Growth Duty: Statutory Guidance Refresh

Lord Johnson of Lainston Excerpts

Monday 15th April 2024 Lords Chamber

Moved by

[Lord Johnson of Lainston]

That the draft Statutory Guidance laid before the House on 6 March be approved.

Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee. Special attention drawn to the instrument.

Motion agreed.

Economic Growth (Regulatory Functions) (Amendment) Order 2024

Lord Johnson of Lainston Excerpts

Monday 15th April 2024 Lords Chamber

[Lord Leong (Lab)]

My Lords, I thank the Minister for introducing the regulation and all noble Lords who have spoken. Every day, we hear of sewage dumping. On average, a sewage dumping event now takes place every two and a half minutes. The lack of investment in our water systems over the past 14 years is a scandal that is increasingly hard to ignore. Billions have been extracted in shareholder dividends and millions in bosses’ bonuses, all while delivering a deteriorating system.

During the passage of the Environment Act, Conservative MPs had the opportunity to support a Labour-backed amendment that would have brought an end to sewage dumping. Of course, they did not do so. We should be extracting sewage from water supplies, not extracting value in unjustified dividends and overleveraged debt. Let us imagine the economic growth, the skilled jobs and supply chains that could have been created if, instead, this money had been funnelled into developing creaking infrastructure, repairing and upgrading pipelines, and preparing for the predicted increase in demand and increasing rainfall.

The Labour Party has long been making the case for the increasingly urgent need to invest for the long term and to improve quality in the short and medium term. So on this issue we agree with the Government that bringing these three regulators within scope of the growth duty will help to ensure they consider how best to promote growth in their sectors.

However, making the changes required by this instrument will obviously require dedicated resources within Ofcom, Ofwat and Ofgem. As the amendment to the Motion makes clear, these regulators already have a lot on their plates, so can the Minister indicate how they are expected to juggle this as well? Are the Government confident that the regulators have the capacity to deliver to the full extent that the order demands?

Like the regulators, we want to support businesses and stimulate the vital investment needed to ensure a quality service to current and future consumers. For example, Labour’s plan to establish “GB Energy” would create half a million new skilled jobs in the industries of the future, rebuild the strength of our industrial heartlands and reduce energy costs and carbon pollution. Labour is already thinking ambitiously about the long-term future of this country.

Given that the Government’s order is about long-term growth, could the Minister explain over what timeline they expect to see the benefits of the change, and over what timeline they will be reviewing its impact?

As far as Ofcom is concerned, the growth duty will also not apply to its regulatory functions under Part 3 of the Enterprise Act 2002, which concern mergers. In particular, it will ensure that Ofcom is not required to consider other factors when providing advice to the Secretary of State on the public interest considerations on media merger cases. Can the Minister explain the reasoning for that very specific exception?

In this regulator’s sector in particular, many noble Lords will know that I am passionately interested in the enormous potential for growth in our telecoms industry, especially in AI, but the world will not wait for us. We risk missing out on exploiting the potential commercial benefits from our world-leading research base if we do not have a clear industrial strategy, if we do not encourage and invest in tech start-ups and scale-ups, and if we do not develop a serious regulatory presence alongside the USA and the EU as global standards are being established.

To conclude, we support bringing the three regulators within the scope of the growth duty, but we regret—who could not?—the failure of the Government to prioritise the sanctioning of polluters and the cleanliness of waterways. Just last month, rowers in the world-famous boat race, some of the fittest people in the nation, fell sick because of their exposure to the water in the Thames. I would be hard pushed to invent a metaphor more apt to sum up why this Government have so comprehensively failed—on regulation, on public health, for young people today and in investing in their tomorrows. Labour stands ready to deliver the decade of national renewal that this country self-evidently needs.

While we support the regulation, we acknowledge the amendment to the Motion tabled by the noble Baroness, Lady Bakewell. We must address the sanctions needed against short-term profiteering by the CEOs of utility companies enriching themselves. I look forward to the Minister’s response.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

My Lords, I am extremely grateful to all noble Lords for their participation in this debate. I particularly congratulate the noble Lord, Lord Leong, on what I thought was an excellent example of good rhetoric in terms of his parallels.

I shall cover some of the points in turn. I am happy to have further conversations with noble Lords about this important statutory instrument. I am grateful for the undertone of what I think the noble Lord, Lord Fox, was suggesting and the overtone of what the noble Lord, Lord Leong, was suggesting. Unfortunately, I did not hear a great deal of support from any other Member of the House; I am sorry to see that on my own Benches the enthusiasts of better regulation seem to have deserted me today.

Ultimately, the statutory guidance, which I will be happy to touch on in a few moments, is an important and useful document to help regulators by refreshing the statutory guidance that we already have. If noble Lords read the original document, as I suggested at the beginning of this debate, and compare it to what we have now, they will see that if you care about the economy, the environment and better outcomes then this is a far better document in terms of directing the regulators in how they perform and enact.

I also said—because this is a particular passion of mine—that this will enable us to have better regulation, not less regulation. This is about regulating in a better way for businesses, for the economy, for consumers and for this nation’s future growth. I said to my officials that I would like to avoid the topic of water and Ofwat and focus on the other 52 regulators and the opportunities this presents—but it is absolutely right, when we are looking at this broad waterfront of how we run our economy and how we regulate for our own safety, for trust in markets, for the consumer and for the environment, that we have this debate.

--- Later in debate ---

[Lord Bellingham (Con)]

I am grateful to the Minister for giving way, as I understand that it is not normal practice for Ministers to give way in a debate like this. I would be grateful if he would look again at the point made by the noble Lord, Lord Fox. I know a bit about the Wye Valley and the damage that has been done by the excessive number of nitrates going into the river. It was not so much that all those poultry producers were breaking the law; it was the sheer scale of those operations that was having such an impact. Could the Minister comment on that particular point?

[Lord Johnson of Lainston (Con)]

I am grateful to my noble friend for the intervention. I did not realise I did not have to give way; my newness to the House probably insisted that I did so.

What is important is that we were discussing the guidance on growth for 52 or 53 regulators. This is not a debate about the Wye Valley. I have heard what the noble Lord, Lord Fox, said about that situation. I understand that the Government have announced this week an action plan and full review. I am delighted that this is a good example of where there is cause and consequence.

