Frequent Flyer Airmiles Schemes

Lord Duncan of Springbank Excerpts

Monday 21st October 2019 Lords Chamber

[Baroness Jones of Moulsecoomb]

To ask Her Majesty’s Government what plans they have to (1) ban or (2) restrict frequent flyer “airmiles” schemes.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, the fight against climate change is the greatest and most pressing challenge facing the modern world. The UK has done more than any other major economy to tackle emissions. UK airlines operate as commercial undertakings in the private sector; the Government do not intervene in commercial matters such as customer loyalty schemes.

[Baroness Jones of Moulsecoomb (GP)]

I thank the Minister for his Answer. However, given that, as he says, climate change is the greatest and most challenging issue, surely it would be sensible to encourage airlines so that, instead of rewarding the 15% of the population who take 70% of the flights, it would be better for all the rest of us if they did not run these schemes—and if they did, we should have a frequent flyer tax instead.

[Lord Duncan of Springbank]

I would much rather that we were able to address 100% of the individuals who take flights. That is why we are participating very strongly in the International Civil Aviation Organization—ICAO—to try to make sure that it addresses this matter at an international level. There are means which can be taken; the next meeting will take place in 2022, and the Government stand ready to play their part.

[Lord Teverson (LD)]

My Lords, the Minister will understand that that is an international offsetting mechanism, which will not work. As individual car drivers we pay 58p per litre in fuel duty, and on top of that we pay VAT. The airlines pay absolutely zero tax on aviation fuel. Surely that is wrong. Would it not be an excellent way to address this, when we chair COP 26 in Glasgow next year, to have as one of our objectives that all airlines internationally should pay their fair tax and their fair contribution to remedying environmental damage?

[Lord Duncan of Springbank]

To be very clear, the UK has an air passenger duty which raises £3.6 billion a year. It is the highest such tax in Europe—many countries in Europe do not have such a tax—and that money goes a long way to address climate change issues, which are of importance to the Government.

[Lord Hamilton of Epsom (Con)]

My Lords, surely a customer loyalty scheme is what it says on the tin: it is trying to persuade people to fly with one airline rather than another. There is no evidence that if you discriminate against these schemes, people will fly less; they will just choose between one airline and another.

[Lord Duncan of Springbank]

It is not the policy of the Government to intervene in these commercial decisions. It is also important to recognise that this is a regressive step in many respects.

[Lord Brooke of Alverthorpe (Lab)]

Is it not the Government’s responsibility to ensure that anybody going on a flight should know what damage is being done to the environment as a consequence of that flight? Is it not time that each individual should have on their ticket or in the email sent to them the amount of carbon that they will be using on that flight? Is it not right that we should have an international scheme whereby the more that people fly, which is recorded on their carbon footprint, the greater the contribution they should make towards the cost of the flight and towards putting the environment right by a tax that increases with more flying?

[Lord Duncan of Springbank]

To be very clear, our air passenger duty is a tax commonly passed on to passengers: the more you fly, the more you pay. Additionally, this should be addressed at international level, as the noble Lord said. I am not averse to the notion of people being more fully aware of what they are participating in, and I will examine that more carefully.

[The Lord Bishop of Salisbury]

Can the Minister explain why the gap between aviation fuel being untaxed and road fuel being taxed as it is, is so great? If the answer is the difficulty of getting international agreement, why are UK internal flights not taxed to get some parity between different methods of transport?

[Lord Duncan of Springbank]

The challenge we face in this country is that we are a major hub for international flights, as well as a country with a significant geographical challenge. We do all we can to ensure that people can take the types of journey they are able to take; it is up to commercial companies to determine how best to take that forward.

[Lord Tugendhat (Con)]

My Lords, might the Minister consider a more rifle-shot approach and, instead of thinking about commercial airlines, think about private jets? Might it be an idea to levy a tax on fuel sold to private jet companies, as distinct from the wider question of national and budget airlines? Private jets might be the best place to start.

[Lord Duncan of Springbank]

My noble friend raises a question to which I do not have the answer in my notes. It strikes me that private jets probably constitute a very small proportion of the overall flights in this country, and that private jets may choose not to come here, depending on circumstance.

[Baroness Randerson (LD)]

My Lords, does the Minister accept that there is great public concern, with the increased awareness of the damage of flying to our environment and climate? Does he accept that it is time that the Government took some action and worked with the grain of public opinion? Will he agree to talk to his colleagues and examine the simple carbon tax introduced by the French Government this year? It will come into force next year, it will tax every flight and it will start to address the damage that is being done.

[Lord Duncan of Springbank]

The noble Baroness makes a point, but air passenger duty is already a tax on every flight which is directly passed on to air passengers. It is also important to recognise that there is a responsibility on individuals. You do not have to fly abroad to take a holiday: St Andrews, in Scotland, is very pleasant, as are many other places in the United Kingdom.

[Lord Bates (Con)]

My Lords, might not a positive way to address the issue be to extend the benefits of loyalty schemes to those who use public transport, cycle or walk?

[Lord Duncan of Springbank]

Yes, that is probably true. I am not sure how it would work, but I am willing to go away, look at it and see whether we can do something with it.

[Lord Fox (LD)]

My Lords, the Minister just dubbed this measure regressive in many ways. Could he enlighten your Lordships’ House on how it is regressive, given the climate emergency that we face?

[Lord Duncan of Springbank]

The reason why I suggest that it is regressive is that by taking this approach, whether banning air miles or making other restrictions in this fashion, the people affected will almost certainly be the poorest, not those who are wealthy or who are travelling business class. The problem is that they can continue to afford to do so, while those who take family holidays will be hit by the brunt of the tax. That is regressive.

[Baroness Jones of Moulsecoomb]

My Lords, I am sorry, but that is absolute nonsense. It is not true. The 15% are the wealthiest people, not the poorest people who take only one flight a year.

[Lord Duncan of Springbank]

I have a sneaking suspicion that the 15% who are the wealthiest will not be deterred by the removal of a loyalty scheme.

Northern Ireland (Executive Formation etc) Act 2019: Section 3(5)

Lord Duncan of Springbank Excerpts

Thursday 17th October 2019 Lords Chamber

Moved by

[Lord Duncan of Springbank]

That this House takes note of the Report pursuant to section 3(5) of the Northern Ireland (Executive Formation etc) Act 2019, which was laid before this House on Monday 14 October.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, on 9 October reports were published providing an update on progress on executive formation, the transparency of political donations, higher education and a Derry university, the presumption of non-prosecution, Troubles prosecution guidance and the abortion law review. Today’s report is a further update, in line with the obligations under the Northern Ireland (Executive Formation etc) Act 2019.

First, I take the opportunity to welcome the inclusion in the Queen’s Speech of the Bill on historical institutional abuse. I look forward to working with colleagues across the House to get that Bill passed so that we can begin to see redress for the victims in Northern Ireland. The people of Northern Ireland have gone for over 1,000 days without an Executive and Assembly. While efforts are being made to bring the parties back into that Executive, the current period for executive formation expires on Monday 21 October.

With regard to the obligations set out in the executive formation Act, should no Executive be formed before 21 October, this Government will be under a statutory duty to change the law in Northern Ireland on access to abortion services, same-sex marriage and opposite-sex civil partnerships and to introduce a new victims’ payment scheme. While every effort is being made to restore an Executive, appropriate steps are being taken to ensure that the Government will meet our obligations under the executive formation Act. In furtherance of that, an awareness campaign was launched last week to ensure that the people of Northern Ireland know how these changes to the law may affect them. Further information will continue to be provided in the coming weeks.

In the absence of a restored Assembly and Executive, the Northern Ireland Office has taken steps to ensure that the Government will fulfil our obligations on abortion. As part of the information campaign, on 7 October my department, working closely with the Department of Health in Northern Ireland, published guidance for healthcare professionals to provide clarity over the new state of the law and their duties and responsibilities. The guidance sets out the changes in law in this area from 22 October 2019 until a new regulatory framework is in place by the end of March 2020.

The immediate changes from 22 October, if the duty comes into effect, will be the repeal of Sections 58 and 59 of the Offences against the Person Act 1861 in Northern Ireland, meaning that no criminal charges can be brought under that Act against females who have an abortion or against qualified—I stress “qualified” —healthcare professionals or others who provide or assist in an abortion. There will also be a moratorium on current and future criminal investigations and prosecutions in this area.

The Government will introduce a new legal framework for abortion to come into force by 31 March 2020. It is worth noting that during this interim period, from 22 October 2019 until the new legal framework is in place, all other relevant laws relating to the termination of pregnancy will remain in place. This includes Section 25(1) of the Criminal Justice Act (Northern Ireland) 1945, which makes it a criminal offence for anyone “in good faith” to assist or wilfully act to,

“destroy the life of a child then capable of being born alive”,

except where the purpose is to preserve the life of the mother.

From 22 October, women resident in Northern Ireland can continue to access services in England and will now have all of the costs of the procedure, including their travel and, where needed, accommodation costs, met by the UK Government. Healthcare professionals will be lawfully able to refer patients to services in England by providing the details of the central booking service or directing them to information available on the GOV.UK website.

It is anticipated that access to abortion services will not be routinely available in Northern Ireland until the new legal framework is in place by 31 March 2020. The guidance notes that if healthcare professionals choose to offer an abortion service to women during the interim period within the bounds of the relevant laws, they should do so in line with their professional competence and guidance from their professional body.

The guidance that we have issued also notes the state of play relating to conscientious objection, and what to do in cases where patients have purchased abortion pills online. Copies of that guidance will be lodged in the Library, and I am happy to provide further information or any updated versions as we go forward. To be clear, we will take forward all the work necessary to implement the new regulations by 31 March 2020.

In addition to changing the law on access to abortion services if the Northern Ireland Executive are not restored by 21 October, Parliament has an obligation to extend same-sex marriage and opposite-sex civil partnerships to Northern Ireland by 13 January 2020, and to introduce a system of victims’ payments by the end of January 2020, to be in force by the end of May 2020. I beg to move.

--- Later in debate ---

[Lord Duncan of Springbank]

My Lords, I begin where I think we need to begin. Everyone in this House are of the same view that we need to restore an Executive in Northern Ireland. There is no doubt about the importance of that, not just going forward, but for what could have been achieved, which we will never know. However, my right honourable friend the Secretary of State for Northern Ireland has been working tirelessly, and I am pleased that the noble Lord, Lord Murphy, has recognised that. He has been straining every sinew to try to bring the two principal parties and all the other parties together. In response to the question asked by the noble Baroness, Lady Humphreys, we have made and will make every effort to bring the five parties together to move that forward.

The challenge, however, is that the obligations of the Northern Ireland (Executive Formation etc) Act fall on the shoulders of the United Kingdom Government early next week. While the Assembly may seek to convene—I do not doubt it will do so—and while I do not doubt that there may be a broader base of attendance than might have been expected, it is unlikely to be able to deliver on those issues that some noble Lords have wished it to do this evening for the reasons raised by my noble friend Lord Caine and the noble Lord, Lord Alderdice.

I say that with some regret because we all recognise the value of that. As has been pointed out by the noble Lord, Lord Murphy, this is a time when we would have valued that information. But I do not believe that, unless we make some serious progress on Monday, we will face anything other than the reality that the United Kingdom Government will take forward their obligations. That is how the Northern Ireland (Executive Formation etc) Act was formed. We did so recognising that, once we had taken on the obligation, we would see it through to its fulfilment. Whether that is deemed right or wrong, it is the law of the land and is exactly what we will do.

I shall take some of the points in reverse, as that may be easier. In response to the question from the noble Baroness, Lady Humphreys, about donations, the issue is that none of the parties has expressed any change in its view about backdating. The sister party of the Liberal Democrats here, the Alliance Party, has pushed strongest and most consistently for backdating, but other parties, notably the DUP and UUP, were keen for this to be a point going forward. Some of the other parties did not express a view on this, but none has changed its view. I am happy to write again to the noble Baroness with more details, but in the recognition that we need to bring this area to rest. I will write on that point.

My noble friend Lord Bates kindly brought the issue back to where we need to focus, for we are here today doing something that should be done elsewhere. As a number of noble Lords have observed, we have seen a deterioration of the situation in Northern Ireland, which is much to be regretted. The political vacuum that exists now will continue to be a problem. What we are doing here today is trying to address certain issues, in but a small moment in time. In truth, until an Executive is formed and the devolution situation works, we will not have adequate governance in Northern Ireland.

I hope that the deal spoken of by the noble Lord, Lord Murphy, delivers for Northern Ireland. I hope that that happening will take away one of the principal obstacles to the parties coming back together. We should be under no illusion that Brexit has been a factor in the parties’ approach to the situation. It would be remiss of me not to point that out. I therefore hope that a deal will remove one of the stumbling blocks—not the only one—and allow those parties to return to government, but, at present, we look forward to that, rather than being certain that it will happen.

I now turn to the conspicuous and very serious issue that has been raised by a number of noble Lords. That is abortion. I state at the outset that I believe this matter should have been taken forward by a devolved Executive. I am happy to put that on record once again. It will not be so; it will be taken forward by us. We have debated this more than once, and I want to correct some of the statements that I believe have been made in error.

The five-month period we talked about is the most challenging aspect of this. At the outset, we need to recognise that abortions in Northern Ireland can take place only in a registered clinic. Some have said that this can simply be circumvented if there is but one NHS employee. That is not true. The clinic still has to be registered and the NHS employee taking part needs the permission of the NHS commissioners. That has to be done formally. Therefore, this is not carte blanche for people to create an opportunity in secret, whether in a front street, a middle street or a back street. It was not designed to be that and it will not be that.

[Baroness O'Loan]

Perhaps when the Minister gets away from the House he could look again at Regulation 5.

[Lord Duncan of Springbank]

I am very happy to state categorically that in any clinic, even if it has one NHS employee, that employee must have the permission of the NHS commissioners. I will write on this point and lodge the letter in the Library to make it very clear that we eliminate this as an issue that might percolate back to Northern Ireland in a nefarious and bad fashion. Equally, it is important to stress that, should there be an attempt by any private clinic to seek registration, it will not be a simple or quick procedure. Certain obligations must be met, and they will be met very carefully during this period. It is important to stress that anyone who seeks to open a clinic that is not registered or that operates without due diligence will be subject to the criminal law, and that law will be broken if they do that. It is important to appreciate that in Northern Ireland.

