to conduct their official activities and are not for their personal benefit. They are in line with those offered to officers of other intergovernmental organisations of which the UK is a member. These include limited immunity from jurisdiction and inviolability for its officers and employees, including immunity from legal process in respect of their official acts, and tax exemption. They do not include immunity from UK road traffic law. The SKAO convention also requires that the SKAO has legal capacity so that it can enter into contracts and take such other action as may be necessary or useful for its purposes and activities.

The order applies to the whole of the UK. However, some provisions of the instrument do not extend to, or apply in, Scotland. A separate Scottish Order in Council has been prepared to deal with these provisions within the legislative competence of the Scottish Parliament. This was laid before the Scottish Parliament on 10 August.

The order confers on the new SKAO and its staff only those privileges and immunities necessary for the organisation to function effectively and conduct its official activities. The order will enable the UK to complete its ratification of the SKAO convention and make the global SKA project a reality. Completing ratification of the SKAO convention will bring us closer to answering some of the most important questions in advancing our understanding of the universe.

The SKA will provide huge opportunities for technological advances and innovation, notably in the field of big data processing and in areas where UK industry and the research establishment are well poised to benefit. I beg to move.

--- Later in debate ---

[Lord Callanan (Con)]

First, I thank all noble Lords who have taken part in this brief debate. I was particularly grateful for the support of the noble Lord, Lord Rees of Ludlow, who is a renowned expert, as the noble Lord, Lord Fox, said, in this subject. I understand that this is the noble Lord’s 25th anniversary as the Astronomer Royal, and I am sure that the whole Committee will want to offer him our warmest congratulations.

This order and the separate Scottish order are the final legislative steps necessary for the UK to ratify the SKAO convention. Once approved by both Parliaments and the Privy Council, we can ratify the convention. This order confers privileges and immunities on the Square Kilometre Array Observatory only as far as is necessary for it to function as an intergovernmental organisation in the United Kingdom. As required by the SKAO convention, the order also confers legal capacity on the organisation so that it can enter into contracts and take such other action as may be necessary or useful for its purpose and activities. The privileges and immunities of the SKAO will be equivalent to those of other intergovernmental organisations, such as the CERN particle physics laboratory near Geneva and the European Southern Observatory. Indeed, the legal status and structure of CERN was used as a model for SKAO.

Turning now to the specific points raised in the debate, as I said earlier, I am very grateful to the noble Lord, Lord Rees, in particular, for his support and for giving us his insight into the SKA project, outlining the many scientific opportunities it will lead to. In particular the noble Lord mentioned the European Southern Observatory, which is an important international facility of which the UK has been the leading member since 2002 and which has substantially supported our astronomical leadership. I am also grateful to the noble Lord, Lord Fox, for his support for the SKA project. I reassure him that BEIS, despite the expertise of its excellent officials, is not being let loose on the subject of dark energy. We are very content to leave that to the astronomers and the experts of the SKA.

The noble Lord asked about ratification. We expect Australia to ratify this year. I can confirm that the expenditure we have committed is for phase 1 of the project. I agree that the SKA should be spoken of with high regard as a great opportunity for the UK and that we should take it as an opportunity to promote our scientific leadership. This order enables non-UK national members of staff, including scientists, to work in the UK, and we expect there to be more than 50 non-UK national members of staff initially, rising to more than 100 later.

The noble Lord, Lord Stevenson, asked about the second phase of the project. The project is scalable and we will build on phase 1. Clearly the funding agreement for that is some way off, but successful completion of phase 1 will form a solid basis for it. This is a very narrow piece of legislation focused on the privileges and immunities of the SKAO and is not related to our commitment to the European Space Agency.

I shall give noble Lords a bit more detail on the finances. In March 2014, the UK Government committed to investing £100 million in the construction of the SKA, which was around 16% of the total construction cost. This was agreed as part of the process of bringing the headquarters to the United Kingdom. A new £16.5 million building has been constructed at Jodrell Bank to house the SKA HQ, with funding from BEIS of £9.8 million, the Science and Technological Facilities Council, the University of Manchester, which committed £5.7 million, and Cheshire East Council, which contributed £1 million. As shown by the widespread support for this project, it is enormously exciting for the UK, and our astronomy community will be a key partner in this global project.