I want to bring us back to the guidelines. It is important that a functioning economy allows all stakeholders to operate in it. Clearly, that is the whole principle. If there is one stakeholder that is dominating its universe through its own actions, that is unacceptable in terms of creating the trust and framework we need in the market.

I return, in conclusion, to what has been a very important debate. I hope it will continue to be an important debate. I stress again that in four years we will have a full review of the growth duty so that we can see how it has been successful. One of the questions asked was: how soon will we know whether it has been successful? I hope it will start to show economic growth, in some of the points I will come to in a moment, immediately. We will certainly do a review after four years. There will be an explicit focus on ensuring that areas such as the derogation of consumer rights, the environment, or whatever it may be, will clearly be included in this.

I will touch on two final points because it is good to have this on the record. Regulators should have regard to medium- and long-term growth—not necessarily short-term growth or the profitability of the actions of any one company—by ensuring that key policy decisions and strategic choices are informed by consideration of key drivers of economic growth. This may include, but is not limited to, innovation, infrastructure and investment, competition, skills, efficiency and productivity, trade, and environmental sustainability, which I have touched on before. That is very important because, if you are running a business, you want to produce phenomenal products for the future of our nation. All too often we have had issues with regulators and the Government being slow to regulate on the innovative products we need to make this economy successful, both for our health and the economy around that.

How many times have businesses come to noble Lords—not all of your Lordships will have been approached by businesses, but many will—to complain about the lack of transparency around the regulator’s decision-making or the timeliness of its response on permitting, or to suggest that international standards could be used or that our own standards could be improved on, or to ask for more skills in regulators or for regulators to help them be skilful? It is so important that we respond to this. I am aware of the comments made around the water industry, and I hope that, to some extent, I have reassured noble Lords that this in no way derogates our responsibilities and abilities to act.

[The Duke of Wellington (CB)]

The Minister has many times referred to the wording in the draft statutory guidance refresh, which I assume can still be amended. Therefore, I ask the Minister to comment on page 26, which I quoted earlier, where it says that

“certain enforcement actions … can be particularly damaging to the growth. These include, for example … financial sanctions; and publicity”.

Surely the Minister would agree, in view of what he said, very persuasively, that those words should be looked at again. They certainly will inhibit a regulator from enforcing financial sanctions.

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Duke for those points. The relationship between the draft document and the formal document is a matter of moments before we finish the debate, so I do not think that is a possibility—but I am happy to be corrected by someone with better procedural knowledge of the House. I will deal with that in a moment, but I do not want to spend too much longer on this because I know that we want to move on.

I return to what this is about. As I say, there are 50 or so regulators covered by the statutory instrument. This is a refresh, so only three new regulators are affected, though there may be other smaller regulators that come into scope; fundamentally, it will be the main economic regulators that we have talked about. The rest of the regulators are covered by the existing statutory guidance, and the refresh improves on that. It is a very good thing, and I hope noble Lords will support us in this quest.

It is right that regulators—even the water regulator—should be pro-innovation, skilled and capable, business aware, proportionate, effective and responsive, and collaborative. I have had a number of businesses represent to me that too many regulators cross over each other and cause a great deal of confusion. They should be internationally aware, and they should be consistent, transparent and accountable. I do not see how any of us in this Chamber can suggest that these ambitions for the regulatory environment are not good. They should be reinforced. If we are to have a strong economy, we have to apply those decent, sensible, long-term economic criteria to the three main regulators.

I am happy to have further discussions as we head towards the White Paper around this. I am also happy to flag other points that noble Lords think will help in constructing a better regulatory framework to enable companies to flourish, consumers and the environment to be protected, and the overall economy of the country to see the necessary growth for the strength and wealth needed to protect our environment in the long term. I am grateful to all noble Lords for their contributions to the debate, and I commend the SI.

Economic Growth (Regulatory Functions) (Amendment) Order 2024

Lord Johnson of Lainston Excerpts

Monday 15th April 2024 Lords Chamber

Moved by

[Lord Johnson of Lainston]

That the draft Order laid before the House on 6 March be approved.

Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee. Special attention drawn to the instrument.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

My Lords, I direct noble Lords to my register of interests. I do not believe I have any specific conflicts, but I am a shareholder in various companies and so on, and it is important for me to highlight that point at the start.

The Economic Growth (Regulatory Functions) (Amendment) Order 2024 and draft guidance, issued under Section 110(1) of the Deregulation Act 2015, were laid before the House on 6 March 2024. I am aware of the amendment that has been tabled, to which I will respond in due course. I also reassure the House that I have responded to the SLSC, following a submission from Wildlife and Countryside Link, which, again, I will cover in due course.

Regulators play a vital role in shaping the UK economy through the way in which they regulate. Regulators set strategies and make decisions that significantly affect the types, the scale and the locations of economic activity in important sectors of the economy. It is therefore critical that regulation is cognisant of the requirements of growth. Efficiencies from improved regulation can translate into lower input costs and higher economic growth overall. I will be publishing a White Paper shortly that addresses the relationship of regulation and growth in greater detail; I look forward to discussing that with many noble Lords in the future.

The instrument and guidance we are debating today relate to the growth duty, a duty that requires specified regulators to have regard to the desirability of promoting economic growth when exercising certain regulatory functions. The instrument extending the growth duty will support an increase in the productivity of our businesses, drive economic performance, and grow our economy. By extending the growth duty to Ofgem, Ofcom and Ofwat, we will ensure that these critical regulators have regard to the need to promote economic growth.

It is clear that regulators can affect growth through their policy decisions. However, regulators can also affect growth through the approach they take to regulation and the wider environment that they establish, including in their relationships with regulated businesses. A good regulatory environment, emerging from the attentive and responsive stewardship of an effective regulator, can create the conditions for business confidence and investment, sensible risk-taking and innovation.

The growth duty currently applies to more than 50 regulators and came into statutory effect alongside the relevant statutory guidance on 29 March 2017 under the Deregulation Act 2015. Currently, the growth duty does not apply to the Office of Communications, also known as Ofcom; the Office of Gas and Electricity Markets, Ofgem; and the Water Services Regulation Authority, Ofwat. This instrument will extend the duty to these three regulators. These regulators oversee industry sectors which alone account for 13% of annual private UK investment and around 4% of UK GDP.