Further, any independent practitioner who might wish to set up a practice must register with the Care Quality Commission. Therefore, again, it is not simply a question of wish fulfilment; they must undertake legal obligatory steps. The premises would need to be established and investigated, and it would be necessary to ensure that they met those criteria. I note that the period that we are talking of is five months. I also note that almost anything involving bureaucracy does not get resolved in five months.

It is also important to set out very clearly that guidance has already been issued by the GMC and the royal colleges to the practitioners in Northern Ireland so that they are aware that, should we be unable to form an Executive, those are the conditions under which they will operate. Any noble Lord who wishes to see those conditions can consult the Library or go to GOV.UK. We have been very clear and transparent, ensuring that they are clear.

[Baroness O'Loan]

I am very sorry and I do not intend to interrupt the Minister repeatedly but I would like to ask whether he accepts that the GMC guidance is predicated upon the Abortion Act 1967 and the obligations of doctors under that Act. In fact, the GMC is not a regulatory body or a law enforcement body, and practitioners in Northern Ireland cannot be asked to be bound by legislation that does not apply or guidance relating to legislation that does not apply.

--- Later in debate ---

[Lord Duncan of Springbank]

To be very clear and to correct that, it is not the GMC’s guidance; it is our guidance. It is the Government’s guidance that we have asked it to pass on to ensure that practitioners are fully informed about and entirely aware of their obligations. It is fully transparent. If any noble Lord wishes to see it, they can consult the website and it is also in the Library.

The noble Baroness raised a number of issues, particularly with regard to the conscientiousness element. I note that a number of practitioners may well have written on this matter. That is important, but I stress categorically that they are entitled to exercise their conscience in this matter and will not be obliged to act against it unless they find themselves in a situation in which the life of the female is endangered. The professional obligations will kick in at that point and they will be obliged to save the life of the female. However, it is important to stress that nobody will be obliged to act against their conscience. Importantly, from 22 October onwards, we will be consulting very broadly to make sure that we get the language absolutely correct. We have no desire to place anybody in the invidious position of having to act against what they believe, so we will make sure that there are consultations. We are looking not just at the medical professions or professional bodies but at the religious groups that might be affected.

I listened with some interest to the notion of noxious substances, raised by the noble Lord, Lord Morrow, and the deliberate attempt to abort a foetus by a dominant male administering the process. I note in saying that there are a number of laws in Northern Ireland that would be absolutely applicable should an individual seek to abuse the body of another person in this regard. They carry with them very significant sentences. At present, the law has not been used in this regard, but it certainly could be. There would be no question that somebody could, with some sort of lightness of touch, escape from criminal justice in this regard. I would like to make sure that nobody in Northern Ireland is of the view that there may be secret poisonings that could somehow go both unreported and unaddressed. That would be the wrong thing to take from this debate here today.

I recognise that there are going to be challenges in each of these areas, but I want it to be clear that during this particular period there is no carte blanche but rather a recognised period of necessity until we are able fully to frame the law as needs be—the law that we wish to see that will come in in March. The laws now in existence will protect the mother from poison or other abuse of that nature. There are existing laws that protect the viability of a foetus that could be born alive. Although we might argue where that particular window might rest—it is between 22 and 28 weeks—it will be on a case-by-case basis, determined not by us here or others, but by the practitioner who is involved in the delivery of that medical situation. That is as it should be.

This is not a legal free-for-all. It is not an opportunity for those in Northern Ireland to create a whole new sector of abortion clinics. It is a recognition that in Northern Ireland, there are challenges because of the situation over the years with the abortion law. As I said before, I would have much preferred this to have been done elsewhere, but it will not be so. It is therefore important for us to ensure that we do all we can to ensure that during that period, the health and well-being of females is paramount. That is our guiding light and that is what we are seeking to do.

We do not believe that during that period there will be a fully-fledged abortion regime put in place because of the challenges that will exist within that, not least just trying to make it so. That is why we are making sure that those who wish to seek an abortion are able to do so in England, and that all costs will be met; and that advice and information can be given by medical professionals without fear or recourse to the criminal law to females to make that decision for themselves. They can, at that point, come to Great Britain to undertake that particular medical procedure.

However, the issue that we need to be more conscious of is the notion of people buying medicines online. The difficulty there is that it is not just for abortion purposes: more widely, there is a criminal offence of individuals selling those particular medicines unprescribed. Again, should a female find herself in a situation where she is suffering because of this, she can now go to a medical professional and seek the necessary help to ensure that she is safe and well. That is important. We need, as a Government, to consider how medicines are now being marketed or purchased online, because it is a matter where health is much more difficult to ensure when we are unable to be sure what the medicines themselves are. That is even if they are what they claim to be, let alone when they are not what they claim to be.

I realise that this is not where any of us would wish to be, but it is important for me to stress that going forward, the most important issue will be the health and well-being of the females of Northern Ireland. We will do all we can to ensure that that is so, and we will make sure that where we can offer that guidance, it will be understood by those who now will be able to take forward their own approach to the question of abortion. After March, there will be a fully-fledged regime in Northern Ireland. I hope that this period will give us the opportunity to ensure that it is fit for purpose and carefully constructed, and that it recognises the challenges that we have witnessed in the debate this evening and, more widely, the question of people’s own conscience and views.

The important thing today, however, is to recognise that we need an Executive in Northern Ireland. On that we can all be absolutely clear. I can assure noble Lords that I do not want to be back doing this again. The important thing for us all right now, however, is to hope that the deal itself might well bring a new opening and a new opportunity for Northern Ireland; and that the parties themselves recognise that there is a way forward and that they can begin to work again in the interest of the people of Northern Ireland. They are better fit and able than we are to do that. On that basis I would like to close my remarks.

Motion agreed.

Product Safety, Metrology and Mutual Recognition Agreement (Amendment) (EU Exit) Regulations 2019

Lord Duncan of Springbank Excerpts

Monday 7th October 2019 Lords Chamber

Moved by

[Lord Duncan of Springbank]

That the Regulations laid before the House on 9 September be approved.

Relevant document: 69th Report from the Joint Committee on Statutory Instruments (special attention drawn to the instrument)

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank)]

My Lords, the extension to Article 50 requires changes to legislation made earlier this year to ensure continued confidence in our consumer safety system. This statutory instrument will amend three earlier regulations: first, a number of product schedules in the Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019, made in March 2019; secondly, the Pressure Equipment (Safety) Regulations 2016; and, thirdly, the Conformity Assessment (Mutual Recognition Agreements) Regulations 2019. I will now take noble Lords through the detail of the changes made to each of these regulations—I can see the excitement building.

The change in exit day has created ambiguity for the personal protective equipment industry, necessitating revision to the Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019. The opportunity has also been taken to refine the instrument based on stakeholder feedback and ongoing developments in the sector, notably clarifying the continued use of data from pre-March 2013 as it affects cosmetics and ensuring that the UK will be able to update the lists of prohibited or restricted substances in all circumstances going forward.

I am concerned that, following publication of the main product safety instrument, stakeholders drew to our attention a number of these issues. I wish to apologise that these errors were identified by stakeholders after our own internal scrutiny processes had been cleared. Once alerted to these issues, we held meetings with the representative bodies from across the product areas to discuss the drafting errors identified and review the relevant product schedule for any other potential points that might require clarification. Eight meetings were held and a number of phone calls and emails were exchanged with relevant stakeholders. We have sought to do all we can in this regard to catch any issues that might not have been caught in the first instance.

Consequently, minor amendments regarding outdoor noise, recreational craft, toys, electromagnetic compatibility, electrical equipment, radio equipment, simple pressure vessels, machinery, measuring instruments and accreditation will be made. We will also correct the error whereby pressure equipment manufacturers would have been deprived of the option of having their manufacturing processes of base materials certified by a competent body.

Details of the technical changes are included in paragraph 7 of the published Explanatory Memorandum. These could ordinarily have been addressed through guidance. However, the extension to exit day meant that we were required to make an instrument to address specific exit-related issues, and we decided that it would be good practice at the same time to bring these minor changes into legislation to give full clarity for business.

We have also taken the opportunity to update the Pressure Equipment (Safety) Regulations 2016 to ensure full implementation of the importer labelling requirements to make it clear that an importer must put their information on both pressure equipment and assemblies. Post exit, UK importers in some circumstances will be able to put their details on a document accompanying the equipment or the assembly.

The instrument also implements into domestic law obligations that the UK currently has as an EU member state with regard to certain goods imported from Switzerland. This was originally implemented through a global provision in the Conformity Assessment (Mutual Recognition Agreements) Regulations 2019. Following further departmental legal analysis, we considered it more appropriate to make it explicitly clear in the law itself. This instrument will allow UK importers of relevant products from Switzerland to put their details on accompanying documentation rather than on the product for a period of 18 months after exit and extend recognition of Swiss authorised representatives to act on behalf of manufacturers to comply with regulations on noise emissions from outdoor equipment in line with the existing EU/Swiss mutual recognition agreement.

A full impact assessment has not been prepared for this instrument because no provisions trigger changes to in-scope operational costs. The impact is limited to familiarisation costs for business, which were previously assessed in a full impact assessment on the earlier instrument as de minimis. A copy of that full impact assessment is publicly available on legislation.gov.uk.

On consultation, the department has benefited from significant stakeholder feedback following the passage of the original regulations, all of which has been taken into account in the revised instruments. However, clearly, this was the wrong way round. As I said when taking forward regulations last week, my department will reflect carefully on ensuring adequate consultation before bringing forward such complicated legislation. This commitment from the Dispatch Box follows on from issues raised by the Joint Committee on Statutory Instruments, whose comments we welcome and will take fully on board.

The amendments made by this instrument will ensure that instruments are correct and that our high standards are maintained after our exit from the European Union. I beg to move.

[Lord McNicol of West Kilbride (Lab)]

My Lords, moving between topics as varied as Hong Kong to product safety is one of the joys of being a Front-Bencher in the House of Lords.

The House is again debating an instrument to rectify problems with previous no-deal regulations, this time on the crucial issues of product safety and metrology. Before I delve into the specifics of the instrument on mutual recognition, I ask the Minister to explain why the House is still debating regulations which will apply only in the event of no deal when the recent European Union (Withdrawal) (No. 2) Act will prevent such a scenario. This feels both disrespectful of Parliament and a little bizarre.

Much of the instrument is intended to ensure that previous regulations will be operable for the latest exit date. As he was asked last week, can the Minister confirm that Parliament will be asked again to revisit these issues if the exit date is again changed?

According to the department’s Explanatory Memorandum, the regulation strives to ensure that products placed on the UK market continue to meet,

“substantially the same essential requirements”.

Why is it only “substantially” the same requirements, not exactly the same ones? If there is no difference, will the Minister clarify this? If there is a difference between substantially copying over requirements and completely doing so, which ones are not required to be copied over?

--- Later in debate ---

[Lord Harris of Haringey (Lab)]

My Lords, I draw attention to my interest as chair of National Trading Standards, which, as far as I know, is not involved in any of these regulations—but for all I know it might be.

I would like some clarity on two specific points. First, the Minister said that no specific impact assessment was drawn up for this statutory instrument, but that it was covered by the previous impact assessment and that the main impact would be in explaining these changes, which we all look forward to, to the businesses affected by them. Did that assessment also look at the role of explaining these changes to those who are responsible for enforcing the regulations and for ensuring proper compliance? It seems to me that this is quite an important area, particularly when we are talking about product safety.

Secondly—I hope this is not frivolous—as I understand it, according to the report of the Joint Committee on Statutory Instruments, there is an error in the instrument. The reference to regulation 15 should have been to regulation 18. The department accepts that this is an error but says that it probably does not matter—I am paraphrasing. I think it is implying that there will be a 24-hour gap during which the mutual recognition agreements will not be in force. If that is the case, will the Minister tell us how frequently the mutual recognition agreements referred to in this SI are in fact employed in this country, and whether an issue really is unlikely to occur during the 24-hour gap?

[Lord Duncan of Springbank]

My Lords, this suite of regulations is quite technical, as the noble Lord, Lord McNicol, said. The original suite was a bundle, and anyone who has managed to carry it around will recognise that it could be measured in depth of inches. The important thing to stress is that I have recognised what a challenge it is to face such a large document. I would not wish to see us go forward on that basis again, for the very reasons flagged here today. I am very happy to say that, as far as I can influence the situation, I will do that very thing.

It is also important to stress—this comes back to the notion of why we are where we are—that the date changes which were necessitated by the change in the exit date were necessarily made in the document we are debating. It has now been—I am going to use the term—Brexit-proofed, in so far as we will not have to revisit these dates because of the manner in which they have been drafted. I reiterate, however, that it is the Government’s policy to leave the European Union on 31 October and noble Lords would expect me to say that, so I am saying it again.

I will go through some of the points raised in the order they were made. The noble Lord, Lord McNicol, again raised the issue of “substantially” versus “exactly”. My team tells me that broadly they are the same. Noble Lords might notice that I used the word “broadly” in that particular context, but they are the same, so they should not be interpreted as being in any way different. As to the question of the stakeholder feedback—

[Lord Fox]

“Broadly” and “substantially” are broadly the same phrase, but why is that phrase being used? Is it because the department is not aware that there are any differences but thinks that there might be unintended differences, or is it aware that there are actual differences between the two situations?

[Lord Duncan of Springbank]

My team has helpfully provided a note on that, just in case someone was querying whether they were indeed the same. On “substantially the same” and an essential requirement, certain essential requirements require the involvement of notified bodies. Post exit, these same essential requirements will require the involvement of UK-based approved bodies, in line with the UK-only system developed under the no-deal legislation. We are therefore at that stage of approved versus notified. There will be differences, in essence, but the substance of those differences is textual rather than meaningful in that context—I hope that is helpful and makes sense.

