Companies (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019

Lord Henley Excerpts

Wednesday 8th May 2019 Lords Chamber

Moved by

[Lord Henley]

That the draft Regulations laid before the House on 8 April be approved.

Relevant document: 25th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)

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

My Lords, these regulations add certain new requirements to the reporting of directors’ remuneration by publicly quoted and traded companies. The purpose of the new measures is to give shareholders more information with which to assess how rewards to directors are matched by performance—for example, by requiring companies to provide more detail about the award of company shares to directors.

The new requirements stem from a new European directive, commonly known as the revised shareholder rights directive. The directive is due to be transposed by 10 June 2019. These draft regulations would implement Articles 9a and 9b of the directive, covering the reporting of directors’ remuneration, to the extent that they are not already given effect in existing UK law. Other parts of the directive are being implemented by Her Majesty’s Treasury, the Financial Conduct Authority and the Department for Work and Pensions.

The regulations add a small number of additional requirements in respect of the directors’ remuneration policy and the directors’ remuneration report which publicly quoted companies are already required to produce under the Companies Act 2006. The main change that the draft regulations would make to the remuneration policy would be to require companies to provide additional detail about proposed share-based remuneration to directors, including arrangements under which directors can exercise their shares.

The Government believe that this will be a valuable addition to the existing framework for executive pay reporting. The award of company shares to directors is of considerable interest to shareholders since it has the potential to align the interests of directors more firmly with the long-term success of the company.

The draft regulations also provide for the remuneration policy to set out more information on directors’ service contracts, in particular their length, and to highlight the key changes introduced in a new remuneration policy compared to the previous policy.

For the remuneration report, the main new requirement proposed in the regulations is for companies to compare the annual change in directors’ remuneration to the annual change in average employee pay over a rolling five-year period. This new measure would provide greater transparency on how pay in the boardrooms of quoted companies aligned with pay and reward across the company as a whole. It would also complement a new obligation introduced by the Government last year for quoted companies to disclose and explain each year the ratio of their chief executive officer’s total annual pay to the average pay of the company’s UK employees. The regulations additionally propose that remuneration reports in future show the split between fixed and variable pay for each director in every year.

Taken as a whole, the new measures in the regulations would further strengthen confidence in the UK’s executive reporting framework as one based on transparent, consistent and accessible public reporting to shareholders.

I want to highlight two provisions in the draft regulations intended to ensure the compatibility of the new measures—which, as I have said, originate from the revised shareholder rights directive—with the UK’s existing company law framework.

The first of these concerns the scope of the companies covered by executive pay reporting. The UK’s existing executive pay regime applies to quoted companies, whereas the shareholder rights directive that these draft regulations will help implement applies to traded companies. In practice, the vast majority of traded companies are also quoted, meaning that their shares are both tradeable on a regulated market and quoted on the FCA’s official list. The draft regulations address this slight differentiation in company definitions between the directive and UK company law by providing for executive pay reporting to apply both to quoted companies and to traded companies, whether or not they are quoted on the official list.

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[Lord Stevenson of Balmacara (Lab)]

My Lords, I am grateful to the Minister for introducing this statutory instrument. I can be relatively brief, because most of my points have already been raised by the noble Baroness, Lady Kramer, and I need only add a couple more things to them. Like her, I was caught immediately by the point at paragraph 2 of the Explanatory Memorandum which explained that this statutory instrument comes from a directive passed on 17 May 2017, and I wondered about the timescale of that.

In addition to the points she made, I point out that the department has a long and distinguished record in looking at directives and regulations that come from the European Union and has always prided itself on the quality of the material brought forward in support of the changes that it wishes to make through an SI, whether it is negative or affirmative. This SI stands out as one that has not been supported by a considerable amount of consultation and debate, and nor is there an impact statement, which I find rather surprising. Perhaps I would not go quite as far as the noble Baroness, Lady Kramer, in suggesting that there is a devilish plan here behind the work done by the department to try to avoid having to do anything in the hope that it would not be necessary because exit day would be before 10 June. Even so, the department has not covered itself in glory in the sense that, although it is true that the difference between where the UK Government have already got to with legislation and this directive is relatively small, these are not unimportant issues. If the department’s heart was in the wish to ensure that shareholders and indeed wider stakeholders had good information that allowed them to assess the performance of directors and to form a view on the effectiveness or otherwise of the company’s approach to directors’ remuneration and performance, these regulations, on the back of the directive, are in fact important. In a sense, that suggests that more work on and understanding of how boards will operate it would have been useful and helpful.

In introducing this SI, the Minister tried to paint a benign picture of how this was all happening anyway and was in line with where the Government were going. But that conceals a concern which has stemmed not just from anything heard on this side of the House but which has come from the Prime Minister, no less, who said that more has to be done to improve the way in which our limited companies system operates. There has been concern from the Bank of England about the whole question of whether tomorrow’s companies will need to be significantly different in terms of powers and responsibilities: it pointed out the much wider group of people who have an interest in the success or otherwise of a company, not just the shareholders. So there is a context here which has not been addressed by the Minister and I hope that he will comment on it.

To be more specific, we could not have reasonably expected the Government on their own to have brought forward regulations to make sure that in future we require that the remuneration of persons in the role of chief executive officer and any deputy chief executive officer must be reported, even if they are not directors. That is a major change, and it will help considerably to better inform those who judge companies.

On the question of how share-based remuneration is described, detail on vesting periods, deferral and holding periods is often lacking. In future, remuneration policy will have to indicate the duration of directors’ service contracts. Again, that will be useful. The remuneration policy must also set out the decision-making process for determination of review and implementation and all significant changes. These are important matters. They may be trivial in themselves, but, taken together, they will give much more information.

The Minister mentioned the split between fixed and variable remunerations and the question of share options. Share options have been a source of long-term concern to those interested in how companies pay their staff, particularly directors. To have that nailed down now is a really important change.

So those changes in themselves are important. The context within which this happens is of political interest. There is a question about why the regulations have been delayed so that we are doing this in a rush, and there is a worry about not having the wider context around consultation and cost, which suggests that something is not quite working here. I look forward to hearing the Minister’s response on that.

Like the noble Baroness, Lady Kramer, I am concerned about the SIs that will presumably be required from DWP on disclosure by asset managers about pension funds. This is also an area of interest, but it would be wrong if the regulations were not in place by 10 June. Can the Minister give us some information on that? Like the noble Baroness, I question how the Department for Business, Energy and Industrial Strategy will take forward the provisions requiring further facilitation of shareholders’ rights. It is a longer deadline—3 September 2020—but, again, further information would be helpful.

These matters are important. The statutory instrument is of great interest and I am happy to support it.

[Lord Henley]

My Lords, as always, I thank both noble Lords for the positive side of their contributions to this debate—but thereafter it went a bit negative. The noble Baroness, Lady Kramer, supported by the noble Lord, Lord Stevenson, seemed to imply that we had been dragged kicking and screaming into bringing the regulations to the House. I assure them that that is not the case.

We were engaged in all the activity related to the EU in developing the regulations, but, as both noble Lords will know—probably far better than me, because they have been involved in BEIS matters for longer—this goes back quite a long way. Various improvements were made in 2013 and in 2018 to company reporting. So we have done quite a lot domestically, and we were involved with the EU in bringing regulations to book which, as the noble Baroness said, were produced in 2017 but do not need to come into effect until June this year. That date we will meet, and that is why we are bringing forward the regulations at this moment.

We have been preparing for a year to implement these measures. Those preparations had to take account of the new Commission guidance on the directive published last year, in 2018, and it would not have been fair to have introduced these new EU rules on UK companies two years before other companies in the EU. It is therefore quite right that we bring them forward at this stage. They form part of the Government’s wider corporate reform package that I mentioned, part of which was implemented last year and part of which was implemented earlier.

Both noble Lords asked about other government departments and the FCA. As I said, the FCA, DWP and the Treasury have to implement other parts. The Treasury will shortly be laying draft regulations. I do not know who in this House will do it; I imagine that it will be my noble friend Lord Young, as my noble friend Lord Bates is off on one of his walks. The measures in the directive are designed to increase transparency in the work of so-called proxy advisers, who advise institutional investors on the companies in which they invest.

DWP will shortly lay draft regulations to implement new measures in the directive covering how pension fund trustees carry out their stewardship roles with investee companies. The FCA will make changes to its handbook to give effect to new obligations under the directive covering asset managers and the disclosure of related party transactions by public companies, but that obviously will not need the same parliamentary scrutiny as these regulations. My department—BEIS—will also bring forward measures. I do not know whether they will be affirmative or negative, but I will advise the House in due course. We will bring forward appropriate measures to implement the final parts so that they can be brought into effect by September 2020.

Finally, the noble Lord, Lord Stevenson, asked about an impact assessment. I think that I made it pretty clear in my opening remarks that we did not think an impact assessment necessary, which is why we consulted widely with all the appropriate bodies, individuals and other parties. As a result of their comments, I am told, we made some changes and felt that an impact assessment was not necessary.

I believe that I have answered all the questions. As I said, we were not dragged kicking and screaming into doing this; we believe that the regulations are an appropriate response from the Government, partly to meet our obligations because we are still in the EU but also as part of the wider package I talked about, which came in last year and on earlier occasions.

Motion agreed.