In extending the growth duty, the department has also taken the opportunity to refresh the related statutory guidance, to provide greater clarity to support regulators in their application of and reporting against the growth duty. The refreshed guidance has identified “drivers of growth” and “behaviours of Smarter Regulation”, which will assist regulators to better support sustainable economic growth. I hope that noble Lords have had a chance to read the guidance, which is an extremely well-written document.

I will talk about some of the key drivers of economic growth. I will list them, if I may: innovation, infrastructure and investment, competition, skills, efficiency and productivity, trade, and—very importantly, please take note—environmental sustainability. I understand that there is a perception that the growth duty is in conflict with environmental duties or protection of the environment. I assure all noble Lords that nothing could be further from the truth. The refreshed growth duty statutory guidance sets out in the opening paragraph the importance of ensuring

“adequate protections for consumers and the environment”.

It goes on to state:

“Natural capital and the ecosystem”


in which we live

“are fundamental to economic growth”

and therefore need to be safeguarded for economic growth to be sustained. The growth duty does not legitimise non-compliance with other duties or objectives, and its purpose is not to achieve or pursue economic growth at the expense of necessary protections.

Together, the extension of the growth duty and revised guidance will support the positive shift in the way that regulation is delivered, driving growth and paving the way for businesses to start to grow. An economy that promotes growth is one which is better able to attract businesses to our shores, to innovate and to serve households, and delivers prosperity across our nation.

The extension of the growth duty expands the remit of what Ofgem, Ofcom and Ofwat should consider when exercising their regulatory functions. Requiring these regulators to consider the growth duty will empower them to consider other areas which may not be reflected or may be only partly reflected in their duties, such as promoting innovation or trade. The growth duty is not prescriptive. It does not mandate particular actions; nor does it create a hierarchy over existing regulatory duties. The draft statutory guidance is clear that it is for regulators to balance their duties. We recognise that decisions on growth will need to be carefully considered along with other duties. The Government have also committed to review the impact of the extension of this SI within the related impact assessment and will consider the impact and effectiveness of the growth duty on investment growth, the environment and other factors in detail at the committed review point.

The refreshed guidance outlines drivers of sustainable economic growth supported by case-study examples to provide clarity to regulators within scope of the duty and help them to promote growth. For the purposes of this debate, I refer noble Lords to the previous sets of guidance, which I found to be limited in terms of the sorts of ambitions that we have, particularly when it comes to making sure that regulators understand the balance of their different duties.

The guidance also identifies behaviours that contribute to good regulatory decision-making and smarter regulation. The purpose of the guidance is to assist regulators to give appropriate consideration to the potential impact of their decisions on economic growth within the sectors they directly regulate and the broader UK economy alongside or as part of consideration of their other statutory duties. Decisions on growth will involve consideration of a regulator’s other duties; for example, they may relate to environmental or consumer protection, and there may be a need to balance multiple objectives. As independent and experienced bodies, regulators are best placed to balance their decision-making in this regard, and the revised guidance intends to encourage transparency and accountability for growth across regulators, attracting investment and, we hope, creating jobs.

Before concluding, I turn briefly to the regret amendment in the name of the noble Baroness, Lady Bakewell of Hardington Mandeville. The amendment is concerned that the growth duty could impact Ofwat’s ability to take enforcement action against polluting companies. We are aware that water pollution levels are totally unacceptable, so we expect Ofwat to take the right decisions to protect our waterways. I reassure the House that it is not a case of growth versus the environment.

First, I confirm to the House that the growth duty does not, has not and will not legitimise non-compliance with existing protections and does not prevent Ofwat taking enforcement action. This includes environmental responsibilities and this is explicit in the revised statutory guidance. The purpose of the growth duty is to ensure that specified regulators consider the potential impact of their activities and decisions on economic growth alongside their other statutory duties. The statutory guidance is clear that this does not legitimise non-compliance with existing duties. Further, it specifically lists environmental sustainability as a driver of economic growth and reiterates that the Government are committed to the net-zero and environmental targets in the Climate Change Act 2008 and the Environment Act 2021. A well-protected and healthy population and environment lead to higher productivity and growth. Therefore, we consider that there is no tension between a regulator’s protection duties and the growth duty.

Secondly, the guidance does not in any way set restrictions on regulators about how their enforcement can and should operate. We can all agree that non-compliant activity or behaviour that undermines protections to the detriment of the environment needs to be appropriately dealt with by regulators. Regulators operate independently from the Government and are free to make enforcement decisions based on the evidence presented to them. The growth duty does not prevent any enforcement. I want to be clear that degradation of the environment does not support long-term growth, and it is not something that the growth duty seeks or permits.

In conclusion, this statutory instrument is necessary to ensure that the energy, water and communications sectors strive for maximum efficiency over a sustained period. A well-regulated system will deliver efficient outputs and drive economic growth and productivity. The refreshed guidance makes it clear that regulators should work with businesses on, among other things, the environment, trade, investment and skills to ensure sustainable medium to long-term economic growth. This ensures that current-day economic growth can be achieved without undermining the ability of future growth. Applying the growth duty to the regulators of the energy, water and communications sectors will help ensure an efficient system by encouraging pro-growth regulatory practices where these are compatible with existing duties. The refreshed growth-duty guidance will support regulators in their application of and reporting against this growth duty. The guidance will assist regulators in discharging their responsibilities under the growth duty and provide clarity for stakeholders as to what they should expect of regulators.

Amendment to the Motion

Moved by

Steel: Port Talbot

Lord Johnson of Lainston Excerpts

Monday 15th April 2024 Lords Chamber

[Lord Roberts of Llandudno]

To ask His Majesty’s Government what assessment they have made of the social impact of the Port Talbot steel works blast furnace’s closure on the surrounding communities.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

My Lords, the Government recognise the impact of transforming the Port Talbot steelworks. This is why we have established a transition board with membership from the local authority, the Welsh Government and Tata. The board has £100 million of funding—£80 million from the UK Government and £20 million from Tata—for projects to support the communities affected. The UK Government are contributing £500 million towards Tata’s £1.25 billion investment, to ensure a sustainable future for Welsh steel and to safeguard up to 5,000 jobs.