--- Later in debate ---

[Lord Duncan of Springbank]

I would be happy to do so, because we are stepping into the etymological element of the debate. As I understand it—I will happily put this in writing—the notion of a notified body and an approved body differs in so far as which is recognised by which entity. The UK itself has a recognised approved body whereas the notified body stems from the earlier legislation. However, rather than going too far down the rabbit hole of exactly how that works, if the noble Lord, Lord Fox, will allow, I will write to him on that point.

On the question of stakeholder involvement, in truth, this is why I apologised. We did this the wrong way round—there should have been greater engagement in advance of such a complex and dense series of materials, to ensure that we had captured all the elements the first time. We did not do that, and we were blessed by the fact that a number of directly affected organisations raised with us the substantive points which have led to the minor changes we have before us today. In truth, although I say they are minor, they are none the less changes we would wish to make to the body of the law—to the instrument itself. However, I acknowledge that this is the wrong way round, and I have said that on the record.

I am grateful to the organisations which have come forward. I am also aware that, once that began to happen, my departmental team therefore recognised that it had to do a thorough combing exercise of the substantive element of the original instrument. I asked the question which I think a number of noble Lords will have asked: “Is there a risk of institutional blindness? If you missed it the first time, will you miss it the second time?” That is why, again, I was assured that the manner in which the second, third and fourth iterations were conducted involved different groups to ensure that we were able to bring before you what we believe to be the comprehensive elements of the corrections which need to be made. I can go through them with your Lordships if you like, but I have a feeling that you probably do not want that. If noble Lords allow, I will therefore put that record into the Library for your consultation. However, noble Lords will be aware that it covers the full range, as the original instrument did, and as we are learning today, it is quite a broad range.

The final point raised by the noble Lord, Lord McNicol, was whether there are any other redundant statutory instruments. The answer to that is, not to my knowledge. There you are.

[Noble Lords]

Oh!

[Lord Duncan of Springbank]

Noble Lords will discover that I am full of these lines.

The noble Lord, Lord Fox, raised a couple of points. There should be no change to self-assessment whatever. On the question of the carcinogenic, mutagenic and reprotoxic elements—CMR—the rollover of the historic data rests within this particular body because it affects the elements within the EU-defined law which we have brought across. However, the noble Lord is right to note that clearly, the ingredients which are part of these elements rest within the wider EU REACH directive, and therefore will fall under the jurisdiction and leadership of Defra. Happily, I can confirm to the noble Lord, Lord Fox, that my noble friend Lord Gardiner will indeed facilitate such a meeting with him regarding the costs of the wider registration or reregistration of chemicals by a British entity. In due course, therefore, such a meeting will take place, and thereafter I hope that we will place on the record useful information for the entire House.

The noble Lord, Lord, Pickles—

[Noble Lords]

Lord Harris!

[Lord Duncan of Springbank]

I apologise. My goodness, I would not wish the noble Lord to be seen as dallying with the other side. The noble Lord, Lord Harris, raised two specific questions, including on the impact assessment in its broadest sense. The detailed impact assessment was specific to the original material. He asked about the familiarisation costs and whether they encompass the costs resting on bodies responsible for enforcement and compliance. The answer is yes, they need to do so, for obvious reasons, because they will have to take forward the management or oversight of this broad area.

As to the question of the 24-hour gap—this feels a bit like the Richard Nixon tapes: a gap during which something has gone on—my team tells me that the answer is no. Immediately before exit date means exactly that. The gap will be a few seconds, and my team assures me that in those few seconds, very little should interfere with the continuity which this suite of instruments represents.

I hope that that answers the questions raised. I also appreciate that this is a technical instrument. This is not the way I wish to do things in future, and I will ensure that there is adequate consultation not just with your Lordships but with wider interested parties. I will learn that lesson and will ensure that my department learns it. On that basis, I commend the Motion.

Motion agreed.

Irish Border: Checks and Customs Arrangements

Lord Duncan of Springbank Excerpts

Tuesday 1st October 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, with the leave of the House, and on behalf of my noble friend Lord Callanan of the Department for Exiting the European Union, I will now repeat in the form of a Statement the Answer given in the other place earlier today by my honourable friend the Parliamentary Under-Secretary of State for Exiting the European Union:

“Mr Speaker, we are committed to finding a solution to the North/South border which protects the Belfast/Good Friday agreement. We can best meet these commitments if we explore solutions other than the backstop.

The backstop risks weakening the delicate balance embodied in the Belfast/Good Friday agreement. This was grounded in agreement, consent, and respect for minorities. Removing control of the areas of commercial and economic life of Northern Ireland to an external body, over which the people of Northern Ireland have no control, risks undermining that balance. Any deal on Brexit on 31 October must avoid the whole or just part—that is, Northern Ireland—being trapped in an arrangement where it is a rule taker.

The Government intend to set out more details on our position on an alternative to the backstop in the coming days. In the meantime, I can assure the House that under no circumstances will the UK place infrastructure, checks or controls at the border. Both sides have always been clear that the arrangements for the border must recognise the unique circumstances of the island of Ireland and, reflecting that, be creative and flexible.

The Prime Minister’s European Union sherpa, David Frost, is leading a cross-government team in these detailed negotiations with Taskforce 50. We have shared in written form a series of confidential technical non-papers, which reflect the ideas the United Kingdom has been putting forward. These papers are not the Government setting out our formal position. These meetings and our sharing of confidential technical non-papers show that we are serious about getting a deal, and one that must involve the removal of the backstop”.

[Lord Murphy of Torfaen (Lab)]

My Lords, if there is an ounce of truth in the reports today that the Government’s technical non-paper, or indeed a real paper, dealing with the Irish border is suggesting physical infrastructure or indeed anything that currently does not exist at the border, does the Minister accept that that could compromise the Good Friday agreement, that it flies in the face of the joint declaration of 2017 and that it would break the law as outlined in Section 10(2)(b) of the European Union (Withdrawal) Act 2018? Can he categorically tell the House that no such proposals have been considered?

[Lord Duncan of Springbank]

My Lords, the noble Lord speaks with wisdom on this matter and brings great experience to the question. I can be categorical: there will be no infrastructure at the border. That is the policy of this Government; it continues to be that, and it will be that going forward. As for the technical non-papers, those are matters for discussion with the EU and it would be inappropriate just now to talk further on them, but this House will have ample opportunity in due course to examine them in the thorough and careful detail that I know it will take to do so.

[Lord Bruce of Bennachie (LD)]

My Lords, has the Prime Minister not acknowledged that there will be physical customs posts within striking distance of both sides of the border? Would that in itself, according to the reaction that we have seen across Northern Ireland, not be deemed by most people to be incompatible with the Good Friday agreement? Could the Minister respond to the freight industry’s suggestion that any such proposal would require designated routes, which clearly would require restrictions on other routes across the border and therefore would in themselves be fundamentally disruptive of free movement across the border? This is a non-paper so presumably the Government are sounding the water, but do they not recognise that what they are coming up against is that there is no Brexit arrangement that will not deeply damage the economy and security of the people of Northern Ireland and indeed of the rest of the UK as well?

[Lord Duncan of Springbank]

My Lords, I had the pleasure this morning of waking up to the dulcet tones of my right honourable friend the Prime Minister on the “Today” programme. When he was asked about proposing a customs border five to 10 miles back from the border, he was very clear, saying: “That’s not what we are proposing at all”. I reiterate the point that there will be ample opportunity to discuss this very clearly. It is very difficult to discuss a non-paper when the non-paper is not available to discuss.

[Lord Hain (Lab)]

My Lords, given that the Government have formally and legally agreed with the EU on no border, no hard-border-related checks or controls between Ireland and Northern Ireland, preserving an all-Ireland economy and the single market, and protecting North/South co-operation as part of the new Good Friday/Belfast agreement, can the Minister explain why they appear ready to present proposals in Brussels that achieve precisely none of those objectives—including by suggesting customs checks away from the border, as I heard the Prime Minister indicate today that they would do? Surely the Government are proposing to break the law again by contravening Section 10(2)(b) of the European Union (Withdrawal) Act 2018, which specifically bans,

“border arrangements between Northern Ireland and the Republic of Ireland after exit day which feature physical infrastructure, including border posts, or checks and controls, that did not exist before exit day and are not in accordance with an agreement between the United Kingdom and the EU”?

[Lord Duncan of Springbank]

The noble Lord raises a point that we must be very clear in answering. My right honourable friend the Prime Minister has been very clear: there will be no infrastructure, no checks and no controls at the border, and we will be in full conformity with our obligations under the law. With regard to the comments that have been floating around today regarding the dialogue with the EU, it will be easier to have a proper discussion on this issue when those documents are in the public domain, as they will be, to facilitate that very discussion and the interrogation by the Members of this House.

[Lord Empey (UUP)]

My Lords, we are having a debate tomorrow on the European Union. Not only do we not have a non-paper; we do not have any paper. It is very difficult to negotiate, suggest or judge if you have absolutely nothing in front of you. I appeal to the Minister to implore his colleagues that if we have a general debate tomorrow, at some point immediately thereafter—whether next week or whenever—we actually put down proposals in black and white that this House can debate and, hopefully, share with the other place. We are running around in circles and arguing over language, one thing is contradicting the other, and this merely adds to and builds up the uncertainty that is so corrosive to not only our economic but our political existence.

[Lord Duncan of Springbank]

My Lords, it is important to stress that this House is not itself negotiating: the UK Government are negotiating with the EU. It is important in that negotiation itself to respect the conditions of the negotiation. Equally, it will be vital for this House and the other place to fully examine that which emerges from those negotiations, as it is right and proper to do.

[Lord Adonis (Lab)]

My Lords, will the Minister confirm the point made by my noble friend Lord Hain that any new infrastructure at or near the border would be a breach of the European Union (Withdrawal) Act 2018?

[Lord Duncan of Springbank]

The UK Government will not breach that Act. As I have been very clear before, the discussions that we must necessarily have as a preamble to the negotiations will be fully transparent and available to all here and in the other place to interrogate, as I am sure they will, very thoroughly.

[Lord Browne of Belmont (DUP)]

My Lords, will the Minister confirm that it is still the Government’s policy that no new border checks will take place in the Irish Sea as a consequence of any deal being reached with Europe?

[Lord Duncan of Springbank]

I am very happy to offer that confirmation.

[Lord Wigley (PC)]

My Lords, is it the Government’s intention that goods coming from the Republic of Ireland to the United Kingdom via Holyhead will be subject to exactly the same sort of border controls as those in Northern Ireland, or is Northern Ireland being treated differently from the rest of the United Kingdom?

[Lord Duncan of Springbank]

It is not the intention of this Government to have Northern Ireland treated any differently from any other part of this, our United Kingdom.

[Baroness O'Loan (CB)]

My Lords, in a situation where there is no technology to deal with the interface between the European Union and, in this case, the United Kingdom, and recognising as the Minister does the need for the economic interests of Northern Ireland and the Republic of Ireland to be protected, there must be a mechanism to allow manufacturing and trade to continue uninterrupted on 31 October and 1 November. Surely the Minister has to agree that, in the absence of other ideas—and we have not really heard any—the compromise must be a time-limited backstop which does not keep us in the European Union indefinitely, without any power to withdraw unilaterally? As I hope that the Minister is aware, the risk of attack on any physical structure, no matter where situated, is very high. Dissidents are still active, and the UVF on Sunday announced that it would continue to fight if the situation deteriorates further.

[Lord Duncan of Springbank]

The important thing to stress right now is that my right honourable friend the Prime Minister has put to the European Union, in a series of clear technical papers, different approaches that can be considered in those negotiations. He will take the full position and present that to his European Union colleagues over the weekend. Thereafter it will come to this House and the other place for a full and careful consideration.

[Lord Bowness (Con)]

Will the Minister please explain his advice to your Lordships that we will all have plenty of time to discuss this matter? Can he explain how, if the Prime Minister comes back with a deal in the middle of October, he is going to be able to comply with the provisions of Section 13 of the European Union (Withdrawal) Act 2018 and legislate for the actual withdrawal agreement itself, without requesting an extension of time from 31 October?

[Lord Duncan of Springbank]

My noble friend asks an important question, to which the answer has been straightforward. It is the intention of this Government to leave the European Union on 31 October.

[Lord Redesdale (LD)]

My Lords, like the Minister I have only got information from Radio 4 on what is going forward, but that seems to be common parlance. Excuse my ignorance of the situation, but my under- standing is that a border between two countries is set as a line. However, the Minister is indicating that there will be no checks on the border, but the border zone could be 10 miles wide.

[Lord Duncan of Springbank]

Again, the Prime Minister made it very clear this morning, on the show which we all tuned in to, that that is not what he is proposing at all. There will be no new infrastructure on the border. I hope the negotiations which are taking place right now will lead to a successful conclusion which can be interrogated by this House in due course.

[Lord Liddle (Lab)]

Could the Minister confirm that the Government are abandoning the solemn commitment that they made in December 2017 to ensure regulatory alignment on the island of Ireland?

--- Later in debate ---

[Lord Duncan of Springbank]

I am happy to respond simply to the noble Lord. We will continue to meet our obligations as we have set out before this House and the other place, and we will continue to do so throughout the negotiations themselves.

Insolvency (Amendment) (EU Exit) (No 2) Regulations 2019

Lord Duncan of Springbank Excerpts

Monday 30th September 2019 Lords Chamber

Moved by

[Lord Duncan of Springbank]

That the draft Regulations laid before the House on 22 July be approved.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, these regulations address the consequences of the change in the UK’s departure date from the EU to the insolvency regulations previously approved by Parliament. The purpose of the new regulations, as with the previous regulations, is to ensure that the UK’s insolvency law operates effectively after Brexit, in all circumstances. The regulations laid before your Lordships make two changes that are necessary to address the introduction of the modernised Scottish insolvency rules, which came into force after 31 March, and the coming into force of Article 25 of the original EU regulation, which creates an integrated insolvency register across the EU.

These latest regulations update the Scottish rules by removing references related to the EU regulation to ensure a consistent approach to the UK courts’ jurisdiction to commence insolvency proceedings. The changes are made at the behest of the Scottish Government and with the support of the Scottish Parliament, following consultation.