Competition and Markets Authority: Legislative and Institutional Reforms

Lord Henley Excerpts

Wednesday 8th May 2019 Lords Chamber

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

My Lords, I thank the noble Baroness, Lady Hayter, for introducing this timely debate. Like the noble Lord, Lord Turnbull, I was intrigued as to which Lady Hayter we would see but, as my noble friend Lord Tyrie stressed, we are happy that it is the Lady Hayter who wishes to look to the consumer benefit, does not look at state intervention, as some of her colleagues in another place might want, and generally goes along with the broad thrust of the suggestions put forward by my noble friend, if I may call him that—I appreciate that he no longer sits on our Benches.

Noble Lords will be pleased to hear that although they will have noticed a large number of yellow notes coming to me, I will not respond in detail to every single point made in this debate; time does not allow me to do so. However, in responding I can to some extent give the broad thrust of some of the Government’s views about where we should go and what we should be doing. I shall take the four questions that my noble friend Lord Tyrie put towards the end of his speech, when he asked whether far-reaching reform is necessary and whether the letter is a step in the right direction. Crucially, he then asked “when?”, which is always one of the hardest questions to respond to at the Dispatch Box, and whether we should do more to do this with cross-party consensus. Following the debate, I think my noble friend will agree that there is a considerable degree of cross-party consensus on his letter. My noble friend himself referred to the letter, as did many other noble Lords, and I do not think anyone said that it was going down the completely wrong track. However, as my noble friend said in the second paragraph of his letter:

“The attached provides preliminary advice. Work is continuing at the CMA on a number of these proposals”.


He described the letter as long; I think it is six pages long, but a further 30 or 40 pages were attached to it. There is a great deal to do there but a great deal more for the CMA, the department, government and others to do. We want to look at that in due course and we certainly want to respond in the proper way.

Just as my noble friends Lady Neville-Rolfe and Lady Altmann said, we believe that competition is crucial and that it should be the lifeblood of our economy. It brings clear benefits for consumers. Businesses that have to compete against each other are incentivised to offer goods and services to consumers that provide greater choice, better quality and lower prices. Consumers themselves benefit from strong markets subject to healthy competition and effective consumer protection rules, and that is what we want to see.

With the Competition and Markets Authority, we have a well-developed set of consumer rights, which are some of the strongest in the world. They have been developed over the years with a degree of cross-party support—I appreciate what the noble Baroness and the noble Lord, Lord Whitty, both of whom were involved in the passage of the 2015 Act—had to say. It was recognised in 2015 that the United Kingdom was ahead of the rest of the European Union in introducing specific rights and remedies for a great many services, particularly on digital content. I shall say a little more about that.

As my noble friend said, any system that regulates markets needs to ensure that it keeps pace with developments in that market, and a dynamic market requires a dynamic competition regime. We have been at the forefront of global reforms, promoting open markets that enable growth and improve consumer outcomes, and we intend to remain on the front foot. That is why we acted, first by publishing the consumer Green Paper last year to which my noble friend Lady Neville-Rolfe referred, which raised fundamental questions about how the Government could ensure that markets work for all consumers, following that up with the consumer White Paper to be issued later this year, focusing on loyalty penalties, and the independent review of digital competition, which reported in March, seeking the views of my noble friend Lord Tyrie on strengthening the competition and consumer enforcement regime.

Following that, and given the Government’s ambition to ensure that we have a competition regime fit for the future, my right honourable friend the Secretary of State asked my noble friend to suggest reforms to the competition and consumer enforcement regime. He responded with the letter dated 21 February, published on 25 February, which we in government welcome as an encouraging step in the right direction that provides a firm basis for further work by both the CMA and the Government.

As all noble Lords who have read the letter and the attachment know, the proposals are wide-ranging and ambitious. They include a greater focus on consumers by introducing a new statutory duty on the CMA to treat the economic interests of consumers and their protection from detriment as paramount; swifter investigation through a new statutory requirement on the CMA to conduct its investigations swiftly, while respecting parties’ rights of defence; stronger powers on competition and consumer enforcement; and a wider set of suggestions, including civil fines for individuals, board-level responsibility for competition and added duties for auditors.

I give an assurance that we intend to consult in due course. The debate introduced by the noble Baroness, Lady Hayter, is a useful start in that direction.

We are also committed to ensuring that those markets work for all. That is why we published the Green Paper last year, looking at how to modernise the approach taken by the CMA and regulators to safeguard consumer rights and protect vulnerable consumers. We want to ensure that our regulatory, competition and enforcement regimes are suitable for the modern economy and the modern consumer. The consumer Green Paper announced that review of alternative dispute resolution, including proposals to strengthen enforcement nationally while maintaining the strong local protections that the noble Baroness, Lady Crawley, with her experience of trading standards, and the noble Lord, Lord Whitty, both believe are important. It announced the smart data review to consider giving consumers more control over their usage data to help them get better deals; performance metrics for consumers in each sector, including information on price differentials; and the creation of a consumer forum comprising Ministers and regulators to ensure joined-up working while respecting regulatory independence.

The consumer White Paper will also set out proposals for the next phase of action to strengthen the consumer regime. The proposals we will set out in our White Paper are based on a clear set of principles. Competition should be central to our approach—the Government should always look to intervene to remove barriers to competition where they arise—but consumers should be able to get redress when things go wrong, so consumer rights should be enforced effectively. Consumers should benefit from new technology and new business models, with competition and regulation working in the consumer interest.

I am running out of time but I wanted to touch on what the noble Baroness, Lady Crawley, referred to as the dog not barking at the elephant in the room—a rather confusing picture but there we are. To touch briefly on EU exit, perhaps I may make clear how we believe that our competition regime would operate post exit.

We will leave the European competition regime at the point of EU exit. The CMA and other regulators will take on responsibility for all anti-trust and merger cases that affect UK markets. Subject to parliamentary approval, the CMA will also take on the role of the UK’s state aid regulator.

In a deal scenario, the current withdrawal agreement makes provision for an implementation period, during which the status quo in competition will be preserved. This means that the CMA and the European Commission will continue to share jurisdiction for the enforcement of anti-trust and merger rules. During the implementation period, we would seek to negotiate comprehensive co-operation arrangements with the EU as part of the future economic partnership, alongside commitments to maintain and enforce effective competition laws. In a no-deal scenario, which we do not believe will happen, the CMA would immediately take jurisdiction over all cases affecting the UK.

My time is running out so I end by thanking the noble Baroness, Lady Hayter, and, more importantly, my noble friend Lord Tyrie for his letter and for what he described as preliminary advice. I assure him that we received that letter; as he knows, my right honourable friend was at its launch, and he and other colleagues in the department take it seriously. We will consider it and, as I said, we intend to consult on it.

Climate Emergency

Lord Henley Excerpts

Tuesday 7th May 2019 Lords Chamber

[Lord Bird]

To ask Her Majesty’s Government, further to the climate emergency declarations by the First Minister of Scotland on 28 April, the Welsh Government Minister for the Environment, Energy and Rural Affairs on 29 April, and the House of Commons on 1 May, what plans they have to formally announce a climate emergency in the United Kingdom.

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

My Lords, our approach will continue to be defined by the action we take, not the words we use. The Government fully recognise the urgency of tackling the challenge of climate change. We were the first country to introduce long-term, legally binding carbon reduction targets and have decarbonised our economy faster than any other G20 country.

[Lord Bird (CB)]

I am very pleased to hear that we have nothing to worry about and that all we need to do is just more of the same. I worry because 80 years ago, when we were facing the arguments of what to do about Nazi Germany, people used the word “appeasers”. In 30 or 50 years’ time, are this Government, the Government after them and the one before them going to be seen as appeasers around the environment? That is what really concerns me. May I suggest that the noble Lord considers the possibility of looking at the future generations legislation in Wales, which brings together the environment, poverty, health and all these questions, so that we can offer a future to our children?

[Lord Henley]

My Lords, I did not say that we have nothing to worry about. I and my right honourable friend the Secretary of State have made it clear, including in the debate we had last week in the name of the noble Lord, Lord Rooker, that there is something to worry about. We are certainly worried about climate change, but we are also of the view that we have taken considerable action in this country; we will take further action, both in this country and internationally, for the benefit of the whole planet. We will also offer leadership, internationally, as a result of actions both international and national.

[Lord McNicol of West Kilbride (Lab)]

My Lords, on the Minister’s final point, it is vital that the Government take all necessary steps to avoid the impending climate catastrophe. This includes, as he touched on, using powers to lobby our allies to cut emissions. Can he explain to the House what steps, if any, Her Majesty’s Government are taking to persuade President Trump’s Administration to return to the Paris agreement and meet their obligations to cut pollution?

--- Later in debate ---

[Lord Henley]

My Lords, the noble Lord is quite right to stress the importance of taking action domestically, because by doing so we can offer worldwide leadership. I can give an assurance that we will continue to offer that leadership as a result of the very good record we have. That is why we want to host COP26 next year: it will be an opportunity for this country and the whole world to put it to America, and other countries, that they must all play their part in this field.

[Baroness Boycott (CB)]

My Lords, without a doubt we have to change the way we farm and the way we eat if we are to avoid this climate emergency. The Government’s new Agriculture Bill might not be perfect but it does go some way towards addressing these issues by setting out what is in the common good: we will cease to subsidise in the way we do at the moment and reward farmers for biodiversity, and for soil and water management. My question is: where is the Bill? When are we going to get it? Given the state we are in, why can we not hurry up?