[Lord Roberts of Llandudno (LD)]

I thank the Minister for those remarks, but can I have an answer to one question? What assurance have we that we have sufficient electricity to work the steel plants at full capacity? Without that, we could have large-scale unemployment. South Wales has known enough of that in the past. Also, our communities could be affected. I remember how many of our local organisations lost out because of previous unemployment, being unable to take part again. There will be all sorts of consequences if we do not have full-scale working plants, and that depends on full-scale electricity supply.

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for that point and agree with him. This is why we have invested significantly in developing the Celtic Freeport as an anchor for floating offshore wind. It will be sufficient to provide a large portion of the power for these two new electric arc furnaces.

[Lord Woodley (Lab)]

My Lords, my union, Unite, last week voted to strike over Tata’s disastrous plan. The plan is an appalling act of industrial vandalism as far as we are concerned, with the loss of thousands of jobs devastating the local community and the local economy. As the Minister knows, Tata has other options, especially as Unite has secured a commitment from the Labour Party to invest £3 billion—not half a billion pounds—in UK steel. Will the Minister therefore urgently rethink the Government’s strategy and insist that Tata keeps at least one blast furnace going until the end of its life as a condition of investing any public money in this operation?

[Lord Johnson of Lainston (Con)]

I must respectfully disagree. This is a very sound plan to ensure that we have a future of steel-making not just in this country but in Wales. This plan will save 5,000 jobs. It will make the steel industry profitable and result in a crucial circular economy where we take our scrap metal and turn it into real steel rather than importing steel or ore from abroad. The Opposition are keen to copy the Conservative Party in so many of our policies, so I am surprised that in this instance they refuse to do so.

[Lord Wigley (PC)]

My Lords, does the Minister accept that there is an outstanding record of employee work in Port Talbot, and that there has not been a significant strike for 40 years there? In these circumstances, is it not outrageous that Tata should now threaten to take back the employees’ pension and redundancy packages to try to stop any industrial action? Is it not time that the Government got a grip on this to secure the future of this vital plant?

[Lord Johnson of Lainston (Con)]

I am grateful for that point. All of us in government are very sensitive to the people whose lives will be affected, which is why we are putting so much money into this process—£100 million in the transition board. I take this opportunity to thank Tata for its commitment to invest £1.25 billion in regenerating the area and renewing the British steel industry. I urge the unions to maintain their very strong record of good relationships, to not go on strike and to work with Tata, so that we can deliver what will be an incredible benefit for the area and the country.

[Baroness Bloomfield of Hinton Waldrist (Con)]

My Lords, I agree with all previous speakers that it would be an utter tragedy for steel-making to disappear from Port Talbot. However, does my noble friend agree that the only way of preserving a great British steel industry, and a green steel industry at that, is for the workers to work closely with Tata Steel, and for us to further green it using the offshore floating wind projects and with the potential of advanced modular reactors on site in Port Talbot?

[Lord Johnson of Lainston (Con)]

I thank my noble friend for that point, and she is absolutely right. If we look back six months or a year, there was very little future for steel-making in this country, and now we have one; we have a truly advanced manufacturing plan for this entire industry. This is something we should celebrate. It is a true industrial policy backed by government money, in partnership with the private sector, and supported by the extraordinary and brilliant talent of the people at Port Talbot.

[Lord Fox (LD)]

My Lords, the Minister will have noticed that the Prime Minister and the leader of the Opposition visited Barrow-in-Furness recently. The reason they went there, as he knows, is to see its submarine manufacturing process. Submarines need high-strength steel—the sort of steel that comes from blast furnaces and not from electric arc ones. Where will that steel come from? From which countries will we import it?

[Lord Johnson of Lainston (Con)]

It is very important that we have a strong defence basis; there is no question about that. The UK industry uses only about 1% of British steel. A quantity of the steel comes from Sheffield Forgemasters, which is owned by the Ministry of Defence. This plan will actually produce the right level of steel from recycled scrap, which is far more efficient for the environment, to enable us to provide for our defence needs.

[Lord Naseby (Con)]

My Lords, is my noble friend aware that the resources he has announced are enormously welcome? However, on the point the noble Lord, Lord Griffiths, made about electricity supply, there should be an absolute guarantee. His Majesty’s Government might consider using the site for one of our many nuclear reactors that we have talked about for the last 18 months. This would be a wonderful situation if that were included on this particular site.

[Lord Johnson of Lainston (Con)]

I am grateful to my noble friend for that comment. The possibility of advanced modular reactors or small modular reactors operating in conjunction with offshore wind was just mentioned. The key is to build a sustainable green steel industry. That is why the Government have put so much money and thought behind this extraordinary and very powerful revolutionary plan.

[Baroness Blower (Lab)]

My Lords, demand for steel is expected to grow tenfold in the coming years. With proper investment, the UK could again be the steel-making capital of Europe. Will the Minister consider changing the procurement rules to ensure that UK public contracts use 100% UK steel, which by itself would create and maintain hundreds, possibly thousands, of jobs?

[Lord Johnson of Lainston (Con)]

I am always wary of insisting on local content when it comes to procurement. We want the best possible value and choice for our consumers, so I am not sure that is the answer. The point is to create a steel industry that produces steel that everyone in the world—not simply customers in the United Kingdom—wants to buy at the right price.

[Lord Bilimoria (CB)]

My Lords, we should be very grateful for the investment that Tata has made in the United Kingdom, starting with Tata Steel and then Jaguar Land Rover. These are huge, risky investments. With the big free trade agreement between the UK and India about to be signed, we should back Tata and appreciate what it has done.

[Lord Johnson of Lainston (Con)]

I am extremely grateful to the noble Lord for making that point. The first visit of my colleague Minister Mak as a Minister in my department was to Port Talbot to meet Tata’s managers. They made it very clear that they want to manage the redundancy process as closely as possible and by using a voluntary scheme. They have a huge amount of interest in this country and have partnered with us by creating a giga-factory, which kick-started our EV car industry in a major way. I echo the noble Lord when I thank Tata for all it is doing with the United Kingdom.