The changes to UK insolvency necessitated by Article 25, which seeks to integrate member states’ insolvency registers, would carry an immediate cost that would be incurred without certainty of reciprocity after exit day. The current regulations would revoke Article 25 of the EU regulation if we leave the EU without agreement.

I stress that it is not the Government’s preferred outcome for the UK and the EU to cease co-operating on cross-border insolvency issues. We have listened carefully to industry professionals, who have outlined the risks that such an outcome would pose to the efficient management of insolvency cases. None the less, we must ensure that the UK’s approach to insolvency is legally correct irrespective of the nature of our exit.

Our assessment of the impact of losing automatic recognition for UK insolvencies in the EU was carefully made; the cost to business would be in the region of £2.7 million per year. We note also that a similar cost will befall EU insolvency practitioners applying to UK courts. However, both sides can retain the benefit of reciprocity only if there is a deal. In the absence of such an arrangement it is important to provide businesses and individuals with certainty regarding the rules governing insolvency in the UK.

These two changes ensure that the impact of leaving the EU will not be exacerbated by retaining inoperable law, which would lead only to confusion and cost. On that basis, I commend the regulations to the House.

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for taking time before the discussion on the Floor of the House to go through some of the more technical detail of the SI. As he said, the regulations make amendments to the Insolvency (Amendment) (EU Exit) Regulations 2019, which were agreed by this House in January. Those regulations were mostly welcomed by the industry and, although concerns were raised by the Joint Committee on Statutory Instruments at the time, the House ultimately passed them. They dealt with the core policy, which I will not seek to reopen, while the No. 2 instrument debated here today appears to make only minor technical amendments.

I shall move on to the substance of today’s regulations. Despite Parliament making it clear that it does not wish the UK to crash out without a deal, it appears that much of this instrument is necessary only to facilitate such a scenario. As the Minister will be aware, both Houses have repeatedly rejected the UK leaving the EU without a deal. Why spend the time and money, therefore, moving forward with SIs that should play no part in the future of our decision-making? Are there any further SIs yet to be laid that deal specifically with a no-deal scenario?

As noted, another element and purpose of this instrument is to amend the Scotland-only regulations, as insolvency is partly devolved. I note from the EM at the back of the SI paperwork that consultation was carried out with the Administration in Scotland. It would be helpful to get a little more detail about what consultation was carried out between the department here and the Scottish Administration. I am curious too about timing. Why have the regulations been brought forward only now, when the new Scottish insolvency laws came into force in April this year?

With regard to the drafting of these regulations, I mentioned earlier that the previous insolvency regulations were mostly welcomed by industry. As the Minister has pointed out, there is a financial cost. I am curious about whether any further discussion or consultation has taken place with the industry.

We have no intention of opposing these technical regulations, though I would be grateful if the Minister could offer assurances in relation to a number of the issues that I have raised.

--- Later in debate ---

[Lord Flight (Con)]

My Lords, the UK has a great advantage over most European economies and the US when it comes to effecting a sorting out and recovery of a business that is failing. Can the Minister confirm that whatever EU rules we may be moving in tandem with will not damage our advantage in sorting out businesses?

[Lord Duncan of Springbank]

My Lords, this has been a short and relatively sweet debate in some respects. There seems to be a recognition that these modest adjustments are necessary, primarily as a consequence of the earlier date not being met. I suspect there is a question about reciprocity. Let me tackle that head on. One of the challenges we have here, even allowing for the legislation made in the other place, is that the situation regarding the EU depends upon the EU. We cannot provide for what it will do in these circumstances. That is why we must be absolutely certain that in any circumstances in this area of insolvency we are legally sound and entirely correct. It would be wrong to do otherwise. However, it is important to stress that if we secure a deal, these regulations will become moot. We will not be pursuing them in that regard, so we will end up in a transition period and then, I do not doubt, the future relationship will examine a number of these aspects and we will see a very different outcome. However, these regulations are necessary. We have spoken with a number of bodies representing those responsible for insolvency to ensure that they are content with the way we are taking this forward.

In relation to some of the points raised by the noble Lord, Lord McNicol, we have looked at this very carefully to establish exactly where the costs rest. Had they been above the £5 million threshold, of course we would have done a full impact assessment. The current assessment is that the figure is £2.7 million and therefore it does not fall into that category. We have done a thorough consultation to ensure that there is no risk whatever that this will suddenly conflagrate beyond that.

As to timing, the noble Lord rightly pointed out that the Scottish Government moved forward its legislation in April, just after the previous proposed exit date. It is not a question of dawdling on our part, but of trying to put these two things together and move them forward, and we would have done so before that exit date in October because it would be necessary to do that. As to the level of consultation with the Scottish Government, it will not surprise noble Lords that we did a thorough consultation with them. One of the Scottish Parliament’s committees did an investigation and affirmed that this was the right approach. We spoke to several bodies in Scotland about this. The changes we are making at this point are relatively modest. They correct the legislation which emerged after 31 March to make sure that it is legally sound. It could not have been done before then because at that point we were not sure what was going to happen by that date, so the legislation could not anticipate the situation in which we ultimately found ourselves. I think the Scottish Government are relatively content, but I am quite happy to provide more information, should that be required, on the official level of engagement that has taken place.

The noble Lord, Lord Fox, made a point about the wider insolvency framework and touched on the balance of powers in respect of authorities. He will be aware that a review in 2016 looked at this. I believe that out of that, some of the issues the noble Lord has raised will be addressed looking at international best practice. We will look at European best practice. It would be foolish not to, given that we are so often involved in cross-border insolvency matters. I expect that in years to come we will see a very different approach to how we examine the wider insolvency question, while also keeping pace with where the EU finds itself.

Both noble Lords asked whether there are any more no-deal SIs. The answer is, not from me. I hope that is the answer they are looking for. I am probably going to have correct that if it is not true. I am nearly certain: not from me, and if I am wrong, I will confirm that later. The important thing to stress is that much of the work I have done today and last week was modest adjustments primarily resulting from the adjustment to the date. It is not my intention to bedraggle you for much longer.

[Lord McNicol of West Kilbride]

I just want to follow up on that and seek some clarification from the Minister. If, for some unknown reason, we do not exit the EU on 31 October, will we need to be back here changing the dates in the SIs all over again to whatever the next date is?

[Lord Duncan of Springbank]

That is very easy and straightforward to answer. It is the Government’s policy to leave on 31 October, but the laws have been drafted to ensure that, going forward, we will not have to revisit these regulations. I reiterate that, come Halloween, we will be on the other side.

[Lord Fox]

Can the Minister clarify the point about the modified version of the jurisdictional tests?

[Lord Duncan of Springbank]

I had written that down but then forgot to mention it. The noble Lord will be aware that one element of the original regulations was the jurisdictional tests. The modification that we are talking about here is to ensure that those tests are broadly compliant with the changes that have been brought in. The jurisdictional tests themselves remain broadly intact. Their purpose is to ensure that the legal jurisdictions of the various courts function after Brexit.

[Lord Fox]

To be clear, the modification is with us rather than with Europe.

[Lord Duncan of Springbank]

Absolutely—the modification is with us. However, the point is that broadly the tests are part of retained EU law and we have made the adjustments to make sure that they are compliant with our own statute book.

[Lord Flight]

My Lords, will these changes in any way damage the superior insolvency legislation that this country has at present?

[Lord Duncan of Springbank]

My noble friend is right to remind me of a point that I had almost overlooked by gazing at the Benches opposite. No, it should not damage that legislation. In fact, the UK is a good jurisdiction in which to address insolvency issues. I think that that is widely recognised in the EU and around the globe. We have an advantage there, and if we can maintain that advantage, this will be a place where such law can be made and we can maintain our leadership credentials. On that basis, I would be content to move forward with the regulations.

Motion agreed.

Gas Tariffs Code (Amendment) (EU Exit) Regulations 2019

Lord Duncan of Springbank Excerpts

Thursday 26th September 2019 Lords Chamber

Moved by

[Lord Duncan of Springbank]

That the draft Regulations laid before the House on 10 July be approved.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, I did not expect such a packed House for my statutory instrument. Let me give your Lordships some background. EU legislation governing our energy markets will be incorporated into domestic legislation via the withdrawal Act retained law. The department is working to ensure this energy legislation continues to function smoothly after exit, and supports a well-functioning, competitive and resilient energy system for consumers.

What does this statutory instrument do? The Article 50 extension to 31 October means that additional EU law will now be retained. Chapters 2, 3 and 4 of the TAR code, which established network code on harmonised transmission tariff structures for gas, have applied since 31 May. We need to amend our previous legislation, the Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019, to address inoperabilities in these additional chapters—for example, with reference to the naming of EU institutions. This supports our aim to retain regulatory functions and frameworks in all eventualities by keeping Great Britain and Northern Ireland’s gas markets working effectively, and by providing continuity for UK industry and its consumers.

The aims of TAR are to increase transparency and the coherence of tariff structures for gas sale and purchase and procedures used to set tariff structures. Tariff structures cover ways in which transmission system operators collect revenues associated with the provision of services at entry and exit points, and collect via capacity and commodity-based transmission tariffs and non-transmission tariffs.

Chapters 2, 3 and 4 applied across the UK and the EU from 31 May 2019. Regulations need to be amended by this statutory instrument to correct deficiencies in what will be the retained EU law—namely, where we state EU entity functions and references to EU institutions and bodies. Deficiencies need to be removed or replaced with reference to UK entities—for example, replacing “member states” with references to UK elements. The regime introduced by TAR is retained, subject to these amendments. The statutory instrument aims to maintain existing domestic rules while amending or removing provisions no longer functioning on exit day. It also aims to retain technical specifications wherever possible, with the result of maximising business continuity for market participants and cross-border gas trading.

In conclusion, the regulations are an appropriate use of the powers of the withdrawal Act to maximise business continuity for UK market operators, facilitate continued efficient international trade in gas, and help to protect security of affordable gas supplies for UK consumers. On that basis, I commend these regulations to the House.

[Lord Teverson (LD)]

My Lords, first, I welcome the Minister to his role. I know this has already been done by our official Front-Bench spokesman, but I very much welcome that he has taken on this broader brief, particularly when the areas of climate change and energy are of great importance—globally as well as within this country. I have no issue with this secondary legislation, but it enables us to ask some key questions related to energy markets, Brexit and, in particular, gas.

The first area that I want to explore is the island of Ireland. As the Minister will be well aware, there is a single energy market across the Irish Sea. I notice particularly that this statutory instrument covers the whole United Kingdom, including Northern Ireland. It is important for the Minister at this stage, particularly in the context of potential no deal, which this secondary legislation is about, to assure us that the single energy market, which includes gas as well as electricity, remains coherent. There are ways of making it remain coherent, given the total dependency that there is on energy supplies between both sides of the border in a no-deal situation. The Republic of Ireland is almost completely dependent on the UK for its gas supplies—gas is starting to come through from its own fields, but that is far from full at the moment—and any disruption of that totally integrated market would be very negative for both the Province of Northern Ireland and the Republic.

I also want to ask about interconnectors, which are an increasingly important part of our energy strategy, and rightly so; I have welcomed many times the fact that we have pushed the interconnector concept forward in relation to energy balancing within the UK, particularly with the increase in renewables. When it comes to gas, we have three interconnectors: one is with Ireland, of course, but we also have them with the Netherlands and Belgium. Again, I seek the Minister’s reassurances—I hope with some reason—that those interconnectors will continue to work, given the fact that we have had, albeit on the electricity side rather than gas, a number of energy incidents recently that mean that our energy security is particularly important in this area. As I understand it, PRISMA and the systems around it will stay in place but, as we come out of the internal energy market if we have a no-deal Brexit, I am not confident that those interconnectors will be quite so straightforward as they might be.

I wish to push the envelope slightly into the important area of oil. As I understand it, the Government have said that when we leave the European Union, however we do so, one area that has not been dealt with in terms of a rollover of European law will be the reserves of petroleum held by the UK after Brexit, and that the Government do not feel bound by the European Union rules on fuel reserves, which I think would mean some 85 million barrels of petroleum being held within our reserves. Rather, they are looking to the International Energy Agency rules, which would reduce that to 35 million barrels, under half that figure. I understand that some of that reserve is actually held in the Rotterdam/Antwerp area. If that is the case, I wish to be reassured by the Minister that in the event of no deal we would still have access to those reserves abroad.

Given the situations in Saudi Arabia with the drone attack, in the Strait of Hormuz, in Iran and in Venezuela, I caution strongly that at this time we should not look to reduce our petroleum reserves in the United Kingdom. This is fundamental to our national security and I urge severe caution on the Government. I would be very interested to hear the Minister’s response to that.

In the Mansion House speech by the previous Prime Minister, and indeed this has since been confirmed by the previous Minister, Claire Perry, we intended to remain—if we could, difficult though that may be outside the single market—a member of the internal energy market, where we have been one of the greatest proponents of liberalisation and one of the countries that has done most to set up that internal market. I wonder whether it is still government policy to try to remain within that energy market, which covers gas as well as electricity.

One of the fears of the gas industry on Brexit is about our need for labour mobility. This industry, more than almost all others, depends on the mobility of expertise and the way that it operates. Why should the Minister be confident of keeping that expertise in circulation following Brexit?

Lastly, this statutory instrument mentions the transmission systems operator. Since the electricity brownout during the Summer Recess, there has been a question about conflict of interest and whether National Grid is the right body to remain as the transmission systems operator. Will the Minister comment on this with reference to the gas side of that operation?

--- Later in debate ---

[Lord McNicol of West Kilbride (Lab)]

My Lords, I join the noble Lord, Lord Teverson, in welcoming the Minister to the Dispatch Box. I am sure that in preparing for this SI, looking through the paperwork and the impact assessment, which says there is no significant impact, he might have thought this was a nice, easy one, but the noble Lords, Lord Howell, Lord Teverson and Lord Liddle, have rightly asked further far-reaching questions on the wider issues of energy and gas supply as we move forward. I shall take the Minister back to the start.