We remain committed to strengthening our position as a world leader in astronomy and space exploration. The order takes us one step closer to bringing the SKAO into operation. As one of the host countries, this Government remain committed to bringing it into being as soon as possible. It will become fully operational when the convention enters into force. As one of the host countries, it is important that the United Kingdom ratifies at the earliest opportunity so that the start of construction of the telescope in 2021 is not delayed. The convention will come into force 30 days after all three host countries—the United Kingdom, South Africa and Australia—plus two further members have ratified it. We expect this to occur by November 2020. This will retain international member confidence in the project and encourage other countries to join. UK scientists and engineers have been involved in the SKA from the project’s inception in the early 1990s.

By hosting this intergovernmental organisation in the UK, we will continue to play a leading role in bringing this project to fruition and guiding it through the construction and operation phases. The UK’s participation reinforces our position in international astronomy and maintains and strengthens relationships with researchers across the globe. I commend this order to the Committee.

Motion agreed.

Intellectual Property (Amendment etc.) (EU Exit) Regulations 2020

Lord Callanan Excerpts

Monday 14th September 2020 Grand Committee

Moved by

[Lord Callanan]

That the Grand Committee do consider the Intellectual Property (Amendment etc.) (EU Exit) Regulations 2020.

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

My Lords, this instrument, which was laid before the House on 13 July 2020, seeks to ensure that the UK’s intellectual property system functions effectively at the end of the transition period. Intellectual property plays a vital role in the UK economy. IP supports creativity, ingenuity and innovation and provides incentives for research and development. It is no surprise that the UK is a global leader in innovation.

Earlier this month, the World Intellectual Property Organization placed us as the fourth most innovative country in the world. UK research and development is at the forefront of the efforts to combat coronavirus, as seen by the progress made by the Oxford Vaccine Group and AstraZeneca, but that does not mean we should rest on our laurels. The instrument before us today ensures that we have a firm footing to look forward and take advantage of the opportunities available to us as a sovereign, independent nation to bolster our strength as a science superpower.

Last year, as noble Lords may recall, a number of statutory instruments on intellectual property were brought before the House. I shall refer to these instruments as the “original legislation”. These instruments ensured that retained EU law on IP operated correctly and that IP protection in the UK would be safeguarded if the UK left the EU without an agreement. However, as we know, that situation did not occur. The UK left the EU on 31 January, and the transition period provided by the withdrawal agreement means that EU law continues to apply in the UK until 31 December this year. Hence EU-wide IP rights have continued to apply automatically in the UK during this period.

The agreement obliges the UK to ensure the preservation of intellectual property rights which have effect in this country by virtue of our membership of the EU. Of course, this is a task which the original legislation had already taken up. We were always going to ensure that valuable IP rights were not lost, but we must now ensure that we do so in the context of the withdrawal agreement and the transition period.

The instrument before the Committee today therefore has three objectives. First, it will update the original legislation so that it reflects the application of EU law until the end of the transition period, fixing some small errors identified during the process of updating it. Secondly, it will ensure that any new EU law which has come into force since that original legislation works as retained domestic law. Thirdly, it will implement any obligations on the UK in the withdrawal agreement, where these differ from our approach in the original legislation.

The instrument is designed to amend the original legislation before it would come into force at the end of the transition period, which I acknowledge may make the drafting somewhat complex. Nevertheless, the aim remains the same: to ensure that the intellectual property system continues to function and that the valuable rights it provides remain in place. I shall focus on two of the more detailed areas in the instrument: the granting of equivalent UK rights in respect of EU trademarks and designs and new EU law on supplementary protection certificates.

In relation to trademarks and designs, the original legislation ensured that an equivalent UK right would be created for any EU trademark or design in force on exit day. This instrument moves the creation date of the new rights to the end of the transition period because, as I mentioned earlier, EU IP rights continue to apply in the UK until that date. This means that as many as 200,000 additional rights granted between exit day and the end of the transition period will be safely protected in the UK.