[Lord Henley]

My Lords, as to where the Agriculture Bill is, I fear that I cannot help the noble Baroness, but no doubt my noble friend sitting beside me will be able to offer advice in due course. All I can say is that we will do all we can in all fields—there are a great many fields in which work needs to be done—to reduce our carbon footprint. As I have said before, we have done a great deal, but there is a great deal more to do.

[Baroness Jones of Moulsecoomb (GP)]

My Lords, the Government met the Extinction Rebellion campaign recently. What did they learn from that and what policies are going to change as a result of the meeting?

[Lord Henley]

My Lords, the most important thing is that we had the report a few months ago from the IPCC, which we put to our own climate change committee. Last week we received a report from the climate change committee and we will respond to it in due course.

[Lord Fox (LD)]

My Lords, returning to the agricultural issue, one way of reducing the climate change impact of agriculture is to grow fewer crops. We could do that by reducing waste. Tony Juniper estimates that about one-third of food in this country is wasted. That is equivalent to cultivating an area the size of Yorkshire and Lancashire and then throwing all the food away. Does the Minister agree that, for whatever reason, the message is not getting over to the general public, food companies and food services? What are the Government going to do and what can we all do to help the Government get this message across?

[Lord Henley]

The noble Lord makes a good point. The first thing to say is that we should all eat up our greens.

[Baroness Jones of Moulsecoomb (GP)]

Please, no!

[Lord Henley]

I will restrain my carnivorous habits in the future. However, the noble Lord makes a good point, and everyone should get that message—there is a great deal of waste in the food chain, just as there is throughout the world. We have possibly a lot less waste than in the third world as a result of the efficient means we have of moving food around and processing it, but as the noble Lord said, there is still a great deal of further waste, and more must be done.

[Lord Howell of Guildford (Con)]

My Lords, in support of the point made by the Labour Member just now, and in light of the fact that 99.3% of all carbon emission increases arise not, alas, in this country but in the wider world—in particular in Asia, Africa and the United States, where the per capita energy consumption is the highest of all—can we have an outline from the Government, maybe through a White Paper or a climate report, on exactly what the younger generation and the whole country are doing to bring to bear the resources on the technology needed to fight climate change and determine our own future rather than just make speeches?

[Lord Henley]

My Lords, the gist of what I am trying to say is that what we are doing through our actions is important in this country. Obviously, as my noble friend makes quite clear, what is happening throughout the rest of the world is far more important, because we are only a small island, producing a relatively small amount of carbon emissions. However, as a result of what we do—and we have a good record, which goes back through all Governments who have been in power over the last few years—we believe that we in this country can show international leadership and hope to persuade other countries to follow suit.

Reducing Greenhouse Gas Emissions

Lord Henley Excerpts

Thursday 2nd May 2019 Lords Chamber

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

My Lords, like all other noble Lords, I pay tribute to the noble Lord, Lord Rooker, for securing a timely and high-quality debate. I also thank him, as always, for his positive tone. He perhaps does not like me saying that, but on this occasion he was positive—I should probably say that he does not always want to be positive on other issues.

All noble Lords have made clear the importance of working together and, looking back on the history of these matters, I am reminded that that is what we have done. The noble Lord, Lord Rooker, mentioned my friend Lady Thatcher, who made a great speech in 1989—a time when my noble friend Lord Deben was in government and possibly even wrote the speech—the first from a government leader warning the rest of the world about the dangers facing us.

In talking about the history, it is worth mentioning the cross-party support for the Climate Change Act 2008, which the Labour Government took through. As the noble Lord, Lord Prescott, will remember, it had support from the Opposition. We recommended amendments increasing the targets, which the then Government accepted and we all took forward. This Government are well aware of their responsibilities under the Climate Change Act and, however much the noble Lord worries about the fact that no Parliament can bind its successor, he knows that we have followed that Climate Change Act and stuck with it. We have not sought to amend it downwards, if I can put it that way, and want to continue with it. It is important for us to remind ourselves of the history of what we have achieved under the coalition Government and the current Government, and what we are still achieving.

That legislative framework, with its ambitious package of policy proposals, has been matched by a vigorous programme of international action as we work and invest to help other countries mitigate and adapt to—I am grateful for what the noble Baroness, Lady Brown, said about adaptation—the impacts of climate change. I hope that, as a result, this country can offer leadership and encouragement to the rest of the world. The noble Lord, Lord Rooker, asked for action. There has been and will continue to be action on what we can achieve domestically and what we can do in the wider world, either by our individual actions or through the process of offering encouragement.

As the House will be aware, my right honourable friend the Secretary of State will publish an energy White Paper in the summer which will seek to address the challenges arising from the transformation of the energy system over the coming decades. That will be important, as many of my noble friends have pointed out; my noble friend Lady Altmann referred to electric cars and the strains they will put on the electricity system. The White Paper will take a long-term view of the energy requirements—up to 2050—consistent with what the Government wish to do on climate change.

We are already seeing the impacts of climate change around the world. Our actions have been determined but we know that more is needed. Last October, the IPCC published its special report on global warming. Its conclusions were stark. Our current rate of warming could see us reaching 1.5 degrees as soon as 2030, which would present many of the threats highlighted by noble Lords in the debate, including to food security, water supply, infrastructure, biodiversity and the ecosystem as a whole.

The science is now clear, and we are witnessing a groundswell of public concern, to which noble Lords have referred. There is an increased sense of urgency and more vocal demands for action. That is why we are seeking to a play a role, both domestically and internationally. I shall address both roles in turn, starting with the domestic sector.

Our legally binding carbon targets, set by our world-leading Climate Change Act, are among the most stretching in the world. We have achieved a great deal since 1990: we have reduced emissions by 42%, while growing our economy by 72%. Doubts have been expressed—first, by the noble Lord, Lord Rooker, and then by the noble Baroness, Lady Jones, and others—about the system of accounting. We have to accept the system that we have, because we cannot change it unless we have the agreement of others. Perhaps that could come in the future but, at the moment, under the current system of accounting, we have reduced our emissions by 42% and, importantly, increased our economy by 72%.

At this point, it is worth looking at the opportunities presented by the growing green economy. Some 400,000 jobs have been created, and we estimate that that figure could rise to 2 million by 2030. The sector is growing faster than the main economy—up by some 11% per annum—with exports estimated to be worth between £60 billion and £170 billion by 2030. The noble Lord, Lord Prescott, referred to opportunities at a local level for areas such as the Humber and what could be—and I am sure will be—achieved there. If the noble Lord were to invite me to the Humber and show me what it is doing, its local industrial strategy and opportunities, I would be more than happy to go. However, one should also look at other opportunities, and I will refer to those in due course.

In 2017, we published our clean growth strategy, setting out our policies and proposals for further decarbonising the economy in the 2020s and the illustrative pathways out to 2050. The strategy also sets out our investment of more than £2.5 billion to support low-carbon innovation from 2015 to 2021, as we seek to realise the opportunities—I again stress the word “opportunities”—of the global shift to a low-carbon economy. I shall give just a few examples of the action we are taking.

In power, 50% of our electricity now comes from clean sources—I am grateful to the noble Lord, Lord Lipsey, for reminding the House of this—and by 2025 we will have phased out coal from our energy mix in its entirety. As a Cumbrian, I shall pause here, because I see the noble Lord, Lord Judd, in his place. Since there was some mention of consent being granted for a new deep mine in Cumbria, I will say that that decision has been made. However, it is not coal for energy consumption but coking coal for the production of steel. At this stage, we have no other way of producing steel without using that coal. The alternative would be to import it across the seas from other, possibly rather dubious, parts of the world. I think it is better to take it out of the mines in that mining area. It may be that the noble Lord, Lord Rooker, does not agree with me.

On 7 March, we published our offshore wind sector deal. It pledges that 30% of British electricity can come from offshore wind by 2030. We have seen dramatic growth in the use of offshore wind and, it is worth reminding the House, an enormous reduction in the cost of offshore wind. We have seen the same in solar power as a result of its use, with enormous reductions in the cost. The noble Lord, Lord Grantchester, asked us to continue to look at tidal and mentioned the Swansea Bay barrage scheme, which we rejected on the grounds of cost. We will of course go on looking at issues such as tidal, but I do not think there are likely to be opportunities for dramatic reductions in costs for schemes of that sort because they are largely about putting large amounts of concrete—a rather carbon-producing product—into the ground, whereas with offshore wind and solar there are genuine opportunities to reduce costs, and we will continue to do so.

There are other renewables that we will continue to look at and research. I can tell the noble Lord, Lord Prescott, that I was very interested to see old mine shafts in a mining park in Glasgow being used as heat pumps. I do not understand the science of it—the noble Lord, Lord Hunt, will no doubt help me out on this—but it is wonderful to see that old mining areas can possibly make a contribution to renewables by making use of those old mine shafts and what goes with them.

There are all sorts of other things that we can and will be doing in research into renewal. One thinks of all the work that goes into storage. The noble Viscount, Lord Hanworth, touched on the production of hydrogen from nuclear power stations. One can also look at the production of hydrogen from wind farms—I have seen it in Orkney—that can be used in transport or other things. We can do research into artificial intelligence and other such things to improve the smartness of our grid. All this can improve energy efficiency, make better use of power and reduce our consumption. I could go on, but I would be in danger of running out of time.