[Lord Leong (Lab)]

My Lords, the Government’s decision to give £500 million to Tata means that 2,800 people will lose their jobs. These are desperate times. People are worried and angry. The Government’s negligence in the 1980s devastated industrial communities, and the scars of entrenched inequality are still evident today. The Port Talbot transition board has up to £100 million to invest in skills and regeneration. Seven months on, can the Minister tell your Lordships’ House if any of this has been spent and if the strategy for doing so will be set out?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for his comments. I point out that the Conservatives have not been in government continuously since the 1980s; there was a prolonged period when Labour was in power. However, the next meeting of the transition board, on 27 April, will discuss exactly that: how will that £100 million be spent on local regeneration? The Government have also invested just under £800 million in the four city deals and £150 million in the Swansea Bay area. We are also investing significant tens of millions, nearly £60 million, in the offshore wind industry in the area, so we are definitely putting our money where our mouth is.

[Lord West of Spithead (Lab)]

My Lords, I will return to the question from the noble Lord, Lord Fox. What percentage of British steel will be used in the Dreadnought class, the AUKUS class submarines, Type 26s, Type 32s and fleet solid support ships? We need sovereign capability and resilience, and I have a feeling that we will be relying on France and other countries for quite a lot of this specialist steel.

[Lord Johnson of Lainston (Con)]

The noble Lord knows far more about building warships than I ever will. All I can say, as I said earlier, is that 1% of defence requirement is provided by UK steel. We believe that this plan will allow us to produce the necessary steel for all our industries, particularly as technology develops. I say again that this is truly a first-class plan to regenerate the area and create a green steel industry for the UK. We should celebrate it while putting in a huge amount of attention to detail to ensure that we mitigate for affecting people’s lives, as much as possible.

Comprehensive and Progressive Trans-Pacific Partnership (IAC Report)

Lord Johnson of Lainston Excerpts

Tuesday 19th March 2024 Lords Chamber

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

I thank all noble Lords for the extraordinary, high-quality debate that we have enjoyed today. I hope people at home are watching this discussion, because it is great proof of the value of this House and its contributions.

[Lord Fox (LD)]

They are crowded around their television sets.

[Lord Johnson of Lainston (Con)]

They are hopefully crowded around their iPads; the noble Lord should know that we have updated from the old-fashioned wireless—which, of course, we have in my household.

I want to say thank you, genuinely, to the noble Baroness, Lady Hayter, and the noble and learned Lord, Lord Goldsmith. I thank the International Agreements Committee for its report. I have a draft set of responses to the report, which will be formulated appropriately and given to the noble Lords as soon as possible. It really was excellent, and I think all the points that the Government have been challenged on are worthy of a response. I am extremely grateful for the mature approach the report took to the value of this trade deal and seeing the optimistic benefits of the CPTPP, within the reasonable framework that we will operate to.

It is possible that noble Lords may hear cheering if they listen carefully, because a few moments ago the Bill was passed in the House of Commons. I am sure we all feel the ripple—the Mexican wave, which is appropriate as it is a CPTPP member—coming down the Corridor to us. Before I go further and answer many noble Lords’ points, I refer Members to my register of interest. I do not believe there are specific conflicts, but I do have interests in CPTPP countries.

I have tried to group the comments made in this important debate and so, if I may, I will go through them. I will try to refer specifically to noble Lords themselves. I will highlight a few individuals, particularly the noble Baroness, Lady Lawlor. I congratulate her for giving a succinct and powerful description of the benefits of free trade, which often we forget. It is right that, in a scrutiny environment such as this House, we look at the problems, issues or challenges that might present themselves with a piece of legislation or a new treaty. To have the truly positive case for free trade made so clearly and powerfully is something that I welcome, and I am very grateful to the noble Baroness for that.

I am very grateful to the noble Viscount, Lord Trenchard, for his words. Again, he has been a passenger on the free trade express over the last year and a half since I have taken this position. I am extremely grateful for his advice and expert opinion on Japan, and the very positive case that Japan makes in terms of our trade relationship with the CPTPP and the associated benefits we have, both through having a trade agreement and an association with it through this process.

I thank the noble Lord, Lord Marland, for his very generous comments about our joint efforts to spread the benefits of UK trade around the world. If anyone has the most air miles on these red Benches, it must be a close competition between the noble Lords, Lord Purvis and Lord Marland. Both noble Lords are doing such important work, whether in spreading democracy and helping complex situations be resolved, or in pushing the Commonwealth. While this is not a debate about the Commonwealth, it is important to note how many countries that make up CPTPP are Commonwealth members. It is absolutely right that we should use this as further leverage to work with our Commonwealth peers. I will certainly take to my colleagues in the Foreign, Commonwealth and Development Office the comments made by the noble Lord, Lord Marland.

I am always grateful to the noble Lord, Lord Kerr, for his comments as to how we can better manage our trade process. If I may, I will just draw his attention, as someone so distinguished and who lauded the EU’s FTA negotiation process, to the fact that I do not think the EU has done a trade deal in my political lifetime. The most recent one was after a culmination of 17 years of negotiation, and the current ones are all live after many years. We have managed to close this deal in an extremely effective time period.

I turn to the process of CRaG which has been well raised by noble Lords. We made a clear commitment under the Grimstone convention that, if there was time, we would have a debate, and this is exactly what we are doing today. My colleagues and I have made ourselves totally and freely available to engage on every issue. Officials have been extremely open in responding to questions and challenges and I am glad to see some of them here today. I am particular aware of issues, such as SPS protection which was raised by the noble Baroness, Lady McIntosh, or agriculture, raised by the noble Lord, Lord McNicol, as well as points made by other speakers on the Front Bench from all parties. I think we have exceeded expectations in the work we have done in order to project that necessary element of debate.

I am not trying to avoid the point, but it is not for me to comment on the activities of the other place. I will leave that to them. It is right to be very comfortable in knowing that any new accession will be equally bound by the CRaG process. This is extremely important. It would be completely unreasonable if that were not the case. The Government have committed to that and I am very comfortable in making a further Front Bench commitment to it.