In addition, where legal action is being taken to challenge an EU right and a decision is still pending at the end of the transition period, the withdrawal agreement requires us to apply the outcome to the equivalent UK right once the decision has been made. The instrument sets out the process for dealing with the outcome of any such decision. It means that third parties will not be put to the expense of having to launch a separate action to challenge the equivalent UK right.

Turning to supplementary protection certificates, or SPCs, these provide an additional period of protection for patented medicines and pesticides, which must be approved for use before they can be placed on the market. These are highly valuable rights for the life sciences sector, which has consistently been the largest investor in research and development in the UK, investing more than £4.5 billion in 2018. The SPC system works as a balance between supporting innovation in new drugs and ensuring that those drugs become available cheaply, through generic competition, in good time. This enables the NHS to benefit from both.

The SPC system derives from EU law. The original legislation ensured that the system would function in the same way before and after exit day, preserving the pre-existing balance and avoiding changes which might affect when drugs enter the UK market. Last year, some adjustments were made to EU SPC law. Regulation (EU) 2019/933 created what is known as the “manufacturing waiver”. This allows third parties to make SPC-protected medicines in certain specific circumstances while the SPC is in force, without requiring the permission of the SPC holder. This instrument therefore accounts for this new law and ensures that it functions properly in a UK context. It keeps the circumstances in which the waiver can be used the same. This was the clear view of the stakeholders we consulted in a public call for views last year. Again, this preserves the current careful balance of interests in the existing SPC system.

There are also a small number of provisions in this instrument relating to copyright, database rights and the principle of exhaustion of rights. Changes in these areas are technical updates to the original legislation to reflect the existence of the transition period.

In conclusion, these regulations finalise the work carried out last year, providing certainty for holders of IP rights and users of the IP system at the end of the transition period. I commend these regulations to the Committee, and I beg to move.

--- Later in debate ---

[Lord Callanan (Con)]

I thank all noble Lords for their valuable contributions to this debate on this important subject. This instrument is vital to ensuring that the IP system is effective and operable from 1 January 2021. Failing to address these issues would put valuable rights at risk and force businesses to go to the expense of litigation to clarify what can and cannot be done.

Innovation and creativity have never been more important or more valuable. This Government have pledged to increase UK investment in R&D, with the goal being to reach 2.4% of GDP by 2027. The fact that we have the world’s most intensive science and technology clusters in Oxford and Cambridge—as determined by the World Intellectual Property Organization—shows the strength of UK science and innovation. Our R&D road map puts science and technology at the forefront of our economic and social recovery. Intellectual property is a crucial part of that effort, so that great research and ideas can be turned into great businesses.

The UK IP system is consistently rated as one of the best in the world, and the UK IPO is widely regarded for its expertise and international influence. To continue to be world-leading, we must be at the forefront of understanding how advances in technology affect the IP framework. Last week at London Tech Week, the IP Minister, Amanda Solloway MP, launched a call for views on the implications of artificial intelligence for the IP system, exploring how the framework may need to evolve with IP being created or infringed by AI.

We must keep leading on international discussions on these issues and more so that the global IP system works effectively for British businesses and those businesses have confidence that they can enforce their rights when they need to do so. International harmonisation is key to ensuring an approach to IP that benefits all nations, and we must continue to deliver high- quality rights granting services here in the UK so that the same confidence and effectiveness apply to our home market.

The noble Lords, Lord Berkeley of Knighton, Lord Clement-Jones and Lord Stevenson, all asked about IP lawyer representation rights. I do not think there is any disagreement between the Government and users about what the law means, but there is an ongoing matter concerning representation rights in the EU for UK IP attorneys and reciprocal rights here. The Government have taken on board the concerns raised by UK attorneys about their loss of rights of representation at the EUIPO and the unfairness they say will result in the UK. The IPO recently finished an online call for views on this issue and unsurprisingly received more than 1,000 responses. We are considering whether to reciprocate by requiring a UK-only correspondence address before the IPO, which would address the concerns noble Lords have raised. The withdrawal agreement does not affect this, other than in relation to the EU rights given equivalence in the UK under that withdrawal agreement.