I now turn briefly to my noble friend’s report. I am grateful to my noble friend Lord Deben and the noble Baroness, Lady Brown, for all the work they have done in producing it. It is a great, big, square book. As they said, there are 600 pages, and I make an honest confession that I have not even opened it yet, because I got it only this morning. However, it will be studied in the department by Ministers in due course. I believe we acted rightly and quickly in commissioning that report from independent experts from my noble friend’s committee to provide that advice. It has come at a crucial moment and will be worth serious study. I guarantee that we will study it and I guarantee my noble friend that, in due course, my right honourable friends the Secretary of State and Claire Perry will respond to it and take it forward in the most appropriate way.

I said that I want to talk about what we are doing domestically, but it is also very important that I now turn to our role internationally, what we are doing and how important it is. The noble Lord, Lord Prescott, talked about that from his experience. We can do an awful lot not only by example—I refer to the history—in the way we have shown how individual countries can cut their emissions and at the same time grow economically. We can show that since we have possibly the best record in the G7 or even the G20 since 1990, but obviously we can do more and we will continue to do more. We have offered to host COP 26 next year, which will be a pivotal global moment to take stock, encourage global ambition and prepare the ground for further action.

We know, as I think the noble Baroness, Lady Brown, said, that climate change is a risk multiplier with the potential to exacerbate global instability through resource stress, population displacement and the impact on trade and global economic and food security. For too many people, climate change is already a matter of life and death. The noble Lord, Lord Judd, stressed this. Millions around the world have been left without homes or livelihoods, as we have seen recently following the cyclone that affected Mozambique, Zimbabwe and Malawi. We are promoting climate security internationally and are helping Governments build resilience while reducing emissions. Through the UK-led Centre for Global Disaster Protection, we are working with developing countries to increase their preparedness for and resilience to climate change and natural disasters. Through our world-leading international climate finance, we are supporting cleaner economic growth and so far have helped some 17 million people with improved access to clean energy and some 47 million people to cope with the effects of climate change. Between 2016 and 2021, we are providing at least £5.8 billion in climate finance and are aiming to spend half of that on building resilience and half on emissions reduction.

I shall say a word or two about that. I remind the House—I think this was a question from the noble Baroness, Lady Altmann—that my right honourable friend the Foreign Secretary announced only yesterday three major new aid programmes to help farmers across Africa and in southern Africa affected by climate change and to boost climate resilience in Ethiopia. We are also playing a key role in the commitment from developed countries to mobilise $100 billion a year in climate finance from 2020. The UK will co-lead efforts on resilience and adaptation ahead of the United Nations Secretary-General’s climate action summit in September. Investing in resilience not only reduces the risk to lives and livelihoods but is the opportunity we talked about to create jobs, spread prosperity, accelerate development and enhance security.

I believe this has been a good debate and that—

[Lord Howell of Guildford]

I hope that my noble friend will forgive me for interrupting, but he is obviously coming to the end of his speech. Our green targets, and indeed those of the wider world, depend heavily on the successful development of low carbon nuclear power. As I indicated, and as is widely seen, our nuclear power programme is in some difficulties at the moment, yet my noble friend has made no mention of that. Would he do so please?

[Lord Henley]

I repeat a commitment that I have given to my noble friend before—that we remain committed to nuclear power. I accept that we will not have the Moorside development in Cumbria that we were hoping for, nor the Wylfa development, but we continue to believe that there is a role for nuclear power. We continue to get considerable amounts of energy from nuclear power. My noble friend will no doubt be ready for the White Paper that I talked about earlier and there will be further announcements from my right honourable friend in due course. However, I offer him my assurance that we certainly continue to see a role for nuclear power.

I believe that I am coming to the end of my time. I end by thanking the noble Lord and giving that assurance. I believe that we and all other parties and other Governments have achieved a great deal. We have demonstrated to the world how emissions reductions can be delivered while at the same time—I think this is important—growing not only our own economy but those of other countries. Lifting countries out of poverty will be better for them. There is no point in imposing a hair-shirt on ourselves if it imposes an even worse hair-shirt on the rest of the world. We will continue to take action in the United Kingdom, taking our strong progress to date as a template for going further, and we will help other countries to do the same.

Corporate Governance

Lord Henley Excerpts

Monday 29th April 2019 Lords Chamber

[Lord Haskel]

To ask Her Majesty’s Government what steps they are taking to raise public confidence in, and support for, business and industry through better corporate governance.

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

My Lords, we have reformed our corporate governance framework to make businesses more open and accountable. A revised UK corporate governance code gives employees a stronger voice in the boardroom and new legislation requires companies to report on their executive pay ratios.

[Lord Haskel (Lab)]

My Lords, we are all aware of the declining confidence in companies, particularly those delivering public goods and services, such as Carillion. Care homes are going bust and the probation service is in crisis at the moment. Led by Tomorrow’s Company—I declare an interest—thought has been given as to how we might restore public confidence in the trustworthiness of such companies. The proposal is that the Government should support the use of a British standard for the corporate governance of companies delivering these goods and services, in the same way that British standards enable us to trust public transport and health services.

--- Later in debate ---

[Lord Haskel]

Will the Government insist that companies delivering products and services to the public must satisfy this British standard, and that procurement bodies must also abide by it?

[Lord Henley]

My Lords, I agree with the noble Lord that public trust in companies and their governance is very important. I assure him that, according to the most recent survey, levels of public confidence are increasing rather than decreasing, as he put it. I am also aware of the work being done by the British Standards Institution in developing two new specifications on sustainable investment management and sustainable finance. It is premature to say whether the Government should expect suppliers to comply but we will obviously consider it carefully in due course.

[Baroness O’Neill of Bengarve (CB)]

Does the Minister consider standards of trust an adequate metric for the trustworthiness of companies?

--- Later in debate ---

[Lord Henley]

My Lords, the noble Baroness asks a difficult philosophical question. It is important to try to maintain public trust. In my response to the noble Lord, Lord Haskel, I tried to make it clear that we have seen some increase in it, but we also think it important—hence the work of the FRC and others on the UK corporate governance code—to make sure that we have an appropriate code so that companies can operate in a proper manner.

[Lord Fox (LD)]

My Lords, the Minister has talked about openness. I know that the CMA has reported back on the auditing business and I would not expect him to comment on the Government’s response to that yet unless he wishes to do so. Does he agree that business reputation is not in the hands of the auditors? It is the responsibility of company owners, their boards and their managers. I am not sure where the noble Lord is getting his data on trust because there is a crisis of trust between society and big business. If he does not recognise that, he is missing something. What measures are the Government considering taking in order to hold company shareholders, boards and managers to their wider responsibilities to society?

[Lord Henley]

I agree with the noble Lord on the first part of his question, which is that this is a matter for companies, and it is right that they should get it right. On levels of trust, what I have been trying to make clear is that we have seen a growth in public trust in business. It is still too low, but the most recent 2019 Edelman global trust barometer shows a small increase, which is to be welcomed and something we would encourage. As the noble Lord says, it is too early for me to comment on the CMA.

[Baroness Neville-Rolfe (Con)]

My Lords, I am glad to hear my noble friend’s comments about trust, but could more be done to enforce the existing rules of corporate law? There is a problem in that the bad eggs give business a very bad name, so good enforcement early on of the right kind, led strongly by the FRC, can be extremely helpful. Does my noble friend agree?

[Lord Henley]

My Lords, I do agree with my noble friend. I think that she will agree that we have done a great deal on corporate governance ever since we published the Green Paper in 2016, and there is the work done by the FRC and others right up to publishing and bringing into operation the new code in January of this year.

[Viscount Hanworth (Lab)]

My Lords, our failure in corporate governance has enabled the City of London to consign many of our utilities and industries to foreign ownership. Are the Government doing anything to staunch this haemorrhage?

[Lord Henley]

My Lords, I did not say that there has been a failure in corporate governance, rather that it is right that the Government should be doing what they have been doing; hence the work of the FRC on the corporate governance code and the work instituted by the Government when we published our Green Paper back in 2016, for example.

[Viscount Hanworth]

I wonder if the noble Lord could answer my question more directly.

[Lord Henley]

My Lords, I believe that I have answered his question.

[Lord Stevenson of Balmacara (Lab)]

My Lords, surely the issue here is not philosophical but political. There is a huge gap in the Government’s legislative programme at the moment and plenty of time to fill it. Since the Green Paper of 2016 the Government have been promising to do something about corporate governance but we have yet to see the detail. For example, when are we going to get the full result of the words spoken by the Prime Minister on the steps of Downing Street when she enthused about workers on boards? These things are important but they have never been acted on; it is about time that they were.

[Lord Henley]

My Lords, we have made clear our views about workers on boards. The FRC has also made clear in its revised code that it requires boards to have in place at least one director appointed from the workforce, a formal workforce advisory panel or a designated non-executive director. We do not think it is right to go ahead with what the noble Lord is suggesting, and we have made that quite clear from the start. It is a matter for companies to decide what is appropriate.

[Lord Cotter (LD)]

My Lords, does the Minister agree that management is the key issue when it comes to small businesses? I left school and went into a company that was run on the lines of “them and us” rather than the co-operative company it is now. It is owned by the employees. Good management is the key issue here.

[Lord Henley]

My Lords, I agree with the noble Lord that good management is obviously the issue. Whether good management should go down the route that he seems to be suggesting—I was not quite clear about employee share ownership—I do not know. However, it should be a matter for companies themselves to decide.

Businesses: Technology

Lord Henley Excerpts

Wednesday 10th April 2019 Lords Chamber

[Lord Holmes of Richmond (Con)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and declare my interests as set out in the register.