The regulations before us deal with the establishment of a network code on harmonised transmission tariff structures for gas, arising from the UK’s withdrawal from the European Union. This issue was debated at length during the debate on the Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019. The Explanatory Memorandum makes it clear that today’s instrument is needed because exit day has been pushed back: it therefore amends those regulations. Will the Minister therefore begin by assuring the House that these regulations do not mark any shift in policy towards the regulatory framework relating to gas?

Looking briefly at how these regulations were laid, I need not remind the House that they would not have been debated and passed until next month had the Supreme Court not announced that Prorogation was invalid. In such a situation, can the Minister be certain that they would have completed their passage before exit day? If not, what would the consequences have been? On the drafting of these regulations, the House will be aware that other regulations need to be amended as a result of the change in exit date. Will the Minister explain why these need to be amended? If this instrument is necessary to make such a small change, will he say why the Government chose to pass this through the affirmative procedure?

More widely, the regulatory framework is an important cornerstone of energy policy, and while the subject has been debated at length, I want to return to one core issue. My noble friend Lord Grantchester has been vocal on the transfer of powers relating to energy policy, particularly on the many responsibilities due to be handed to Ofgem, which has faced budgetary constraints under this Government. Can the Minister say whether any further regulations due to be laid before exit day will transfer any energy powers to UK agencies? Going back to a point made by the three noble Lords who spoke earlier, protecting our energy supply is critical to our safety and security in such difficult and troubling times. I agree with the noble Lord, Lord Teverson, that retention of the petroleum reserves is an issue of national security. Although it does not relate directly to the SI, some words about that from the Minister on behalf of Her Majesty’s Government would be appreciated.

[Lord Duncan of Springbank]

I thank all noble Lords for their participation in this short but none the less instructive debate. I will begin where the noble Lord, Lord McNicol, left off, to answer some of the questions specific to the statutory instrument.

The issue to remember is that because we did not leave on 31 March, the legislation that had been passed at that point as retained law had to incorporate the fact that this piece of EU law was passed on 31 May and therefore became part of EU retained law. The reason we have brought this back now is that there are certain elements of that retained law which would need to be adjusted to be functional after Brexit within domestic law. The changes are relatively modest but none the less critical.

The answer to why it was done via the affirmative procedure is simple: because it has elements in relation to fees. As to whether it represents any shift in our policy, at a fundamental level the answer is no. This is simply a tidying-up exercise, which is modest in its implications but none the less critical to make sure that there is a functioning statute book after Brexit. As to the transfer of powers to Ofgem—it was not in my briefing pack but it is now—in the transfer of powers from the EU regulator ACER to Ofgem, no additional powers are created.

Those are the specific answers to the questions on the statutory instrument. I will now turn to the questions raised by noble Lords and begin, in order, with the noble Lord, Lord Teverson. One of the important things to stress about the market on the island of Ireland is that it is a single electricity market, not a single gas market. The gas does not cross the borders, only the electricity. The UK Government remain fully committed—as do the Irish Government—to ensuring the single electricity market on the island of Ireland. We believe that will be a priority for both Governments to ensure.

There is an interconnector transferring gas from the United Kingdom into the Republic of Ireland and we do not anticipate that that will be affected by any of these issues. The gas market across the EU is a remarkably—I want to use the term without meaning it as a pun—liquid market, but it is a very significant and successful market.

When it comes to interconnectors with the EU, touching on some of the issues raised by the noble Lord, Lord Liddle, we secure only 5% of our gas from the EU. It is a modest amount. Will that be affected by some of the geopolitics on the continent of Europe? We do not anticipate so, but have reserves which will allow us to secure continued use of gas during any such period.

My noble friend Lord Howell raised the wider situation on the continent of Europe. It is important to look at some of the real challenges this creates for the continent, the EU and ourselves. The first thing to stress is that we believe the Nord Stream pipeline is a problematic reality, which is why we are supportive of where Ukraine stands. However, there are also serious issues for the states to the east of the European Union. In this country we are moving swiftly towards decarbonisation but Poland, the Czech Republic, Slovakia and others are presently faced by the impossible devil’s dilemma of having to continue with their indigenous coal reserves being utilised or importing from Russia. Noble Lords can appreciate the dilemma that creates for the EU as it seeks to determine a decarbonised agenda. We have been, as a number of noble Lords have noted, a very liberalising influence in trying to secure the movement going forward to help those countries decarbonise, but it is, as my noble friend Lord Howell correctly stresses, one of the greater challenges faced by the continent today.

We will seek to continue to be participants in the energy markets of the EU. Brexit will have an impact on that and it is very difficult for me to anticipate exactly how we shall continue in that area. For example, one of the issues on which we have been a great leader inside the European Union is emissions trading, where we have sought from a leadership position to encourage the decarbonisation through a market-based regime. Exactly how we will continue to do so after Brexit remains to be determined. Part of the difficulty, with which noble Lords will be very familiar, is that we are unable to begin to negotiate the future relationship until we have established the departure. Some of these questions which rightly should not only be answered now but should have been some time ago have not been answered. On that basis, we cannot do it unanimously and must wait until such time as we can move this forward with the EU after Brexit.

[Lord Teverson]

I thank the Minister for giving way. What I am trying to get at here is that the previous Government—the previous Prime Minister and her Ministers—were able to say, “We want to remain a part of the internal energy market. We may not achieve it, but that is our intent”. I am very aware that the present Prime Minister is trying to quite substantially change the political agreement within any withdrawal agreement, and I am trying to determine what government policy relating to this is known. Is the position the same or has it changed?

[Lord Duncan of Springbank]

Let me be very specific: it is the policy of this Government to remain part of the internal energy market. The policy has not changed—for the same reasons, in truth, that applied before. They still apply today.

I will write with a specific answer to the question about petroleum reserves, which might be helpful. It is important to stress that it is government policy to ensure that the reserves are adequate for every eventuality. They must be stress tested necessarily through the challenges that Brexit represents. It is not our ambition to in any way put at risk what those reserves mean for the functioning of the wider energy situation in the United Kingdom. I also stress that we are—primarily in gas, certainly—dependent on imports from outwith the EU as a whole, although not primarily from Russia.

[Lord Howell of Guildford]

We are talking about gas and not oil reserves. That means gas storage. As we know, our own gas storage system is not all that reliable and has within recent memory gone down quite severely, with devastating effects on short-term gas prices. Are we planning any further storage projects of the kind we have had in the past, or to replace the Rough storage facility in the North Sea as a result of moving into the Brexit situation?

[Lord Duncan of Springbank]

I do not believe that the Brexit situation changes the dynamic of how we approach the wider question of gas storage. We need to make sure that the storage is adequate for any—in fact, every—eventuality. Brexit itself has not changed the policy on that. It will be our intention to ensure that it is not only adequate but able to anticipate whatever challenges come ahead. We will remain committed to that end.

[Lord Teverson]

I will not interrupt again. However, I feel that this is a really important national issue. Will the Minister confirm or give us assurance that, following Brexit, the Government will not—immediately or within a short period of time—reduce the amount of petroleum reserves that have to be held in this country?

--- Later in debate ---

[Lord Duncan of Springbank]

The Government will ensure that the reserves held are adequate for every eventuality. I suspect that the noble Lord is asking a more fundamental question, which is whether that limit should be set by the EU or follow international standards. Quite clearly, in both instances, it is important for the Government to judge what is right for the United Kingdom. We will do so on that basis.

I think that I have just about tackled all the issues. If I have missed anything out, I am very happy to respond in writing. On that basis, I beg to move.

Motion agreed.

Statutory Auditors, Third Country Auditors and International Accounts Standards (Amendment) (EU Exit) Regulations 2019

Lord Duncan of Springbank Excerpts

Thursday 26th September 2019 Lords Chamber

Moved by

[Lord Duncan of Springbank]

That the draft Regulations laid before the House on 15 July be approved.

Relevant document: 59th Report from the Secondary Legislation Scrutiny Committee

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

It is like I have never been away. Noble Lords will be aware that regulations were laid before Parliament earlier in the year to address deficiencies arising in the fields of accounting and audit from the withdrawal of the United Kingdom from the European Union. They did not implement new policy but granted new powers and responsibilities to the Secretary of State and the Financial Reporting Council. Further regulating adjustments are now required.

The EU accounting and audit directive, together with the EU’s international financial reporting standards regulation—to the extent that they are not repealed—will form part of the retained EU law under the European Union (Withdrawal) Act. The accounting and audit directives set out the requirements on the accounts and audit of most incorporated businesses, as well as a framework of standards. The directives also set out the responsibilities of the competent authorities.

The EU’s international financial reporting standards regulation sets standards for accounting by parent companies of groups. The audit regulation sets additional requirements on the statutory audit of those businesses defined as public interest entities. These are banks, building societies, insurers and issuers of shares or debt securities on regulated markets.

Our aim is to ensure that the framework for accounting and audit regulation works effectively following the UK’s withdrawal from the EU. The statutory instrument under discussion takes some further steps to help facilitate this. With regard to the audit directive, this instrument will ensure that equivalence or adequacy status decisions will be granted by negative resolution regulations. It makes sure that, irrespective of whether a withdrawal agreement is reached, the Secretary of State can make regulations after our exit from the EU to set out the framework for future assessment of equivalence and adequacy by the UK regulator. It will also enable us to grant equivalence and adequacy status to some third countries that have had applications under consideration in the EU during the period since March this year.

This instrument also completes the process of extending powers to the UK’s competent authority, the Financial Reporting Council. It extends the FRC’s ability to regulate third-country auditors to include EEA and Gibraltarian auditors. It also puts beyond doubt that those EEA auditors who have already registered in the UK as statutory auditors will retain that status after exit. The instrument makes an important change to the audit exemption framework. In common with the exemptions in the accounting framework for subsidiaries, the subsidiaries audit exemption will not be available unless the subsidiary has a UK parent. Finally, on audit, the instrument corrects an error in the previous audit statutory instrument affecting the frequency of audit inspections required for auditors of public interest entities.

On accounting standards, the instrument revokes some EU regulations relating to the adoption or amendment of IFRS within the EU. Without revocation, these regulations would be brought into domestic law by the European Union (Withdrawal) Act. However, the International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019 have already made provision for what will be the international accounting standards for the UK at exit day. These revocations remove any duplication and potential confusion. The revocations here also reflect changes in EU adopted international accounting standards issued or identified since the earlier accounting statutory instruments were made.

What will the impacts be? The Government have carried out a de minimis impact assessment of this instrument as the overall costs to business are anticipated to be small. This confirmed that the additional impact on business of the changes in this instrument is a cost of approximately £930,000 per year. Only limited sectors are affected by each of the changes. This limited impact is counterbalanced by the beneficial effect of the changes in the first audit EU exit statutory instrument, which was assessed as saving businesses approximately £2.96 million per year.

In conclusion, these amendments aim to provide continuity for businesses operating in the audit sector wherever possible and to ensure that UK companies will continue to benefit from global trade and investment. If the UK leaves the EU without an agreement, the measures contained in these regulations will be critical in ensuring that the audit regulatory framework in the UK works effectively. I commend these draft regulations to the House.

[Lord Purvis of Tweed (LD)]

Is the Minister able to indicate a little more why it was a de minimis consultation? There has been briefing, but companies that operate on a cross-border basis have to register with the country in the EEA that they will be doing business with. This means that, effectively, there will now be British businesses doing duplicate processes after exit—a UK one and an EU one. These points of principle on the additional burdens on British businesses having to operate in two entities were raised repeatedly during the passage of the Trade Bill. It is even more complex for those in Scotland, where the Minister and I both live, which is under the ICAS registration process. What information does the Minister have about how many British businesses will have to have these dual processes? Why was there no consultation on the regulatory impact on those businesses, which will be a cost to the British economy?

[Lord Duncan of Springbank]

The impact assessment was conducted on a de minimis basis and it established that the cost is £0.93 million—£930,000. I am happy to write further to the noble Lord on this matter to set out exactly how this figure was reached and who is affected by it and will place a copy in the Library.

[Lord McNicol of West Kilbride (Lab)]

I thank the Minister for his introduction to this statutory instrument. Before I come to the substance of the policy in these regulations, I highlight the comments made by the House of Lords Secondary Legislation Scrutiny Committee, which said:

“However, the range and magnitude of the changes are significant: the Regulations make changes to 15 items of legislation and include a sub-delegation of powers to UK regulators and extend a ministerial power of direction”.


The committee is right. Despite the utterances in the Explanatory Memorandum that this instrument exists only to continue the framework of the regulatory oversight and professional recognition of statutory auditors and third-country auditors in the UK, concerns have been raised, as we have just heard, that the regulations extend beyond this. The challenges financial services organisations will face in adapting to these changes are numerous, and were also noted by the SLSC. Can the Minister confirm whether any recent support has been offered to such firms to assist them in adapting to the changes?

In the light of such wide-ranging challenges resulting from these regulations, I draw the House’s attention to the fact that one of the core reasons why the other place divided on this instrument was the absence of a full impact assessment. Although I have no intention of similarly dividing this House, I place on record my disappointment that the Government have chosen not to publish an assessment in the period between these regulations being debated in the Commons and today. Parliament needs to be given the full information on the impact that these regulations will have on the financial sector; without such an assessment, that is not the case.

Moving on, I should like to ask the Minister a number of technical questions about the substance of these regulations. I will speak slowly. First, on Regulation 4, which deals with the loss of the EEA subsidiary exemption, can he confirm the timescale for the issues here to take effect? The legislation does not give a specific timeframe for the implementation of this provision, so I can assume only that further regulations may well be necessary. Secondly, in relation to Regulation 6, which focuses on the EEA qualification for auditors and which the Minister touched on, can he guarantee to the House that EEA-qualified auditors recognised up to December 2020 will retain their eligibility? If I missed that in his introductory remarks, my apologies.

To conclude, the way in which this instrument has been progressed, with little assessment and consultation, is deeply disappointing. It is mentioned in the Explanatory Memorandum for the SI, under paragraph 10 on “Consultation outcome”, that there has been no consultation on this instrument, which is deeply worrying. There also seems to be a thread of ambiguity through the regulations, which I hope the Minister can cast aside with assurances today. On this side of the House, we have agreed that the Government should make preparation through secondary legislation to ensure continuity after exit, but I hope the Minister can confirm that future regulations aimed at doing this will take a different approach.