Turning to the noble Lord’s remarks on copyright, which the noble Lord, Lord Clement-Jones, also asked about, the UK and all EU member states are party to the international treaties on copyright. They give rights holders cross-border protections for all their creative works. This will not change at the end of the transition period. On the future of EU copyright legislation, also raised by the noble Lord, Lord Stevenson, the UK has now left the European Union. The transition period will end on 31 December 2020, as I have said. This means the UK is not required to implement the copyright directive, and the Government have no plans to do so. Any change to UK copyright legislation would come only after detailed consideration and assessment, including consultations with all of the relevant stakeholders.

On the Japanese-UK FTA, the noble Lord also asked about new protections for the UK creative industries. British businesses can now be confident that their brands and innovations will be protected. We have gone beyond the EU on provisions that tackle online infringement of IP rights such as film and music piracy. I cannot comment in more detail until the text is formally laid before the House, but I am grateful for the detailed comments made by my noble friend Lord Naseby on the Explanatory Memorandum.

My noble friend asked about international registrations. This does indeed refer to protections that are applied for through the World Intellectual Property Organization. He asked about decisions taken by EU bodies. Those relate only to decisions that are pending at the end of the transition period, although of course it can take several years for such cases to finally conclude. On the cancellation actions, in most cases the relevance of a decision under UK law will be clear. An example is an EU right that is invalidated because of an earlier national right in an EU member state. Guidance will be produced on what types of grounds may not apply.

I was asked about the duration of supplementary protection certificates. The key to the SPC system is the balance between encouraging innovation in new medicines and ensuring that drugs become available to patients cheaply through generic competition in good time. In that way, the NHS benefits from how long the SPC lasts, which forms part of that balance. How the landscape for medicines develops in the future will determine whether any further changes are needed.

My noble friend asked whether we are ready to go. The IPO is working hard and we are confident that it will be ready to administer the incoming IP rights effectively and correctly. There will be extensive further guidance for users on the updated official forms and other processes over the coming weeks and months. This will include written information, webinars and other materials. As I say, we will publish clear guidance. My noble friend will receive a copy and we will explain how the law is going to change in December and what preparations businesses may need to make. We will update the guidance to reflect the content of this instrument once it has been approved by Parliament. There will be many other outreach activities and we will make sure that any changes to IPO practices are notified in advance.

The noble Lord, Lord Clement-Jones, asked about discussions with the WIPO and protections for international registrations. The Government have worked with the WIPO to see whether we could retain international rights within its system. Through this work we have established that the safest approach for rights holders was to provide them with UK rights, and this is what we have done. He also asked about the Unified Patent Court. In view of the UK’s withdrawal from the European Union, the UK no longer wishes to be a party to the Unified Patent Court system. Participating in a court that applies EU law and is bound by the CJEU would, in our view, be inconsistent with the Government’s aim of becoming an independent, self-governing nation.

The noble Lord also raised the exhaustion of IP rights. This is a complex and indeed contentious area. Under the arrangements we have made, there will be no change to the existing exhaustion of intellectual property rules affecting the import of goods into the UK from EEA countries. However, there may be new restrictions on the parallel export of goods from the UK to the EEA. Businesses undertaking such activities may need to check with the appropriate rights holders to see whether permission is needed. The Government are considering options for a future exhaustion regime and we will consult again with the relevant stakeholders before any decision is made.

The noble Lord, Lord Stevenson of Balmacara, asked about the negotiations on the free trade agreement with the EU. We are seeking an IP chapter that will secure mutual assurances to provide high standards of protection for IP rights which both the UK and the EU already have. I do not recognise his characterisation of the role of the IPO. It is renowned for and will continue to provide high-quality rights, granting services to support businesses in understanding IP and to take an active role in shaping the global IP environment. It remains a world-leading and highly influential IPO that plays its part fully in the UK’s high ranking in the Global Innovation Index.

In conclusion, this instrument will ensure the smooth functioning of the IP system as we exit the transition period. It will provide certainty and security for businesses which can be confident that their valuable rights will continue to be protected here in the UK. I commend the order to the Committee.

Motion agreed.

Committee adjourned at 7 pm.