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

My Lords, we are creating an attractive environment, building the foundations and skills, data and ethics to allow businesses based on AI to start and scale. It is encouraging to note that inward investment to the UK AI sector increased by 17% last year—more than the whole of Europe combined.

[Lord Holmes of Richmond]

My Lords, there are obviously many factors involved, not least our excellent higher education institutions and our approach to immigration, to international students and to funding, to name just a few. Does my noble friend agree that we need to optimise all these factors and more if we are to realise this fantastic opportunity for companies to come here to start and scale in the UK?

[Lord Henley]

My noble friend is quite right to draw attention to our strengths, particularly those in the university sector; for example, he will know that on a league table based on research we have three of the top 10 universities, which certainly makes it attractive for businesses to come to this country and for businesses here to upscale their businesses in AI. He pointed to other factors as well, but I assure him that the Government are doing their bit with the AI sector deal, which is worth some £1 billion to the sector—half from the Government and half from the industry—and I hope that we will see yet further support for it.

[Lord Grantchester (Lab)]

My Lords, before asking my question, I congratulate the noble Lord the Government Chief Whip on the achievement of his family business, Taylors Bulbs, in reaching the celebratory milestone of 100 years in business. My best wishes to him and his business for the next 100 years.

The noble Lord, Lord Holmes, is correct to identify and endorse huge commercial opportunities. However, a PwC report in 2017 highlighted that AI and wider automation could result in up to 30% of UK jobs being dispensable. Change can be painful. What steps are the department taking to ensure that all employees benefit from these developing technologies, such as by an improved leisure/work balance, and that AI does not simply lead to mass redundancies?

[Lord Henley]

The noble Lord takes a depressingly pessimistic view of that PwC report. It pointed out that advances in that sector could lead to growth of £230 billion between now and 2030. That is to be welcomed. It also pointed out that jobs would disappear, but I think it went on, as did another report to which I referred the other day, to point to a very large number of new jobs in the sector, which would probably be more highly paid and more highly skilled and which we could provide in this country.

[Lord Fox (LD)]

My Lords, will the Minister focus on the scale-up part of the Question? The British Business Bank is there to help the scale-up process. I understand that it loans about £2.5 billion through other institutions. How much of that money proportionately is going into the AI industries to help them scale up, and does he expect that proportion to increase or decrease?

[Lord Henley]

My Lords, I cannot give any precise figures about how much is specifically targeted on the AI industry. The important point is to recognise, as did the PwC and other reports, what will happen in that industry: the advantages for it, how much it will grow and how well this country is doing. That is why I cited in my Answer the massive increase in inward investment—which is obviously an indication of what is happening to not only start-ups but scale-ups—of 17%, which is more than the rest of Europe combined.

[Lord Hamilton of Epsom (Con)]

My Lords, has my noble friend noticed that although the Opposition are complaining about the redundancies that will be caused by new technology, they are on the other hand complaining about the lack of productivity growth in this country, which will of course be achieved by the introduction of new technology?

[Lord Henley]

As always, my noble friend makes a valid point. We will see new jobs, better jobs, greater productivity and a general growth in the sector.

[Lord Mountevans (CB)]

My Lords, fintech is a great story for Britain. Later this month, we have the Innovate Finance FinTech summit marking the beginning of UK FinTech Week, but 42% of those working in the sector come from overseas. Does the Minister agree that access to this country for the young innovators from abroad is essential, and that we should have an immigration regime which permits them to come to this country?

[Lord Henley]

My Lords, the noble Lord rightly points to the importance of the fintech sector and the fact that London is its leading world player. We shall have to look carefully to ensure that we can attract the right people not only from abroad but from the UK. That is why skills will be important. I am sure that my noble friend from the Home Office will have noticed what he had to say on bringing in people from overseas.

[Lord West of Spithead (Lab)]

My Lords, I raise a slightly different aspect. We are ahead of most countries in the world on AI, particularly at our universities, but a large number of university courses are getting very full with Chinese students. Is there any concern about this vast number coming in, bearing in mind their input to a large number of other areas of high tech within our nation?

[Lord Henley]

The noble Lord takes me slightly wider than the original Question. Again, it is a sign of the success of the university sector that it attracts people paying large fees into universities, to the benefit of those universities and of this country. I hope that universities will then be able to consider expanding those courses.

[Viscount Ridley (Con)]

My Lords, is my noble friend aware of just how highly respected the UK artificial intelligence sector is around the world in not just research but application? It is generally trusted more than both China and the United States, and has a stronger digital industry than both Germany and France. Can the Government give something of a lead to this nascent industry through their procurement policies?

[Lord Henley]

My Lords, that will certainly be considered. In one of my earlier answers I referred to the AI sector deal, but I can also refer to the fintech sector strategy launched a year ago by my right honourable friend the Chancellor. Again, it set out our commitment to that sector remaining the leading centre for fintech.

Fuel Poverty

Lord Henley Excerpts

Thursday 4th April 2019 Lords Chamber

[Baroness Donaghy]

To ask Her Majesty’s Government what is their estimate of the number of households in fuel poverty; and what action they intend to take to reduce that number.

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

My Lords, in 2016, 2.55 million households in England were in fuel poverty. We can measure progress using the total fuel poverty gap—that is, the reduction in bills required for all fuel-poor households to heat their home at a reasonable cost, which has decreased by £25 million since 2010. The best long-term solution to tackle fuel poverty is to improve energy efficiency, which we have made the primary focus of our energy company obligation.

[Baroness Donaghy (Lab)]

I thank the Minister for his Answer. I hope he agrees that we have not cracked this problem yet. The official figures are the tip of the iceberg. Since I last asked this Question, things have become worse, with fuel price hikes and a massive rise in the private rented sector, where fuel poverty is at its worst. The Government’s plan for insulating and upgrading homes is 60 to 80 years behind target. What practical steps will the Government take to solve this Victorian problem before we get to the 22nd century?

--- Later in debate ---

[Lord Henley]

My Lords, we should treat the figures with some caution. They are based on income below the poverty line, and thus are relative figures. That being the case, there is always the danger that the more one does the worse they get, because you can never actually meet that target.

However, the noble Baroness is right to look at practical measures. I referred to the energy company obligation, which has delivered 2.4 million energy saving measures since 2013. I also refer to the warm home discount scheme and the various measures we announced recently to deal with the private rented sector, providing extra insulation for houses and increasing the obligation on landlords to spend more on bringing their houses up to an appropriate level of insulation. I refer to the Domestic Gas and Electricity (Tariff Cap) Act 2018, which made various changes, and the work that Ofgem has done on the safeguard tariff. I could go on.

[Lord Marlesford (Con)]

Does my noble friend agree that one simple, practical measure would be to make the winter fuel payment taxable? It is paid out by the department for social services anyway, so that would be very easy. The tax collected could then be used to increase the payment, so that those who do not pay tax would get a higher sum. That would mean it was self-adjusting. There would be no further expenditure, but it would at least mean that more of the expenditure went to those who need it.

[Lord Henley]

I suspect it is a benefit of which a large number of Members of this House are in receipt—I see one or two indicating that they are not. I note what my noble friend said. It is a very good suggestion, and I will ensure that my right honourable friend the Chancellor is made aware of it.

[Lord Teverson (LD)]

My Lords, the Minister is absolutely right to mention the private rented sector. One year ago, the minimum energy efficiency standards regulations came into force, which meant that properties could not be rented unless their EPC was E or above. However, properties are still being advertised that do not meet that criterion. What are the Government doing to ensure that local authorities apply those regulations and fuel poverty is reduced in that sector?

[Lord Henley]

The noble Lord is right: it is for local authorities to do that, but he will also remember that we brought forward further regulations this year, which he and I debated in this House, whereby we increased the obligation on landlords in how much they should be expected to spend to raise houses in the private rented sector to, I think, at least band E. I forget the precise level that they have to be at.

[Baroness Meacher (CB)]

My Lords, how many households dependent on universal credit have to choose between sufficient food for their children and sufficient heating to keep the children warm during the winter months? If figures are not available, will he commit the Government to commissioning a study to find out that information?

[Lord Henley]

My Lords, I will see whether those figures are available and if they are, I will make them available to the noble Baroness. In my original Answer, I was trying to address the importance of the aggregate fuel poverty gap. We are seeing that come down over the years; the aggregate fuel poverty gap was of the order of £857 million in 2010 and it has now dropped by £25 million to £832 million.

[Lord Howell of Guildford (Con)]

My Lords, as renewable energy prices become more and more competitive with new technology, would one fairly simple way to ease fuel poverty not be to reduce the subsidy charge on electricity bills that has to be imposed to pay for green subsidies? Does my noble friend not agree that the energy gap Her Majesty’s Government imposed has not been a great success, since fuel bills are rising all round?

[Lord Henley]

On that last point, I assure my noble friend that we estimate that the price cap will save consumers something of the order of £1 billion annually on their bills. On his first point about setting the levels of subsidy for renewables, it is important to provide the appropriate subsidy to see that we get the appropriate developments in renewable energy. As my noble friend will be aware, we have seen a dramatic drop in the cost of producing offshore wind, for example; the same is true of solar and we hope those trends will continue.

[Lord Grantchester (Lab)]

One of the key aspects in reducing fuel poverty is giving people the tools to manage themselves, through the infrastructure development of smart meters. On this development curve, can the Minister give the House a measure of success regarding how many households have been drawn out of fuel poverty by their introduction?