It is worth touching on some of the sub-issues that have come up in this debate. The noble Lord, Lord Fox, wisely raised SPS measures, and comments were made about ISDS. I believe we had a discussion earlier in this Chamber about the brevity of speeches and the importance of avoiding repetition, but I am going to have to repeat myself, if I may, and test the patience of noble Lords. There is no derogation. It says so in Hansard. It has been in Hansard before. There should be a collected, bound edition of my repeated statements in Hansard about free trade agreements that do not derogate from the security of our sanitary and phytosanitary provisions. It is very important to be comfortable about this. Hormone- injected beef, chlorinated chicken or dangerous pesticides which are banned here are not allowed into the UK on account of the FTA. This is a matter under our own control. It is important that consumers hear this.

When I talk to people about free trade deals, a lot of them worry that, somehow, this will result in a tidal wave of deadly products. The noble Baroness, Lady Bennett, referred to the UK becoming a dumping ground for dangerous products. Any decision to allow so-called dangerous products into the UK is a matter for the UK Border Agency, the food safety authorities and the Government. If that is the case, it has nothing to do with this FTA, which is important in the sense that it changes our position on tariffs and how we trade with each of the different countries. I just want to reassure noble Lords and the public that nothing will change.

[Baroness Bennett of Manor Castle (GP)]

To respond briefly to the Minister, of course, there is “allowing”, and there is also what checking is being done to make sure that it does not happen anyway. That is the kind of checking I was referring to.

[Lord Johnson of Lainston (Con)]

I thank the noble Baroness. The checking is a matter for the Food Standards Agency. We have made a number of assertions. It believes that this FTA will not result in additional risk for it. I do not wish to be contentious. I always listen very closely to the noble Baroness’s comment about free trade. We do not share the same views on its benefits. I listened to her very carefully and I noticed that at no point did she mention the principle of the consumer. I am particularly focused on making sure that the consumer benefits from these free trade deals—that they see prices come down and the range of products broaden.

A number of noble Lords, including the noble Lord, Lord Fox, and the noble Baroness, Lady Bennett, mentioned the concept of proximity being at the core of trade. For many goods, it is right and in fact efficient to have a proximous concept of trade. I think of the idea of swapping beef herds, in terms of practicality—although I think we sell better beef than the Australians, and certainly more specialist types—so there is a market in that sense. However, if we look at investment, which is an important element of the CPTPP, our two biggest investment partners in terms of growth and current value are the United States and now India. They are clearly not the most proximous countries to the UK, so it is important to understand that, in modern trade, in services, the digital provision of services and financial investment, the world truly is our oyster.

Speaking of investment: the ISDS concern is raised continually. As Investment Minister, I believe that strong investment protections for investors into the UK are at the core of our offering. If, at any point, investors felt that their investment rights would be derogated, it would be much harder for all of us—and whoever stands in my place as Investment Minister—to get the vital money that we need for our infrastructure into this country. These ISDS provisions are enormously beneficial for us. I feel totally safe in offering them to other countries. I do not believe that there is any derogation of our ability to manage our economy, our ambitions for net zero, how we treat our workforce or any other measure. Investing in these CPTPP countries protects our businesses, particularly in countries such as Malaysia where we now have these protections.

That brings me briefly to the services point—

[Lord Kerr of Kinlochard (CB)]

I entirely agree with the Minister about ISDS. Will he confirm that ISDS will be in any trade deal we sign with India?

[Lord Johnson of Lainston (Con)]

This is not in my notes. I cannot confirm what will be in our trade deal with India. I stress the importance of protecting our investor base when we invest internationally. It is right that the services principle has been raised. One of the most effective elements of the CPTPP treaty revolves around our agricultural access, where there is a high degree of compatibility between what we produce and what these markets want, as there is with goods. Noble Lords have raised this on a number of occasions. The noble Lord, Lord McNicol, raised the point about the Society of Motor Manufacturers and Traders, which particularly welcomes the relationship with Malaysia, where there is a different tariff approach. The rules of origin will simplify a lot of activity when we come to work with these countries. We do a lot of manufacturing trade with countries such as Japan, Malaysia, Vietnam and other CPTPP countries.

Services are the future. Some 80% of our economy and its growth are structured around services. The services chapters in the CPTPP can go further. This is a living agreement. We will build on the chapters, particularly on digital, that allow us to expand our services access. There are important basic building blocks around professional qualification recognition and plans to develop this effectively, to promote collaboration between professional qualification providers. It promotes collaboration between regulators. It allows for more effective business mobility, which is important. Someone who is posted to Canada on a work contract can take their spouse. There is first-time access and security for business mobility in countries such as Malaysia and Brunei, as well as other opportunities, such as transportation in Chile, and a number of other key points relating to digital provision and preventing data localisation. These all sound quite technical but are very important in firing the starting gun on further discussions.

A number of Peers, including the noble Lords, Lord Purvis, Lord Kerr and Lord Anderson, and the noble Baroness, Lady Hayter, have mentioned that these further discussions are encapsulated around a general review. This is a useful mechanism for us to participate in before we become a full member, as we are doing. This conversation will certainly include how to build on the services offering that is in the CPTPP. We welcome it. Our teams will be fully dedicated to it.

The noble Lords, Lord Kerr and Lord Marland, looked at the secretariat which will help us in these negotiations. I ask noble Lords to forgive me if I have missed any who also made this point. We have 14 full- time personnel who are part of the negotiating team and who now make up the CPTPP unit within the Department for Business and Trade. As I understand it, they are permanent and will not be moved to negotiate another deal. They will stay, I hope, to focus on making sure that we have a close relationship with the CPTPP countries. If a permanent secretariat is developed in the coming years, they would feed into that.

We want this organisation to grow, have deep roots and be strong for the future. I do not know what the plans are relating to the secretariat, but these are always live conversations, and of course we will feed in where appropriate. Once we become a full member, we will be able to put our platform forward with more vigour.

A question which is oft raised is how the department promotes the CPTPP to small businesses. I am very pleased that there is an SME chapter in the CPTPP; it is important, because it helps all economies focus on how they can help small and medium-sized enterprises to make the most of the CPTPP. This is at the core of all the economies that are participating in the treaty.