--- Later in debate ---

[Lord Duncan of Springbank]

My Lords, this is quite an exciting issue when you get into it—more so than I anticipated. I will attempt to tackle each of the questions raised in turn. After that, perhaps I may make some general points.

In reference to the points made by the noble Lord, Lord McNicol, the first thing to note is that the passage he quoted refers to the 58th report of that committee and not the 59th. In that report, the committee described the SI as being of interest, but the reports are quite different in the way they tackle the elements themselves. On the noble Lord’s specific points about the EEA auditors losing their exemption and to what timescale, that will happen at the point at which the changes come into force on exit day. Regulations 4 and 7 amend the Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) Regulations 2019, which will also come into force on exit day. He asked whether the EEA qualification of auditors will be recognised up to December 2020 and the answer is yes, it will.

I hope noble Lords will bear with me because I am trying to make sure that I give all the answers that they expect. On the question asked by the noble Lord, Lord Liddle, about the implications of this, the impact assessment that was undertaken was able to show that the impact was modest. But the question he asked echoes the points made by the noble Lord, Lord Purvis of Tweed, so if the noble Lord, Lord Purvis, will allow, I will copy him into the answer that I will lodge in the Library. Noble Lords should have all the information that I have. I have no problem with that.

As to the wider philosophical questions of potential conflicts of interest and so forth, I am probably less equipped to answer those specifically. However, the Government will always maintain the highest levels of integrity, as noble Lords would expect. I have no reason to suspect any reason why I should be discomfited by what I am putting forward today, whether there are ethical or indeed wider accountancy considerations. It is not the intention of the Government in any way to create further ambiguity in this, but rather to ensure continuity as we move this matter forward. However, I will take away the issue about consultation, which is useful. I will reflect on that. I would not wish there to be an issue where noble Lords were uneasy because of the absence of information. I want noble Lords to have as much information as I have. I will reflect on that and make sure that in future I am able to bring noble Lords information that might help them.

[Lord Purvis of Tweed]

It would not be the first time that Ministers at the Dispatch Box during consideration of statutory instruments or Brexit-related legislation have said that they will reflect on the lack of consultation. To set my mind at rest on this aspect, what consultation was carried out on this measure with the Institute of Chartered Accountants of Scotland? What consultation was there with the Scottish Government? As the Minister will well know, the implications of this measure affect all parts of the United Kingdom, including those that have distinct history and presents, not just England.

[Lord Duncan of Springbank]

I am happy to write to the noble Lord, Lord Purvis of Tweed, answering each of those questions—if he will permit. Again, I will ensure that the answer is laid in the Library as appropriate.

I use the term “reflect” because it is the only term I can use in this instance. It is not just my own views that might reflect on the wider questions. My view right now is that I do not wish to stand before the House when these questions are raised when the answer is not adequate for noble Lords’ consideration. I wish all noble Lords to be able to see that we have taken every possible measure to assess the correctness of the approach and I want noble Lords to have comfort and confidence that that has been done adequately. I will give a guarantee that I will do that very thing. On that basis, I wish to move forward with the instrument.

Motion agreed.

International Climate Action

Lord Duncan of Springbank Excerpts

Thursday 26th September 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, with your permission I will repeat a Statement currently being made in the other place by the Secretary of State for Business, Energy and Industrial Strategy. The Statement is as follows:

“Mr Speaker, I am delighted that my first Statement as the Business and Energy Secretary is on a subject that matters so much to every Member in this House and to every person on this planet. As we heard from a 16 year-old girl, Greta Thunberg, it is vitally important to act now so that our children and grandchildren have a bright future ahead of them. We have only this planet and it is the duty of all of us to do all we can, cross-party and cross-industry, to leave it in a better place than we found it. So today, I would like to make a Statement on the UN Climate Action Summit in New York on Monday of this week.

The Prime Minister and the Secretary of State for International Development joined the UN Secretary-General, world leaders and key figures from business, industry and civil society at the UN Climate Action Summit on Monday. The science is clear about the speed, scale and cost to lives and livelihoods of the climate crisis that is facing us all. Costs show that total global damages from climate-related events were more than $300 billion in 2017 alone and we know that, globally, emissions still continue to rise year on year. And with tragic impact, we also know that the world’s most vulnerable are being hit hardest by the impacts of climate change: natural disasters are already pushing 26 million people a year into poverty, with hundreds of millions of people potentially facing major food shortages in the coming decade. The Prime Minister and other world leaders met because they wanted to take decisive collective action to cut emissions and improve the resilience of countries and communities.

The Prime Minister showed clearly what decisive climate action looks like at home and abroad. In the UK, we have cut emissions by 42% since 1990 while growing the economy by 72%, cutting our use of coal in our electricity system from almost 40% to only 5% in just six years, and leading the world in deployment of clean technologies such as offshore wind. In just one renewable sector, the UK is home to almost half the world’s offshore wind power. We became the first country in the G20 to legislate for net-zero greenhouse gas emissions by 2050 and we already see thousands of jobs being created as part of this transition. Almost 400,000 people are employed in the low-carbon sector and its supply chains, a number that we plan to grow to 2 million by 2030.

We are also playing a critical part on the world stage. In his closing speech, the Prime Minister set out his determination to work together with others to tackle the climate crisis. He called for all countries to increase their 2030 climate ambition pledges under the Paris agreement and confirmed that the UK will play our part by raising our own nationally determined contribution by February next year.

To help developing countries go further and faster, we also committed to double the UK’s international climate finance from £5.8 billion to £11.6 billion over the period 2021-25. This funding will support some of the most vulnerable communities in the world to develop low-carbon technologies and to shift from fossil fuels to clean energy. This will help to replace, for example, wood-burning stoves and kerosene lamps used by millions of the world’s poorest families with sustainable and more reliable technologies like solar power for cooking, heating and lighting.

This new funding will also help protect our incredible rainforests and mangroves, which act as vital carbon sinks, and help restore degraded ecosystems, such as abandoned land, which were once home to forests, mangroves and other precious habitats. So many of us have been glued to David Attenborough’s incredible “Blue Planet” and “Planet Earth” series which really brought home the scale of destruction and the need for global action. Doubling our international climate finance will help those most vulnerable deal with the damaging effects of climate change and become more resilient. It includes support for early warning systems in communities vulnerable to extreme weather events like droughts or floods, giving people vital extra hours, days and even weeks to prepare.

On Monday, as a part of the international climate finance commitment, the Government clearly put technology at the heart of our response with a new £1 billion Ayrton fund to drive forward clean energy innovation in developing countries. The fund is named after the British physicist and suffragette Hertha Ayrton, whose work at the beginning of the 20th century inspired the Ayrton anti-gas fans that saved lives during the First World War. This is new funding that leading scientists and innovators from across the UK and the world can access.

Our Prime Minister was not alone in taking action. We led on the summit’s adaptation and resilience theme with Egypt, and delivered a powerful call to action joined by 112 countries. As part of this we launched a first-of-its-kind Coalition for Climate Resilient Investment to transform infrastructure investment by integrating climate risks into decision-making, ensuring that schools, hospitals and other buildings are built taking into account climate risk. We also launched a new risk-informed early action partnership which will help make 1 billion people safer from disaster by greatly improving early warning systems of such dangerous events as floods and hurricanes. We were delighted that 77 countries, 10 regions and 100 cities committed at the summit to net zero by 2050. We saw the incoming Chilean COP25 presidency announcing a Climate Ambition Alliance of 70 countries, each signalling their intention to submit enhanced climate action plans or nationally determined contributions.

Businesses are also taking action. More than 50 financial institutions pledged to test all of their $2.9 trillion in assets for the risks of climate change. Nine multilateral development banks have committed to support global climate action investments by targeting $175 billion in annual financing by 2025.

The Climate Action Summit was, however, by no means an end in itself. It was a call for global action: one that the UK and many others heeded. But we cannot and will not be complacent. Coming out of the summit, the combined commitments of all those countries and all that good will still does not put us on track to meet the temperature goals of the Paris Agreement. People right across the country and right across the world are every day sending a clear message that we all must go further. As the Secretary-General said, “Time is running out”.

Globally, much more is needed. The UK, as an acknowledged world leader in tackling climate change and as the nominated host for COP26 in 2020, now has a unique opportunity to work with countries and businesses across the world, to build on the foundations laid at this week’s summit, to drive this action agenda forward and to turn the tide of emissions growth. There is no other planet: this is it, and we must look after it”.

--- Later in debate ---

[Lord Teverson (LD)]

My Lords, I thank the Minister for repeating the Statement. He has made me feel like a climate criminal because part of his Statement was on replacing wood-burning stoves internationally. I have two of them, I am afraid, but I burn my own wood—it takes three years to dry—and I replace the trees on my very modest property. I hope he will forgive me.

I do not mean this negatively, as everything the Labour Front Bench said was true, but it is easy to sermonise on this stuff. I know this from my own experience: I have solar thermal panels to heat my water; I have wood-burning stoves; and there are various other things that I do. Even I, as an individual, can criticise hugely in terms of the agenda set by Greta Thunberg at that conference. Her speech—my goodness—is not the sort we would make in this place. It was very different—not a politician’s speech—but it was very hard-hitting and absolutely bang on in terms of what we have all managed to do so far. We can congratulate ourselves on our 42% reduction, which is good in terms of other international indices, but we have a long way to go. The Government, since 2015, have lost pace on this, but they have started to pick up again.

I welcome this Statement. I welcome the fact that our Prime Minister went to New York, went to the United Nations, spoke with other people and made this announcement about international aid when, so often within the government party, there is a lot of criticism of how much money we spend abroad as opposed to in the UK, so I give him full credit for that. It is good to hear that the United Kingdom was seen as one of the positive countries trying to push this agenda forward. I also welcome from his Statement a fact we knew already: that we have captured the COP 26 conference, which is at the end of next year. That puts a pressure on all of us as parliamentarians here and at the other end to push that agenda consistently, not just when it is fashionable—over the period at least leading up to 2026. It was being advertised as a joint Italy-UK conference, so I would be interested to understand from the Minister how this will happen.

What representations are the Government making to President Bolsonaro of Brazil about the Amazon—not necessarily in New York, because I understand the Prime Minister’s visit there was cut short for some reason? The President has has made very strong statements that the Amazon is a completely sovereign issue for Brazil. As it is an ex-colonised country, I sort of understand that, but how are we making representations there? I would also like to understand where the money is coming from—I do not mean this negatively. Is this additional money or is it part of the DfID budget? I would be very interested to hear where those funds come from and over what time they will be expended.

Those are my questions, but I want to be positive here. I welcome that we have this emphasis on green growth. I also welcome the commitments made at the Labour Party conference in terms of climate, green growth and green package—we did a similar thing in the Liberal Democrats’ one. What has been quite clear is that, over the last three or four years, this topic has not been very often debated in this House. We now need to make sure that this remains a permanent part of our agenda—and in Parliament generally—over the long term and is not a one-off.

[Lord Duncan of Springbank]

My Lords, I welcome the contribution from both noble Lords. Tackling climate change will be, perhaps, the most significant challenge that we as a planet face. It is important to recognise that there is work to be done at home and abroad. That is why the UN conference in New York was important, because it gave us an opportunity to talk to the wider communities about not just what we want them to do, but how we can demonstrate what we have been doing ourselves. That is how we will make the difference. We have to able to show that we are not just talking the talk but walking the walk.

I will address some of the key issues brought forward by the two speakers, beginning with the noble Lord, Lord McNicol. The commitment made by the Labour Party to reach net zero by 2030 is quite an ambitious claim. We have taken advice from the Committee on Climate Change which says that we can move there by 2050. We would welcome the Labour Party submitting its proposals to the Committee on Climate Change to establish whether indeed they can be realised in that time available. The advice we have just now from that committee is that that is not possible, but we will welcome any information that Labour is able to supply on the functional pathways which have been explored by the Committee on Climate Change.

This is an area in which there is rhetoric all too often. That is why it is important to look at commitments here. We are the first major economy to commit to net zero by 2050, following the advice of the Committee on Climate Change, which has again set out the clear pathways we can follow to achieve that. We have committed to increase our individual commitments to climate change. We have doubled our international climate finance, which is a not insignificant amount of money. We have committed to align all our overseas development aid with the Paris agreement—one of the first major nations to do that. There is clearly much more that we have to do, but that is at least the beginning of the process.

When it comes to international support, our climate finance has so far helped 57 million people cope with the effects of climate change in the adaptation and mitigation sectors. Some 26 million people will have improved access to clean energy; 16 million people have avoided or reduced their greenhouse gas emissions via the funding. We have installed 1,600 megawatts of clean energy capacity. Some £3.8 billion of public finance has been mobilised for climate change. As to where the money comes from, for the declarations we have made it has been new money, coming primarily from taxpayers. It is the commitment of taxpayers themselves that we need to be able to ensure as we go forward. As to what we are doing at home, it is important to recognise that there is a role for government and for individuals. The noble Lord, Lord Teverson, raised wood-burning stoves, which have become very popular. We need to make sure that we address the sustainability issues of these, and the example that he gave suggests that his approach is sustainable.

We are making great headway. As the noble Lord, Lord McNicol, has pointed out, the decarbonisation of energy generation is extraordinary. In a very short period, we have moved towards certain days of the week when no coal is used in the generation of our electricity; that is extraordinary. In some respects, and this is where the gas bridge concept will come in, moving towards lower or lighter hydrocarbons is critical in helping us to decarbonise. This is seen in the Americas, where lighter hydrocarbons are easing out the use of coal. This is the first area in which we have achieved significant decarbonisation.

When we come to the concept of, “Ask not what your country can do for you; ask what you can do for your country”, each household will have to answer particular questions. How well insulated are our homes and roof spaces? Are we moving forward considering the efficiency of different types of boilers? There will come a point when we will ask about the use of gas as a means of providing heat and energy in our homes. We have made substantial progress with the UK car fleet but that is quite modest compared against the journey yet to be taken. That is why we need to think about new technologies and ensure that the prices of the vehicles themselves are within the reach of the ordinary household. There is no point in trying to use a stick when modestly priced cars are not available to take this forward.