[Lord Henley]

My Lords, the noble Lord is right to talk to the importance of smart meters. We hope that by 2020, every household will have been offered a smart meter. Most people are satisfied with them and, if used properly, we expect smart meters to enable consumers to take something of the order of £300 million off their fuel bills.

Electricity Capacity (No. 1) Regulations 2019

Lord Henley Excerpts

Wednesday 3rd April 2019 Lords Chamber

Moved by

[Lord Henley]

That the draft Regulations laid before the House on 28 February be approved.

Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)

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

My Lords, the capacity market is a key element of the Government’s strategy for maintaining the security of electricity supplies in Great Britain. Britain’s current security of electricity supply is robust. The forecast electricity margin for winter 2018-19 is over 11%, the highest for five years, showing that the capacity market works.

This draft instrument will help maintain a strong security of supply position into the future. It contains modifications needed for the operation of the capacity market, pending fresh state aid approval by the European Commission, and makes arrangements for a positive or negative state aid decision.

Before I go into detail on the draft instrument, it may be helpful to provide some context and background on the capacity market. The capacity market ensures that there will be sufficient electricity capacity in Great Britain during periods of peak electricity demand. It secures the capacity required through awarding capacity agreements in competitive, technology-neutral auctions held four years and one year ahead of delivery. Those who win agreements—known as capacity providers—commit to providing capacity during periods of system stress in exchange for receiving capacity payments. The revenue from capacity payments incentivises the necessary investment to maintain and refurbish existing capacity and to finance new capacity. It also ensures that those able to shift demand for electricity away from periods of greatest scarcity are encouraged to do so.

In November 2018, the General Court of the Court of Justice of the European Union annulled the European Commission’s state aid approval for GB’s capacity market and introduced a standstill period until the scheme can be reapproved. The judgment was based on the procedure the Commission followed when it approved the capacity market, not the substance of the capacity market itself. The judgment prevents the UK Government making capacity payments unless and until the scheme has state aid approval. It changes neither the Government’s commitment to delivering secure electricity supplies at least cost to consumers, nor our belief that capacity market auctions remain the most appropriate way to do this.

The Commission is investigating the scheme’s compatibility with state aid rules and recently confirmed it is moving on to the next phase. We are working with it to ensure that it has everything necessary to reapprove the scheme as quickly as possible. We are confident that the scheme will be approved and payments to agreement holders that have met their obligations during the standstill period will be allowed.

The Department for Business, Energy and Industrial Strategy published a consultation proposing modifications to allow the capacity market to operate as far as possible during the standstill period, following the General Court’s decision in December last year. Sixty-one responses were received, from a wide range of stakeholders, and there was significant support for the majority of the proposals raised.

The House of Lords Secondary Legislation Scrutiny Committee highlighted uncertainties associated with the state aid process. We are confident that the draft instrument helps address those uncertainties.

I will briefly expand on the provisions of the draft instrument itself. First, to maintain industry confidence, the instrument includes modifications that ensure that capacity payments currently prevented by the court’s judgment can be paid to capacity providers after state aid approval is obtained. These payments will remain linked to capacity providers’ performance of their obligations under their capacity agreements. Secondly, in recognition of the disruption caused to capacity providers, this instrument adds flexibility to termination, penalty and credit cover requirements during the standstill period. Thirdly, the instrument sets the conditions for rearranging the one-year-ahead auction that was originally planned for earlier this year, securing the capacity required for winter 2019-20. Agreements awarded by this auction will be conditional on state aid approval, allowing the auction to be run before there is state aid approval.

Moving on, this instrument allows the settlement body to hold payments made by suppliers to fund the scheme where suppliers choose to pay during the standstill period. It also enables the collection of all outstanding supplier charges for the standstill period upon receipt of state aid approval. This provides certainty that, upon state aid approval, capacity payments will be paid promptly.

Finally, in the unlikely event of a negative state aid decision or no decision by October 2020, the instrument will terminate capacity agreements without any entitlement to receive capacity payments, and will require supplier payments held by the settlement body to be returned. We have also laid complementary amendments to the capacity market rules, which govern the technical and administrative procedures relating to capacity market operation.

These regulations are necessary to provide legal certainty and confidence to industry about how the capacity market will operate until state aid approval is received, and I commend them to the House.

[Lord Tope (LD)]

My Lords, I am grateful to the Minister for a full and clear explanation of both the regulations and the need for them, which arises from the CJEU ruling. As he has said, the majority of the industry clearly supports these regulations, they are necessary, and they go a considerable way to reduce uncertainty. Therefore, we certainly will not oppose them and will support them.

First, on the theme of uncertainty, the Secondary Legislation Scrutiny Committee, to which the Minister referred, concluded its report to your Lordships by referring in paragraph 18 to the “considerable uncertainty” and suggesting that we might wish to explore further how the Government propose to deal with it. I will be brief, because this is not my subject. Can the Minister tell us specifically how the Government will continue to engage with the industry—I am sure they will wish to reassure the industry that that will be the case—and what steps they will take to try to perhaps restore and certainly to keep the confidence of the industry and investors at what is inevitably a very uncertain time?

Secondly, probably the greatest uncertainty at this precise moment, which is not particular to this industry, is our place within the European Union. The regulations are brought forward at this stage on the assumption, quite rightly, that we are members of the European Union and that we will remain members of the European Union during the implementation period of a negotiated withdrawal agreement. The inevitable question comes: what if that is not the case? We may all hope—I certainly do—that that is the case; indeed, I hope that we remain members of the European Union, full stop. But at this moment, many would argue that the most likely scenario is a no-deal withdrawal, not in weeks but days. That may happen. Can the Minister give us any guidance as to what preparations have been made and how ready the Government are to deal with that scenario if, unfortunately, it actually happens?

My third point was raised in the other place when it debated the regulations yesterday. There was strong doubt whether the CJEU ruling was based solely on procedural grounds, as the Minister said and the documents on the regulations state. It was suggested that other grounds were included in the ruling; it would be useful to know whether the Government recognise that to be the case and, if so, what steps they are taking to deal with those other concerns.

I thank the Minister again for bringing the regulations to the House. They are necessary in the light of the ruling and the uncertain times we are in, and I wish them a fair way for such time as they are needed.

--- Later in debate ---

[Lord Grantchester (Lab)]

I thank the Minister for his introduction and explanation of the regulations before the House. They are necessarily very technical and controversial as they involve the capacity market, state aid and a judicial review of the actions being taken by the Government.

This instrument was the subject of a lengthy report from Sub-Committee A of your Lordships’ Secondary Legislation Scrutiny Committee. The Government are embarking on a high-risk strategy and the committee’s 20th report concludes with the recommendation that,

“the House may wish to explore further how the Government are proposing to ensure that the Capacity Market can continue to operate in the future”.

The noble Lord, Lord Tope, raised this issue among his concerns.

As the Minister has explained, the situation arises following a case brought by a demand-side response provider, Tempus Energy, to the European Court of Justice that the construction of the capacity market discriminates against its interests. The European Commission has suspended the state aid clearance following the ruling, producing what may possibly be a lengthy standstill position that will impact on delivery year T1 2019-20, which is due to begin on 1 October 2019 and could continue beyond October 2020. Does the Minister agree that a delay of this magnitude beyond 2020 could bring about a complete suspension, or indeed termination, of the capacity market mechanisms with a high degree of certainty that that may result in unwinding the whole scheme, which has been in place since 2014? What is the Government’s risk assessment of that outcome?

I appreciate that the Minister is in severe difficulty as this period brings into play the interplay between the UK’s exit and the complexities around the state aid regimes of the EU and the UK post any implementation period and deal or no-deal scenarios. The Government seem to be making risky assumptions that not only will the ruling be swift but that this is only a procedural issue on the implementation of the state aid approvals. Does the Minister agree that the judicial review case negates those assumptions and that the robustness and fairness of the capacity market is secure?

The noble Lord, Lord Stunell, has raised serious issues in relation to this situation and the way the Government have implemented the scheme. Perhaps I may further underline the contention that the capacity market has not been entirely equal in the Government’s assessment to providers and that the Government appear to be adjusting the mechanisms as they consider their approaches to the first five-year review? Would not a safer and less risky strategy have been to halt all auctions and bring forward the review of the workings and results of the capacity market against the original objective; namely, that the capacity market was set up to bring forward long-term new technological capacity to reform the energy market away from fossil fuels?

As the Minister has explained, the UK has an 11% capacity margin and these T1 auctions are mostly short-term capacity builders. Can he outline how and why a suspension pending these reviews while the ruling is being reconsidered could be interpreted to undermine more longer-term solutions coming on board? I appreciate that the confidence of industry investors is crucial, but what is the rush? This shadow system outlined in the Minister’s remarks at the beginning, on the assumption that the ECJ ruling is merely procedural and confirmatory, appears to have the backing of industry generally. I am grateful for the considerations on the issue from Simon Markall on behalf of Energy UK.

I appreciate that continuity and consistency of the capacity market is important to industry and that competition between technologies could be maintained through policy evolution. Any perceived lack of level playing field in winning CM contracts could be solved while maintaining the working capital and cash-flow stability of the market through these shadow, deferred, contingent mechanisms under the instrument. Labour would not wish to undermine either the security of electricity supplies or the market that relies on this scheme. We understand that, over the longer term, industry confidence in the capacity market as an investable mechanism is an important driver for change, with cost savings and value for money overall. Nevertheless, there are concerns that the transfer from fossil fuels towards renewable and nuclear fuels is not proceeding at pace—as the debate yesterday on the climate emergency revealed.