I am aware of the difficulty in promoting quite a complex treaty principle—there are rules of origin and comparable treaties, as we have treaties with many of these countries already, so it is not necessarily clear sometimes which treaty you should use, and you have to pick which of the two. We have done a great deal of work to ensure that our online access is powerful enough to enable people to make these decisions. We have a unit which specialises in promoting our free trade agenda and the treaties that we have signed up to. It has run a number of workshops. We need to work with the Chambers of Commerce to make sure that we get the message out.

I am totally aware of the need to ensure that this is a success, and I welcome the challenge. Crucially, the department sees it as part of its conceptual and fundamental mission. This Government want to be proud of their post-Brexit vision of Britain. Therefore, it is up to us to ensure that we deliver, by making the necessary noise to get as many businesses involved, both in exporting and in taking advantage of this treaty.

I hope I have covered the majority of the points raised. I am always comfortable coming back to noble Lords and the committee. Again, I congratulate the committee, and the noble and learned Lord, Lord Goldsmith, and the noble Baroness, Lady Hayter, for the work they do and the high degree of collaboration that they have with me.

On the question of our trade policy, people hunt for a matrix or template of what tomorrow holds. Looking back on our accession to the CPTPP, I am reminded that it has been likened to the next-door neighbour’s cat with a cough—I cannot remember quite what the quote was from the noble Lord, Lord Purvis. But I think this is a lion that will roar. Think of the rather extraordinary counterintuitive decision to say that we are going to pivot—that we had a relationship with the European Union and are now going to look for bigger and better relationships around the rest of the world. That is exactly the sort of economic decision that a good businessperson would take. Unquestionably, there is no derogation in the need to have the highest-quality trading relationship with our European neighbours, but where is the future? That is the point.

If you asked any of the next generation coming through—some of them are in this Chamber today—they would say that we should look to Asia and the growing populations. My noble friend Lady Lawlor rightly pointed to the astonishing levels of growth coming from those economies. In this country, for a politician, Cabinet Minister or Prime Minister—the leadership in this great nation of ours—to decide to go for the Pacific in this way and join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership is an astounding jump of the mind that I am sure previous senior mandarins of the Foreign and Commonwealth Office must be aghast at—such out-of-the-box thinking.

I am enormously proud to have been party to bringing this legislation through this House and promoting it with all noble Lords in this place. If I can repeat them, the countries are Australia, Brunei, Canada, Chile, Peru, Singapore, New Zealand, Vietnam, Japan, Malaysia and Mexico. We are proud to join that phenomenal cohort. I am excited about the future and very positive about the opportunities that this trade treaty will bring. In my view, it will far outstrip the predictions made by everyone in this House, and even the Government themselves. I am grateful for this opportunity to discuss it.

UK Tradeshow Programme Closure

Lord Johnson of Lainston Excerpts

Monday 18th March 2024 Lords Chamber

[Lord Leong]

To ask His Majesty’s Government what recent assessment they have made of the impact of the closure of the UK Tradeshow Programme on the ability of small and medium-sized enterprises to export to new markets

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

Although the DBT has closed the specific Tradeshow Access Programme, it still provides considerable support to small and medium enterprises to attend trade shows, ranging from training in language and culture and pitching and negotiations to networking receptions that use our embassies overseas and Meet the Buyer events.

[Lord Leong (Lab)]

My Lords, the Tradeshow Access Programme provided vital support to thousands of SMEs to attend international trade events. The return on investment was remarkable; then the Government closed it. Last year, UK exports were £860 billion—well short of the £1 trillion target. Does the Minister agree that we need to get out there and sell, sell, sell? Can he tell the House when the replacement programme for SMEs and their respective trade associations—the beating heart of our export economy—will be announced?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for his mantra of sell, sell, sell. Mine is ABC: always be closing. The DBT is doing this. It is unfair to say that we closed this programme; it was not necessarily yielding the benefits we hoped for. We must look for value for money; we have instead gone to a more targeted approach, where the UK will take a pavilion and crowd in businesses in specific instances. Recently we have been to Mobile World, led by my noble friend Lord Offord; the World Defense Show in Saudi Arabia; Bett, the education show; and the Hydrogen show in Chile. Although the Tradeshow Access Programme looked like a good idea and was very popular among certain businesses, it was not used in the way we wanted. This approach is far more effective for getting to our £1 trillion target.

[The Earl of Effingham (Con)]

My Lords, there are 5.5 million firms listed in Companies House, but only 9% of them currently export, which seems low, optically. What does the Minister believe is an achievable percentage to aim for and what is the Government’s strategy to reach that target?

[Lord Johnson of Lainston (Con)]

My noble friend is absolutely right. We have a cultural issue with companies in this great nation of ours actually deciding to export. The total is about 300,000, and we have a target of 500,000—the 500 club that was inspired by my noble friend Lord Offord. We will do this in a number of ways. The UK Export Academy is an important mechanism for teaching businesses and business leaders how to export. We have 160 international trade advisers around the country whose specific task is to hold the hands of these companies when it comes to exporting abroad. We have thousands of agents around the world, underneath our HMTCs, whose job is to help them on the ground and help them find distribution partners, most importantly. We have the Help to Grow programme, the export support service, and we now have growth hubs as well. There is more we can do, but we have made a phenomenal start and are starting to see the benefits of a very coherent action plan.

[Lord Razzall (LD)]

My Lords, will the Minister acknowledge that there has been a significant reduction in export sales by SMEs and small businesses since Brexit? Will he also acknowledge that, to take advantage of the limited number of trade deals that his department has managed to sign since Brexit, it is necessary to give significant help to SMEs and small businesses, if the gap is going to be closed?

[Lord Johnson of Lainston (Con)]

I would say two things to the noble Lord. First, exports are up over the past year by 13%—and tomorrow we have a debate on the CPTPP, which will allow this country to join an £11 trillion trading network, which will result in significant benefits to our businesses immediately and into the future.

[Lord Lansley (Con)]

My Lords, I remind my noble friend that, many years ago, I secured the outsourcing of the export marketing research scheme to the British Chambers of Commerce from the then department; that was very successful for over 20 years, and continues as a scheme under the department. That plus the grant support for introduction into markets provides a significant benefit to small businesses. Can my noble friend say whether he and the department are working very closely with trade associations and chambers of commerce to ensure that they are also delivery vehicles and multipliers for the work that the department is doing?