I could go on at some length, but I suspect that other questions will reveal some of the answers.

[Lord Marlesford (Con)]

My Lords, I have a practical suggestion for how we can save the Amazon rainforest and similar areas. The international community, through the IMF and the World Bank, should take over a proportion of the government debt of the countries concerned, on the basis that the debt would not be liable to interest nor have to be repaid provided that these areas were conserved. To give a real incentive, the multiple of the value of the commercial exploitation of the rainforests offered would have to be considerable—probably five or even 10 times as much debt as the commercial value. If that were done, countries would have a real incentive to protect and preserve their rainforests.

[Lord Duncan of Springbank]

My Lords, debt cancellation is not a new idea. It has had some currency and traction in the past. It is an area that bears further consideration. Going forward, we should not shy away from looking at it. It would have to be done very carefully. How to address this in the short term might be more challenging.

[Lord Soley (Lab)]

My Lords, I am happy to congratulate the Government on their achievements so far. This country is a leader—I accept that. However, even if we achieve everything we have said by 2050 and other countries do as well, we will still have a crisis on our hands. Research and development is now going on in a number of research institutes and universities into how we can take these emissions out of the atmosphere. Frankly, without that, we will be in trouble later in this century. As a next step, might the Government consider whether the UK institutions and universities could take a lead on bringing together organisations from a number of countries to start developing some of the techniques that are already known, but are in the very early stages of development, in order to take these carbon gases out of the atmosphere.

[Lord Duncan of Springbank]

The noble Lord is right that the challenge will not be addressed on a global scale even if we were to achieve net zero in this country tomorrow, because we are responsible for around 1% of all climate-related emissions. There is clearly much more to be done by others. The atmospheric sequestration of greenhouse gases is an important area. I am less familiar with research on that, but I will enquire further into it and will write to the noble Lord with my findings. I would certainly hope that every possible avenue can be explored to ensure that we are able to address this global challenge.

[Baroness Hayman (CB)]

My Lords, I too welcome the Minister’s Statement, in particular its acknowledgement of the seriousness of the crisis that we are facing. One of the many tragedies of our current political discourse is the way that it sucks the oxygen out of other debates, including this one, which is, in his words, the most significant challenge that we as a planet face. I also welcome that he said very clearly that the funding referred to is new. It would be a tragedy if this very welcome funding were to detract from the DfID programmes for health, women and education that are so important.

The Statement refers to offshore wind. Does the Minister accept that we are missing a trick in our reluctance to pursue onshore wind opportunities? Internationally, COP26 is a huge opportunity for action, but we also have the CHOGM meeting in Kigali next year. Are there plans to involve the Commonwealth in corporate action? Finally, the Statement speaks about cross-party working. A group of us in this House are committed to finding a way to do that. May I issue an invitation to him, with his new brief, to meet us as soon as possible?

[Lord Duncan of Springbank]

The noble Baroness reminds us again that Brexit seems to consume a lot of the bandwidth. We cannot lose sight of these issues. Long after Brexit is resolved—whichever direction it is resolved in—this will remain a challenge for our country and for all countries.

On the question of onshore and offshore wind, we are certainly global leaders in offshore wind but we need to consider much more carefully the entire renewables sector and how we move it forward. Nothing will be ruled out. We need to be careful as we move forward and, again, every aspect of renewables needs to be considered on its own terms. Offshore wind has been very successful; indeed, pricing in the offshore wind sector has shown a remarkable change in a very short period of time. We are reaching the point now where it is all but self-sustaining, which is an extraordinary achievement given that we anticipated that being a much more distant prospect.

COP26 is an opportunity for this country to focus its attention but there are a number of international meetings. We are on the glide path to COP26 and we have to work out several things. How do we form the right alliances? How do we meet the right people? How do we offer the right advice? How do we engage directly with the right levels of funding? How do we ensure that we are all facing in the same direction? One of the biggest challenges right now is encouraging those countries responsible for some of the more significant current emissions, whether that be the US, China, India or wherever, to meet the net zero target by 2050. It is all very well for me to tell noble Lords that 70 nations have reached that level of commitment; if those 70 nations do not include the principal emitters then, while it is all very interesting to see how they stack up, in truth the impact on the global climate is modest.

The Commonwealth has a vital part to play in this because it represents not just those who can provide the support but those who need the mitigation and adaptation aspects as well. We have a perfect fraternity, if you like, for dialogue about what is most needed and best supported. I would love to come to the cross-party group.

[The Earl of Selborne (Non-Afl)]

It is generally agreed that new technologies will be essential to hitting these demanding targets. The Minister referred to the areas in which we are global leaders. Indeed, we are leaders in much of the research and technology in areas such as energy storage and the development of batteries, where advanced technology will be required, and carbon capture and storage, where after all we have a national advantage, having extracted oil from the North Sea and thereby having created storage. Is the Minister satisfied that we are giving enough priority to these two areas of research and development?

[Lord Duncan of Springbank]

I am probably going to frighten my officials when I say that I suspect the answer is no. I think we need to be investing significantly in the technologies that are available. We also need to seriously consider how we move those technologies, given the way in which they are already used within the UK and the EU, to countries where they can do the maximum good. Carbon capture utilisation and storage offers us opportunities, if we use these methodologies wisely and carefully, in removing carbon. We have to remember that there are chemical processes—for example, the production of ammonia—where we simply cannot do without carbon dioxide because it is part of the natural chemical equation. We need to find ways of removing the carbon as best we can through those technologies.

Storage must be at the heart of where we go now. The progress that we make on wind will simply be blown away unless we can capture it and hold it in some form of storage. The pump hydro stations that exist in Scotland and Wales are a very useful example of that, and Norway has a significant number of those, but we need to think of other technologies as well, such as battery technologies, to retain that electricity.

We need to be global leaders in this area. In fact, the EU has to be a global leader in this area too, and we should be collaborating strongly through the Horizon programmes to ensure that we remain committed to technologies and ensure that they are available, not just here in Europe but wherever they can do good.

[Lord Birt (CB)]

I applaud the Minister’s high productivity today—he must have been up all night—as well as his manner. Would that there were more like him.

I strongly approve, as everyone who has spoken plainly does, of the Government embracing the net zero target. However, as the Minister has made clear in his answers already, finding the pathway to achieving that target is an enormous task. As he says, on the other side of Brexit it will be arguably the single biggest challenge that this country has to face. For instance, the previous Chancellor identified the scale of GDP that will have to be devoted to ensuring that our transport system, the heating of our homes and buildings, and our electricity generation is de-carbonised. It is an enormous challenge. The Government have declared their target. When are they going to set out the framework for achieving it—the multiple pathways which the Minister has referred to—and meeting that ultimate challenge?

[Lord Duncan of Springbank]

The noble Lord is absolutely right: setting a 2050 net zero target is important as a point on the horizon to be reached, but it is the pathways we will take to get there that will be the challenge. He is right again when he reminds us that the Chancellor gave an estimate of how much he thought this might cost this country alone, but it is sometimes more useful to take it down to the level of the individual household. To consider what it will mean, think of a household that has one car and a central heating system using gas, and think of having to move that forward. There are different technologies that we may be able to use to increase the efficiency of the electricity going into the home, but when we begin to talk about the changeover, particularly with vehicles, we are talking about significant individual household investments, and we cannot shy away from that.

One of the greatest dangers we face today is the number of times people conflate the words “electricity” and “energy”. On some days you will hear that we are approaching close to getting 100% of our electricity from renewable sources, but if you put the word “energy” into that, you are absolutely wrong, because our transport system and the way we heat our homes are primarily hydrocarbon based. We are not one small step away, and unless the general public appreciate that, they will wonder why we are not going faster.

The challenge we need to map out is the one that the noble Lord rightly pointed out. Our plan as we approach the glide path to COP26 in Glasgow must be to set out very clearly not only the routes we are seeking to explore, because some need exploration, but the targets and milestones by which we can measure our progress. We must also set out how we can look at that as a means to encourage others to follow in our slipstream. In truth, as I said, if we achieve this ourselves, we will have done little at a global level: we must have others come alongside. Once we have seen the framework, we should probably gather together once again to explore the details of how it might work in reality and to look at the costs, because it will not be without costs, and commitments required from individual households to change their behaviour.

[The Earl of Sandwich (CB)]

My Lords, like the noble Lord, Lord Teverson, I welcome not only the Statement but the fact that the Prime Minister actually got to New York and had some really good news on that front; I hope he will develop that side of his life. I was impressed that the poorest countries got a mention, especially because that is what our Department for International Development is for, but is it saying enough about this to the general public? Perhaps it needs the Prime Minister to get behind it. This is critical for some of the countries we are supporting, but nobody knows that we are supporting them. Should we be sending more delegations of Members of Parliament to see what is being done? I am not satisfied with that. There was a figure in the press this morning that the sea will rise 10 millimetres per annum by the end of the century. This is a horrifying statistic. Are we doing enough to support those particular countries? Can the Minister say any more about that?

[Lord Duncan of Springbank]

That is an interesting point. How much more can we do using the intellectual resources of Members of this House and the other place to engage directly with countries at the sharper end of climate change? I accept that and I will take it away and give some consideration to how we can use the resources available to us. I think we need to promote more carefully the good work that we do overseas, not just in the area of poverty, which is perhaps better known, but in addressing wider climate change questions. Only by doing that can we ensure that our people retain a strong commitment to the 0.7% of GDP for the millennium development goals. We need to make sure that that is the bedrock on which we build, not a fight that we have to have every single time we look at it because it is simply being eroded.

On the question of the sea level rise, I had a meeting not so long ago with the ambassador of the Maldives. The noble Lord will appreciate that the highest point on the Maldives is actually lower than my height, so its people will experience this very quickly; even at that level of seawater rise, the land will disappear in very short order. We need to consider very carefully how we can help a country such as the Maldives, as well as other island states, which will be very much at the sharpest end of any sea level rise. We also have to accept that it is not just the sea level that is rising but the sea temperature. We will face a lot of challenges. We often talk about global migration issues. We will see that global migration in the water first; we will see it in the seas. The seas around the United Kingdom are shallower—we have the North Sea basin—and we will begin to see our fishing industry experiencing very different kinds of fish, potentially in very short order. We need to be on top of a whole range of issues and we need to be careful to ensure that people understand the challenges we face, not just at home but in supporting the wider global community in this area.

Spending Round 2019

Lord Duncan of Springbank Excerpts

Wednesday 25th September 2019 Lords Chamber

Moved by

[Lord Duncan of Springbank]

That this House takes note of the Spending Round 2019.

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, I would like to begin by paying tribute to my noble friend Lord Young, who as ever is in his place; I would much rather that he was in my place, but here we are. He has an extraordinary record of five decades of service—a parliamentary career that is almost unrivalled in recent history—an extraordinary achievement. I can assure the noble Lord that I would welcome him back with open arms. I would also like to thank my colleagues, the noble Earl, Lord Courtown, and the noble Lord, Lord Bethell, for helping with this particular brief. It has its own challenges.

I want to say also that, thanks to the decisions that the coalition and Conservative Governments have taken since 2010 and the hard work of the British people, we can now afford to turn the page on austerity and move forward from a decade of recovery to a decade of renewal. This spending round does that by delivering on the people’s priorities across the NHS, education and police, giving certainty to all departments—and I emphasise all departments—about their budgets for the coming year, and clearing the decks for government to focus on delivering Brexit.

Next year, the Government will add £13.4 billion to the plans for total public spending, including £1.7 billion added to capital spending. Those extra funds take the real increase in day-to-day spending to £13.8 billion, or 4.1%. That means that we are delivering the fastest increase in day-to-day spending for 15 years. Importantly, we will do so while continuing to meet our existing fiscal rules. That additional funding will ensure we build the Britain of tomorrow: a safer Britain; a healthier Britain; a better-educated Britain; and a more global Britain.

In terms of safer Britain, we are reducing crime. That must be one of the Government’s top priorities. At this spending round, the Government announced a 6.3% real-terms increase in Home Office spending, the biggest in 15 years. That will mean £750 million to fund the first year of our plan to recruit 20,000 new police officers. We will start recruiting immediately, with an extra £45 million this year so that that recruitment can start at once. Further, the Government will carry out a formal review into how we handle serious and organised crime, ahead of the full spending review next year. We will provide additional funding to tackle online child sexual exploitation. We will double the places of worship fund to ensure greater protection for synagogues, mosques and other religious buildings. We announced more investment in our criminal justice system to address increased demand, with a 5% real-terms increase in the resource budget for the Ministry of Justice, an increase in their capital budget to £620 million next year and an extra £80 million for the Crown Prosecution Service.

In terms of creating a healthier Britain, this spending round provides further support for our NHS. Last year, we increased NHS spending by an extra £34 billion a year by 2023-24. In this spending round, we affirm our commitment to the NHS with a £6.2 billion increase in NHS funding for the next year. We are investing more in training and professional development for our doctors and nurses, with over £2 billion of new capital funding—starting with an upgrade to 20 hospitals this year and £250 million for ground-breaking new artificial intelligence technologies to help solve some of healthcare’s toughest challenges. In addition, councils will have access to new funds of £1.5 billion for social care from next year. Councils will also see the largest increase in local government spending power since 2010 and on top of the existing £2.5 billion of social care grants already announced.

On ensuring that we have a better-educated Britain, alongside providing for the health of our people, the next most important task of government is to educate the next generation. That is why we are delivering on our pledge to increase school spending. By the financial year 2022-23, we will have increased funding by £7.1 billion in cash terms compared to this year. Next year, we will make sure that day-to-day funding for every school can rise at least in line with inflation, with the schools that have been historically underfunded benefiting the most. That funding will mean that teachers’ starting salaries can rise to £30,000 per year by 2022-23, to ensure that we can attract more of the best graduates to the teaching profession. We will provide over £700 million more to support children and young people with special educational needs next year—an 11% increase compared to this year. This spending round also provides a £400 million increase in 16 to 19 year-old education funding next year, and the Government will increase early years spending by £66 million.