The capacity market has brought forward essentially only one combined-cycle gas plant of 400 megawatts against recent open-cycle gas plants, which are more polluting. The Government have given contracts to diesel generators—more polluting than coal—when they refused to set a decarbonisation target for 2030. The response that the nuclear industry is in turmoil despite a sector deal agreement underlines the situation. The 2 gigawatts of new interconnectors is slightly beside the point.

I assure the Minister that I appreciate that progress has been made. I welcome the share of electricity from low-carbon sources now reaching 56%. Nevertheless, the issue is not being taken seriously enough or the necessary pace of change being achieved. I ask the Minister to commit to publishing the Government’s five-year review of the electricity market reform this summer and for it to include a full review of the capacity market. Can he assure the House this afternoon that the Government have a full appreciation of all the risks by outlining all the discussions the Government have undertaken with the Commission? With that assurance and the assurances that the Treasury will guarantee all the conditional payment obligations to be underwritten, that his department will continue dialogue with all parties on this review and that this instrument is supported by industry, I am happy to approve it today.

[Lord Henley]

I am grateful to the noble Lord, Lord Grantchester, for his support for this instrument, and I look forward to that support in a few minutes when I conclude my words. At the same time, he called for a halt. Since we are talking about security of supply, I simply cannot go along with him. It is the Government’s view, widely supported by the industry, that the capacity market is the best way to deliver security of electricity supply at the lowest cost to consumers. We will debate this matter tomorrow at Question Time. It is important that we have security of supply and that we have it at the best price. As I said in my opening remarks, our current security of supply positon is robust. I cited the figure that we reckon the margin this winter will be— over 11%, the highest for five years. That shows that the market works.

A number of concerns have been raised and a number of questions put, and I hope I can deal with them. I will first get on to the question of uncertainty and engagement that the noble Lord, Lord Tope, raised, echoed by the noble Lord, Lord Grantchester. It is important to recognise that there is uncertainty. We appreciate that any judgment of the Court of Justice of the European Union creates uncertainty and potential difficulties for the industry.

As I made clear, the Commission is investigating the scheme, and recently confirmed that it is moving on to the next phase. This is an important step as we work to reinstate state aid approval for the capacity market as soon as possible. We are working with the Commission to ensure that we have everything necessary to reconsider the scheme as quickly as possible. I assure the noble Lord, Lord Tope, that we will continue to engage regularly with stakeholders; we will provide them with updates on progress and the re-notification process, and clarity on arrangements during and following the standstill period.

We are confident that the Commission will approve the scheme following its investigation. We hope that that investigation will conclude ahead of October 2019, the start of the 2019-20 delivery year. We consider it very improbable—although it is possible—that the decision will be delayed into 2020. In the unlikely event of a negative state aid decision, or no decision, by October 2020, the instrument will terminate capacity agreements and, as I said in my opening remarks, any entitlement to receive capacity payments. Supplier payments then held by the settlement body will also be returned, which will ensure that supplier payments cannot be held indefinitely.

The noble Lord, Lord Tope, asked about the position after a no-deal Brexit. The Government have made it clear that no deal is exceedingly unlikely. However, while the UK remains a member state or is subject to an implementation period following a negotiated withdrawal, the current state aid regime will apply and the Commission will need to approve the scheme. The Government intend there to be a domestic state aid regime after the UK leaves the EU. The draft State Aid (EU Exit) Regulations 2019 are currently before Parliament. In a no-deal exit, the UK will be subject to a domestic state aid regime, for which the Competition and Markets Authority, rather than the Commission, will be the regulator. This assumes that the draft State Aid (EU Exit) Regulations are agreed by both Houses and made. If, at the time the UK leaves the EU, the Commission has not yet approved the scheme, it will then be a matter for the CMA to investigate and approve that scheme.

The noble Lord, Lord Tope, asked whether the decision of the court itself was purely procedural. This question was echoed by the noble Lords, Lord Stunell and Lord Grantchester. The court gave examples of where the Commission should have had doubts and should have investigated them, but it did not rule that the design was incompatible with state aid requirements. We have carefully considered each issue raised through that court judgment and remain confident that the design of the capacity market is compatible with the state aid requirements. We cannot pre-empt the outcome of the Commission’s investigations, but we are confident that the scheme will be approved by the Commission following investigation, not least because it has approved six other capacity markets since 2014.

The noble Lord, Lord Stunell, asked whether the capacity market did not sufficiently support demand-side response. As I made clear, the purpose of the capacity market is to ensure security of supply, at least cost, for the consumer—something we all desire to achieve. It is technologically neutral and allows all types of capacity, including DSR, to participate without discrimination.

The design of the capacity market provides for features that support demand-side participation, including lower credit cover, participation as price takers and three metering options. The Government are also taking broader action to support DSR, as set out in the smart systems plan. The five-year review of the capacity market, which the noble Lord, Lord Grantchester, asked about, will also explore further ways in which DSR participation can be supported.

The noble Lord, Lord Grantchester, also asked about the judicial review and the case raised by Tempus. We are confident about our position. The Government will robustly defend this challenge and, as I said, we are confident in the steps we are taking to reinstate the capacity market and to operate the scheme to the fullest extent possible during the standstill period within state aid constraints.

Turning to renewable generation and carbon reduction, the noble Lord, Lord Grantchester, implied that we were not serious about switching to low-carbon electricity generation. As he will be aware, we are committed to switching away from coal. We have announced that we will be giving up coal in 2025 and increasing the share of renewables and gas in electricity generation while reducing the cost of renewables. We have seen a dramatic reduction in the cost—I recently cited the figures for offshore wind—and we have invested £92 billion in clean energy since 2010. We have quadrupled our renewable electricity supplies since 2010 and the share of electricity generated from low-carbon sources reached a record high of 56% in the third quarter of 2018, with 33% from renewables. I hope the noble Lord will accept our commitment in that area.

[Lord Stunell]

I thank the Minister for what he has said so far and for his shopping list of money well spent. I do not wish to challenge that but is he satisfied that the Government’s investment is rightly balanced between generating new capacity—renewable or otherwise —and demand reduction? He said that the system takes account of DSR but he did not answer my point about whether there are equal investment opportunities to reduce a kilowatt hour as there are to increase capacity by a kilowatt hour.

[Lord Henley]

My Lords, I am satisfied but I will consider carefully what the noble Lord has said and look again at the Written Answer to which he referred, which I sent to him last week. If I can elaborate on it and provide him with further examples of how we have taken DSR sufficiently into account, I shall write to him on that if I feel it necessary. However, I do not accept his basic premise that there is not a level playing field.

I believe I have answered all the questions put to me. This is an important statutory instrument and I commend it to the House.

Motion agreed.

Climate

Lord Henley Excerpts

Tuesday 2nd April 2019 Grand Committee

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

My Lords, I first thank the noble Baroness, Lady Jones, for securing this debate, which has been of high quality, even if all speakers have been limited to a mere three minutes each. In fact, perhaps that made the quality even higher, I do not know; it has certain advantages.

I will make the point, in response to the noble Baroness, Lady Lane-Fox, and to others who are worried that the debate is not happening, that the debate is very much happening. This might just be one very tiny, minuscule part of it, but we know—mention was made earlier of demonstrations by schoolchildren and others—that the debate is happening up and down the country. As other noble Lords put it when they talked about local authorities, it is happening at local authority level.

A number of questions were raised, and I will not be able to respond to all of them this afternoon. I have been criticised by my noble friend Lord Caithness, quite rightly, for failing to respond in a previous debate to his questions about the effect of the shifting of magnetic north and cosmic rays on global warning. I will write to him in due course, but he will recognise it is quite a difficult thing to respond to because there is not much evidence.

I also give an assurance to all those who spoke that the Government are aware of the threats posed by climate change, and that we respect the sense of urgency. We understand it, agree that there is an urgent need to do things, and accept that impacts are already being felt. The Government are responding, and we continue to demonstrate strong leadership worldwide—I will get on to that later on—to tackle it at home and abroad.

I will start with the IPCC report on climate change, and what our response will be. We are already seeing the impacts of climate change—the hottest days of the year are getting hotter, and minimum temperatures are getting milder. There is a clear trend, and I remind the noble Lord, Lord Greaves, that we have not always had the stable temperature he seems to think we have. I refer him to the late Middle Ages, when there were vineyards in the south of England. The same was true in Roman times, with a colder spell in between. After the Middle Ages warm period, we had the mini-ice age of the 17th and early 18th centuries—so the climate has always changed, but something is happening at the moment. We agree that there is a trend and that something needs to be done; and we know that, without action, rising temperatures will result in even more serious effects.

For those who think we have been slow off the mark, following the IPCC’s report last October, within a week we had requested advice from the Committee on Climate Change on the implications of the Paris agreement for the UK’s long-term emissions target. I can assure the noble Lord, Lord Teverson, that when it comes out in May—I was not sure of the precise date but he said 2 May, which I think is right—we will respond as appropriate. He would not expect me to say at this point that we will accept everything the committee says. It would be a rash Government, possibly a Liberal Government, who would take that line. As an aside, I do welcome his genuinely positive approach to what the Government are doing—and I think one can take a positive approach.