Turning to other departments, this spending round took bold action right across government. We have made available an additional £2.2 billion of funding for the Ministry of Defence, a real-terms increase of 2.6% for their budget from next year. We have increased our support for the Diplomatic Service, with £90 million of funding for 1,000 diplomats and overseas staff, and 14 new and upgraded diplomatic posts. We have ensured that we continue to protect our environment, with new funding to tackle the crisis in air quality. We are increasing our funding for biodiversity and to help develop new programmes to help meet our net zero commitment by 2050. We have also provided more than £200 million to transform bus services around the country.

Let me stress that every government department has had its budget for day-to-day spending increased at least in line with inflation for the first time since the spending review of 2002. As for the wider infrastructure and fiscal framework, we will build on the announcements we made in the spending round at the Budget before my right honourable friend the Chancellor will review our fiscal framework to ensure it meets the economic priorities of today, not the priorities of a decade ago. Central to the Government’s new economic plan will be rebuilding our national infrastructure to ensure that we invest in the long-term growth of this country. We will bring forward detailed plans at the Budget later this year alongside an ambitious strategy for new investment.

On that basis, I hope we can open what will be an interesting debate and perhaps a pleasant sorbet before the courses that are yet to come.

Spending Round 2019

Lord Duncan of Springbank Excerpts

Wednesday 25th September 2019 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, I thank all your Lordships for your warm welcome on my new role. It is nice to be here for a brief time—I am not wholly convinced it will be my permanent future—but, none the less, I am interested in each of the comments made by noble Lords this evening.

I think there has been far more consensus than there has been division on some of the issues affecting wider society. I am reminded of some remarks, again, by Benjamin Disraeli, which he would have written in Sybil, a book subtitled Two Nations. He said:

“Two nations; between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets”.


He spoke not of different parts of this kingdom, nor indeed of different social classes; he spoke simply of the rich and the poor—a reminder again that some challenges are with us and must be addressed even now afresh.

I have also thought how we might frame this debate, and I was struck by the comments made by the right reverend Prelate the Bishop of Durham. It put me in mind of some remarks by a former Vice-President of the United States, Hubert Humphrey, who simply said that,

“the moral test of government is how that government treats those who are in the dawn of life, the children; those who are in the twilight of life, the elderly; and those who are in the shadows of life, the sick, the needy and the handicapped”.

That is a test that we need to embrace now.

In lots of ways, this particular spending review does a number of things, but it does not seek to do everything. We need to recognise the difference between what a spending review is destined to try to achieve and what a Budget is setting out to try to achieve. I take for example, one aspect, which I know a number of Lords have touched on this evening: education. It is very easy to talk about education in simple, glowing terms or in simple statistics and headlines. However, it is important to recognise that we made great strides forward in collaboration with the Liberal Democrats in our coalition Government back in the day: 85% of pupils are in good or outstanding schools, compared with 66% in 2010; there are 10,000 more teachers and 921,000 new school places since then; and there are 160,000 more six year-olds on track to become fluent readers compared even with last year.

When we look at the money we put into education, we begin to see how that money can make a difference. Money spent wisely is money well spent. I will touch upon the comments of the noble Lord, Lord Davies. The minimum per pupil funding for a primary school pupil will become £4,000, for a secondary school pupil £5,000. We are putting £66 million into early years spending, and £400 million more will go into further education. Each of these elements should create a positive pathway to move issues forward.

Social care is perhaps one of the shadowy areas that Hubert Humphrey spoke of. In many respects, this is a new area as we begin to explore how funding will work. The money we are putting into social care is significant, but it is only to stabilise the system until we can begin to understand how best we can tackle the wider challenges that exist within the social framework. For too long we have seen these simply as issues to be dealt with by the individual; there is a wider community interest which we have recognised. That is why I expect that the Budget itself, which will come later, will look at this head-on and should, I hope, begin to make a significant difference.

I will try to answer all questions in the time available, but I hope noble Lords will appreciate that there were quite a few. I will begin by picking on the right reverend Prelate, just because I happen to have the notes at hand. I hope he will forgive me. The question of health and social care that I have already touched upon will become important. The £1 billion will make a difference. There is an additional £500 million which should begin to stabilise the system. It does not solve the problems but begins to take us in the right direction.

The right reverend Prelate asked very specifically about unaccompanied children and legal aid. Unaccompanied children were brought into the scope of legal aid in immigration matters when the Ministry of Justice’s Legal Support action plan was published in February 2019. I hope that will go some way to addressing that particular issue. We are committed to ensuring that everyone can get the timely support that they need to access that justice system. If you cannot access justice, you cannot secure it. It is very simple.

There was a question on whether we should be in any way rejoicing that there are 10,000 more prison officers. In some respects, the answer to that should simply be no. That is not a way we should measure things, but it is not the only way we seek to measure things. It is about ensuring that those who find themselves in prison find a way out of prison without returning, looking at the recidivism rates themselves to ensure that people who have found their way into that troubled area are able to find their way out of it. In order to do that, we have to take the pressure off the system itself. Those 10,000 extra guards should, I hope, make some difference. However, it should not be a metric by which we measure the success of our society; it is simply a reflection of the need that these aspects have for us.

The right reverend Prelate will be aware that many aspects relating to benefits will appear in the Budget more sensibly because that is where they will rest. What we are looking at here is the departmental spending aspects. The Government are increasing spending on universal credit: it will be £2.5 billion higher in 2023-24 than when the decisions were taken in 2016.

Overseas aid is an issue very dear to my heart. The 0.7% of GDP is an important measure of our society. We are one of the few developed nations actually to try to meet that. However, we have got to make sure that the money spent works. It cannot be based upon return to the United Kingdom, although we must make sure it is value for money. Money spent unwisely is, in some respects, money lost. It should look at issues around poverty but should also begin to question the notion of how we address the wider global climate change and look at some of the wider issues that rest underneath that. I am proud that we managed to commit that fund. However, I want to make sure that it works for everybody here at home, to make sure that there is support among those who seek to continue the spending, so that it does not get undermined by people saying, “Why are we spending money on foreign people doing foreign things?” We are all part of a global community, and I think we should be able to recognise that.

A number of noble Lords touched on the north, but my noble friend Lord Kirkhope in particular touched on devolution. We often think about devolution within the nations of this United Kingdom but in truth—he is absolutely right in flagging this up—the question is: how does it break through to the parts of Great Britain? It is true that we need further investment, and this spending review looks at investing in a new towns schemes, bringing substantial funds into the north to try to bring this about. This cannot be tokenistic, it must come from the ground up, it must be money spent wisely and it needs to be accountable. We need to see value for money—it is not about headlines, it is about making sure that the people themselves experience the benefit.

Returning to the issues raised by my noble friend Lord Kirkhope, I am also aware that that question of mental health is absolutely vital. For too long our health service has seen this as a separate issue to be encountered later—it is not. It is at the heart of so many of the problems experienced by wider communities. A number of noble Lords have raised this matter, and that is why the Government have been willing to commit money directly into the mental health area. Is it enough money? I do not think there could ever be enough money committed into this area, but I hope it is a beginning, to move us in the right direction. I welcome my noble friend’s comments in this regard. It is important that as a community we recognise, as we pull these things together, that nobody should be left behind.

The noble Lord, Lord Tunnicliffe, raised a number of issues, including some put forward by the Labour Party itself. I do not want to be overly political here because each party must decide how it wishes to promote wider ideas. However, I note that some of the aspects appear to be broadly uncosted and unfunded. One of the challenges when you are trying to address wider austerity issues is to make sure your books are balanced and you can deliver what is most important—the sustainability of support. Those very elements are critical to giving confidence that we can deliver against them. I admire each of the aspects of the issues he raised, but they must be sustainable in the way they are delivered. Again, I respect the comments made by the Liberal Democrat Benches, recognising that we cannot spend our way out of a problem. We need to find the right balance in the way we address this. It is not always going to be easy, but I hope that we can find the right dynamic to do it.

If you will forgive me, I will work my way through my notes. The noble Lord, Lord Tunnicliffe, was also asking about the timing—and a number of noble Lords raised this question. Is this a pre-election attempt—a would-be pre-election attempt—to interest the wider community? In truth, I think noble Lords will recognise that 31 October is a watershed moment. Whatever you make of that, there needs to be a recognition that after that point there will need to be a brave new tomorrow. Exactly what that looks like will depend on how we enter that point, but we need to be in a position to look at that in a different fashion—a way of seeing how we can begin to budget. That is why, in looking at the spending review, every attempt was made to ensure that it was as up to date as could be, but it does not replace the Budget, which is yet to come later this year. The OBR will have the full details of that material, allowing for a detailed analysis of how money will be spent, and there will be a greater ability to interrogate that. We recognise that a number of issues have lain dormant as we have tackled Brexit. A number of noble Lords this evening and on other occasions have been very clear that we have, in the past, been guilty of becoming indulgent in regard to Brexit and not looking at what we need to be getting our hands dirty with, which is the issues of the people. This spending review aims to try to achieve that as best we can.

The noble Lord, Lord Livermore, asked a number of very detailed questions, particularly in regard to the lower deciles. He is absolutely right to flag this up, because one of the challenges is that if we cannot address the lower deciles the disparity between the rich and the poor—the very thing that Disraeli was talking about—becomes ever greater. In some respects, we have made progress in looking at the living wage, which has made a difference, but to secure the living wage you have to be in work. More people are in employment, which is important, but not enough people are in employment. We need to make sure that not only those on the living wage but those living and working in poverty are recognised. This will be explored further in the Budget itself, but I take away from the points he made the absolutely critical point: we cannot have people left behind who are getting poorer through no fault of their own, and we need to be very careful to achieve that.

My predecessor, my noble friend Lord Young, asked a number of questions, some related to those of the noble Lord, Lord Livermore. He will know far better than I, I do not doubt, that the majority of DWP spend is annually managed expenditure—AME—and the spending review deals with resource spending, so we will see a slight difference in the way this comes forward. The local housing allowance is part of that AME spending, but this is an important issue and I do not want to lose sight of it. I want to make sure that this is absolutely at the heart of the housing question addressed in the Budget and I will ensure that my right honourable friend the Chancellor does that very thing. It would be short-sighted were we to lose track of what that could mean.

The noble Lord also asked when the next OBR forecast will be. The answer is that I do not know—that was an easy one; good—but the Chancellor will know, and I do not doubt that in due course he will tell me, and I will pass it on that further information if I am blessed by retaining this position.

My noble friend Lady Stroud asked a number of quite difficult questions about health, particularly on how those with disabilities are affected. The spending review included £7 million to expand Jobcentre Plus advisory support in schools for young people with special educational needs, and to extend eligibility for access to work to cover internships for disabled people. I would like to know more about that so I will write to my noble friend—I would like more information to understand that as well. The Government will continue to support the most vulnerable: spending on benefits to support disabled people will be higher in every year to 2023 than it was in 2010, which is not unimportant. As for question of wages, the living wage has risen and that is not to be lightly set aside. The total increase in annual earnings should be higher, by a factor of some significance, than they were in 2016. The lowest earners had the fastest pay rises in the last 20 years, but they have not risen far enough, because they started from a lower point—we cannot lose track of that either.

I shall touch briefly on some of the wider questions in the spending review. Local government spending was raised by a number of Peers, particularly recognising the challenges faced in the settlement for local government. Clearly, there are moneys coming in different areas. There will be a 4.3% core spending power increase. We will see real-terms increases: there will not be just a levelling down in that regard. The extra £1 billion grant for social care, which will affect adults and children, with an additional £500 million, should provide some respite for the budgets of local government. The estimated increase in core spending powers is £2.9 billion, including reference to later consultation of the 2% core council tax referendum threshold and a 2% adult social care precept. That should go some way, again.

On the wider question of housing, and particularly the absence thereof—homelessness—we have put forward £422 million to help reduce homelessness and rough sleeping, including an additional £54 million in 2020-21, a real-terms increase of 13% from 2019-20. Is that enough? I suspect not, but I hope it makes some difference and begins a journey as we try to improve these aspects.

The question of the Foreign and Commonwealth Office was raised by some noble Lords.

[Lord Greaves]

The Minister might like five seconds’ rest. He has not tackled the point I raised, which is that none of this new money—or extra money, if that is what it is—for local government appears to be coming to ordinary district councils and unitary councils for their ordinary local, street-level, neighbourhood services. In many places these are in a state of potential collapse.

[Lord Duncan of Springbank]

The noble Lord raises an important issue. We talk about millions and billions, and various other ways of assessing money, but if people in the street and in their homes do not experience the benefit of that, it simply seems to wash over them. I will explore further how that money will arrive in the very council forums he discusses, I will write to him on that basis and put that letter in the Library.

Before I forget, the noble Baroness, Lady Kramer, asked a very technical question. My team simply said that we will have to write to her. If she will allow me, I will write to her on that point and put that letter in the Library.

I am running slightly short of time. I am not trying to short-change anyone, but if I end up leaving anyone out, or they feel they have not had full value, I will happily respond to any points beyond that.

The important points I want to stress, as I try to draw my remarks to a close, will be twofold. One is that the spending review itself is based on the best forecasts available at the time. The question of how they go forward is short-term; it will last for one year but the important thing is that it sets a new direction. We have turned a page. We often use “austerity” as a pejorative term, and for many people it is to live through that, but in truth it is about living within means and spending wisely. From hereon in, we must make sure that the money we spend delivers and that those in receipt of it see the benefit of it. I hope that this spending review will do that very thing. Importantly, going forward, the Budget will also begin to put the flesh on to the wider bones which we have set out here. I hope that will give noble Lords some confidence that the system itself, and the approach we are adopting, has not been jerry-rigged or in any way seeks to undermine what has been going forward.

I know that I have left a number of questions unanswered but I shall not be able to find the questions and answers at this moment. I realise that it is now slightly late and that some of your Lordships, like me, may be a little wearier than we would have been otherwise. If noble Lords will forgive me, on that basis—if I have left anything out, please come back to me and I will respond formally—I shall sit down and let your Lordships all go home.

Motion agreed.