The IPCC report offered a stark warning that our current rate of warming could see us reaching 1.5 degrees, possibly as soon as 2030. That would have devastating effects—it could do a great deal to our infrastructure, food, water supplies and so on. It went on to point out that up to 90% of coral reefs could be lost, with irreversible effects such as melting ice sheets that would continue to have impacts for centuries to come. The report is a rallying cry for Governments around the world to do something—to innovate, to invest and to raise ambition. It is therefore right that we should follow the scientists. As all noble Lords have made clear, we are now witnessing a groundswell of public concern. There is an increased sense of urgency from people all around the country—I mentioned the recent demonstration by schoolchildren—and more vocal demands for action.

The Government absolutely share their mission to solve this global challenge. To do so, we are taking action both domestically and internationally, as the noble Baroness, Lady Jones, asked us—because there is no point in us just doing things domestically if we do not try to provide the international lead that I believe we can and will. I shall touch on both of those.

On domestic action, our carbon targets are among the most stringent in the world and have provided a blueprint for climate action internationally, with elements of our framework emulated by many other leading nations. We should be proud of our record, which was cited by the noble Lord, Lord Grantchester when he stressed that we have reduced emissions since 1990 by 42% while—this is the important thing—growing the economy by 72%.

But there is more to do. In 2017, we published our Clean Growth Strategy. The noble Baroness, Lady Jones, called it “a very poor effort”. I have to say that I do not agree. The important thing to remember about the strategy is that “growth” appears in its name. As I have said, we have seen a cut in our emissions by 42% while continuing to grow our economy by 72%. The strategy set out our policies and proposals for meeting future carbon budgets and the illustrative pathways for the 2050 target. It explains just how the Government are investing more than £2.5 billion to support low-carbon innovation from 2015 to 2021, building on the UK’s world-leading expertise in areas such as offshore wind—where we have seen the price of offshore power come right down—and electric vehicles.

The noble Baroness, Lady Meacher, asked about research that we are doing in that area. It is important to emphasise what has been achieved. For example, the noble Baroness will see what a success story solar has been over the years as a result of government intervention, with deployment and cost reductions exceeding expectations to the point where two large-scale projects have already deployed without subsidy from the Government, and the planned construction of two more large-scale, subsidy-free solar projects has recently been announced. That is as a result of the investment that government have made and the encouragement and support that we have given—again, we have seen the price drop. I cite these just as examples; there is much more research in other areas.

The noble Baroness asked about storage, which I agree is the vital thing to address if we are to make renewables such as solar and wind, which are necessarily variable, of great use. Yes, research on hydrogen has been going on. I have seen some serious work being done by Heriot-Watt University in Orkney, where they are beginning to power ships using hydrogen. I also went to the Clyde to see some new CalMac ferries being built that will be powered by hydrogen. There is a future for hydrogen there; there is possibly a future for hydrogen in cars. Electricity might take over—I do not know—but all avenues need to be explored, and the Government will play their part in that. We are certainly exploring hydrogen’s potential to deliver against our own clean growth aims.

I see that I am running out of time so, rather than going on with examples of the sort of research that the noble Baroness asked about, I will quickly move on to say a little about the international position. I am very grateful for what the noble Earl, Lord Sandwich, said about welcoming our international role and the role that we can play. As I said, what we do in the UK on our own is not going to make much difference. We believe that the United Kingdom has played a key role internationally in demonstrating leadership through its domestic action, through climate diplomacy and through financial support, and that our world-leading economic, scientific and technical skills are shaping the global debate. I am proud to say that United Kingdom negotiators played a central role in securing the Paris agreement in 2015, while the UK scientific community was at the heart of the international effort behind the IPCC’s special report.

Our world-leading climate science programmes are helping developing countries to mitigate and adapt. We are fully aware of the concerns that the noble Earl and others raised about the problems that other countries are having. We are providing at least £5.8 billion between 2016 and 2020, helping over 47 million people to cope with the effects of climate change. This September the United Kingdom will lead the resilience stream at the UN Secretary-General’s climate action summit. Our ambition is to drive transformational change in the way that we think and take decisions on resilience, enabling people and the planet to adapt and cope with shocks and stresses.

I conclude by reiterating the determined action that the United Kingdom Government are taking to tackle climate change both domestically and abroad. Our sense of urgency is real and the challenge that we face is great. The IPCC report made that clear, and it is necessary for us to build on that momentum, acting now to build a brighter future for ourselves and for our children.

Employment: Automation

Lord Henley Excerpts

Monday 1st April 2019 Lords Chamber

[Lord Fox]

To ask Her Majesty’s Government what assessment they have made of the analysis by the Office for National Statistics, published on 25 March, that nearly 1.5 million jobs may be at risk of being lost to automation and that those most at risk are female workers.

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

My Lords, the work of the ONS demonstrates the significant transitional challenge posed by automation but overlooks the considerable opportunity for the creation of new, highly skilled employment opportunities. The industrial strategy sets out the Government’s vision to make the UK a global centre for AI and data innovation, alongside measures to ensure our people are equipped to capitalise on those opportunities.

[Lord Fox (LD)]

I thank the Minister for his Answer, which looks at the benefits—and there certainly are benefits from automation—but there are also risks, not only in gender terms but also in geographic terms. In addition to the study that came out last week, the Centre for Cities last year issued a study highlighting that those economies in the United Kingdom which are already weakest will be the ones whose jobs are most at risk. Therefore, I repeat the Question with a geographical bent. What in the industrial strategy and what in the Government’s plans is focusing specifically on the danger to further diversity and on the danger of putting further issues on to our weakest economies?

[Lord Henley]

My Lords, I am glad that the noble Lord recognises that there are very positive sides to developments in this field. As he will know, the World Economic Forum estimates that, although there might be some 75 million jobs lost globally as a result of change of this sort, another 133 million could be created. However, the noble Lord is right to point out that there will be disadvantages for people, particularly for those who are low-skilled and particularly—he mentioned the gender point—for women. Therefore, as the industrial strategy makes clear, it is very important that we look to retraining. I refer the noble Lord to large parts of the industrial strategy that point in the direction of retraining and upskilling our workforce as much as possible.

[Lord Hamilton of Epsom (Con)]

My Lords, can my noble friend tell us what happened to all the women who were employed as secretaries and personal assistants when the introduction of the word processor made them all redundant?

[Lord Henley]

My Lords, my noble friend is quite right: they found new jobs, better jobs, more highly skilled jobs and, probably, more interesting jobs.

[Lord Watts (Lab)]

My Lords, the Government have quite rightly tried to deal with the issue of skills training in the UK, but it is quite clear that the FE colleges have been starved of resources for the last few years. What are the Government going to do to put that money back into the FE sector so that it can provide the skills that we need?

[Lord Henley]

My Lords, I could go on at length about what the Government are doing in terms of funding for new training, starting with the £506 million we have offered for maths, digital and technical education including, and including the £100 million we have committed to the first stage of developing the national retraining schemes to support people vulnerable to technological change. With the seven minutes I have, I will leave it there. There is a great deal going on. That is what the industrial strategy is all about.

[Viscount Ridley (Con)]

My Lords, predictions of worklessness as a result of innovation have been coming round monotonously decade after decade—since at least the days of Ned Ludd—and have been proved wrong again and again. In fact, it is evident that innovation produces more and better jobs over the long run. Is it possible that the current alarm is because, for the first time, artificial intelligence is affecting the jobs of doctors, lawyers and people like us? Does my noble friend agree that the way to deal with this problem is to encourage people to retrain as easily as possible to take advantage of new opportunities in the new economy?

[Lord Henley]

My noble friend is an optimist, as the House will be aware. He is a rational optimist—if I may give a little plug for his book—but he is quite right to mention that there have always been worries that, with each new wave of automation, jobs will be lost. As my noble friend has said, what has happened is that, with each new wave of automation, we have seen jobs go but it is the boring, repetitive jobs that have disappeared to be replaced by machines. It might be that, as he points out, some of the boring, repetitive jobs that solicitors do, such as conveyancing, can be more easily done by machine.

[Baroness Kramer (LD)]

My Lords, only 19% of the digital technology workforce is female, as are only 15% of computing graduates and only 17% of fintech founders. In an age where automation will become dominant, is it not time that the Government abandoned relying on these sorts of piecemeal, scattered or small-scale initiatives to increase diversity and launched a holistic, well-resourced and high-profile strategy, along the lines of the anti-smoking campaign, to challenge everything from unconscious bias to the lack of training and role models, and to de-risk change generally?

[Lord Henley]

My Lords, I do not quite take the almost semi-Stalinist approach that the noble Baroness is putting forward. What I am saying is that society will change as a result of these things but the Government must also recognise that it is going to change. That is what the industrial strategy is all about, and we will go along with that.

[Lord Stevenson of Balmacara (Lab)]

My Lords, it is all very well to be optimistic, and even to be rationally optimistic, but however boring some jobs may be to those who have better and more highly paid ones, those jobs also pay wages which keep people out of poverty and ensure that families are supported. These are serious issues; we are talking about 1.5 million people losing their jobs and likely to be affected. I hope that the Government have more than some forward thinking about where they might find educational support for these people. In a practical sense, however, is it not possible that this sort of challenge—a big challenge for society as a whole—should be referred to those experts who are able to give us advice on where to go? Will the Minister suggest that this be a central issue in the work of the Centre for Data Ethics and Innovation, which has just been established?

--- Later in debate ---

[Lord Henley]

My Lords, the point I was making is that it is not just government that will lead on changes here but the employers themselves. If we take some of those boring jobs, such as checking out at a supermarket, many of those are being replaced by the self-checkout mechanism. That allows the employers, as is happening in supermarkets, warehousing and elsewhere, to shift employees to more interesting jobs.