[Lord Johnson of Lainston (Con)]

I am very grateful to my noble friend for all the work that he has done to help exports and trade in this nation over his many years of service in this House and the other place. I draw attention to the fact that the British Business Bank also provides funding for small businesses to give them the training and skills to export, and UKEF provides billions of pounds to ensure that they have the capital to enable them to export. But my noble friend is absolutely right: we can do more with the chambers of commerce, and we have a specific group structured to enable us to have strong relationships with those organisations. On the ground, particularly in harder-to-reach markets such as China, they play an invaluable role, and I personally do everything I can to co-operate with and encourage them.

[The Senior Deputy Speaker (Lord Gardiner of Kimble)]

My Lords, the noble Lord, Lord Campbell-Savours, is taking part remotely. I invite the noble Lord to speak.

[Lord Campbell-Savours (Lab) [V]]

My Lords, with post-Covid demand for exhibition space now returning and with seed-corn start-ups reliant on new customer contact and wider market awareness, why cut or compromise this programme? Since the 1970s, we have had valuable DTI support for small business. Labour promoted it—indeed, all Governments have done so. Such programmes have helped a generation of young entrepreneurs penetrate export markets and build many of today’s successful companies. Why the restraint? Surely we should be expanding these programmes. The Minister referred to targeting, which too often leads to cuts, as we all know.

[Lord Johnson of Lainston (Con)]

I am always grateful to the noble Lord for the challenge but, actually, I believe that we have come to the right conclusion, which is to crowd in significant numbers of businesses to single and key focused trade shows. We provide a great deal of support beforehand, including language and culture training and skills training to make sure that these businesses are prepared. During the mission, a Minister normally accompanies the businesses to get greater penetration into the market that we are trying to sell into.

It is no good just giving a few hundred pounds to a small business to have a small trade stand in a very large trade show. What you need is to put a proper front on. Great Britain is selling its wares to the world and, by concentrating that firepower, we have far greater effect. I also believe that we have better value for money. It is worth talking to some of the businesses that have participated in these trade shows, where the feedback has been excellent. I say this without prejudice, but other countries are jealous of the extraordinary quality of the stands that we build, which project the union jack across these wonderful events.

[Earl Attlee (Con)]

My Lords, what are the Government doing about the problem of de-banking less popular businesses, such as defence and the oil and gas industry?

[Lord Johnson of Lainston (Con)]

I am not entirely sure whether that is a question for me, but the noble Earl touches on defence, and I would say that we have been doing a huge amount on defence and security exports to promote our industries. New arrangements, such as AUKUS, are also incredibly powerful in driving our exports in that area. I also draw this House’s attention to the Saudi Great Futures event, which will launch on 14 May. Over the past few days we have sent out literally thousands of invitations to businesses, and we will fly a huge quantity over to Riyadh in the middle of May to celebrate the enormous opportunities that we see in that country, working on projects such as NEOM. Across the board there is an enormous amount that we are doing. I shall have to refer the question about banking to one of my colleagues.

[Lord Anderson of Swansea (Lab)]

My Lords, the Minister has just said that there will be “significant benefits” to this country from the trans-Pacific partnership. How significant is “significant”? Does he recognise that the Government estimate that the benefit to our GDP will be 0.08% and the OBR believes it will be 0.04%? Should the Government not be careful not to overegg their pudding?

[Lord Johnson of Lainston (Con)]

Since many of our exports are going to be food and drink, I think overegging the pudding is precisely what we should be doing when it comes to encouraging our exports. The opportunities that CPTPP presents are, first, a new trade deal with Malaysia, which we do not have; far better arrangements around rules of origin, which noble Lords opposite who have been involved in motor manufacture will see the benefits from; and very important new opportunities to export our agricultural goods. CPTPP is not a single trade deal but a living agreement. We hope new members will join which are aligned to our ambitions. That will allow us to have access to even greater markets. I am very proud of this Government’s record of negotiating trade deals, but there is more to do, so I am excited about the future too.

[Baroness McIntosh of Pickering (Con)]

My Lords, will my noble friend thank the department for sending a representative to local businesses in North Yorkshire to sell the business advice that they give from the new hub in Darlington? How widely known is the hub, and how available are such things to give such advice?

[Lord Johnson of Lainston (Con)]

I thank my noble friend for that point. Absolutely, promoting our activities is one of the key issues we face and we rely on chambers of commerce, and indeed the general body politic, to do that. There is always more work to do and I am grateful to her for amplifying our message.

[Lord Watts (Lab)]

My Lords does the Minister agree that we need to do much more to support small and medium-sized businesses, bearing in mind that there is no chance that we will do a deal with America, with China or with India in the foreseeable future, as we were promised under Brexit?

[Lord Johnson of Lainston (Con)]

I totally agree. Indeed, my own Secretary of State has made this the year of small business, very ably led by my colleague Kevin Hollinrake. As we speak—although it may have just finished—the Prime Minister has been hosting a very successful SME event in Coventry, which I hope will continue to amplify our message that we are doing everything we can to see this vital sector grow and flourish in this great nation of ours.

Post Office Legislation

Lord Johnson of Lainston Excerpts

Thursday 14th March 2024 Lords Chamber

[Lord Young of Norwood Green (Lab)]

My Lords—

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

We will come to the noble Lord shortly, although it is right to be hasty.

I am extremely grateful to the noble Lord, Lord McNicol, and the noble Baroness, Lady Brinton, for their input and will try to answer their questions as we go through. On the noble Lord’s wise point about why the sentence in the Explanatory Notes trails off, I think there is a typo. If I remember rightly, it should say “extinguish criminal convictions” at the end of that sentence. I am grateful to him for pointing that out.

Perhaps I may cover collectively the broad themes raised. The noble Lord, Lord McNicol, asked how we prevent the misuse or abuse of this measure. I was interested to hear a noble Lord speak in a previous debate about the quashing of convictions of soldiers in the First World War. This was a group conviction-quashing measure that was considered unique and was specifically designed for special circumstances. There was great concern that the process might be misused at a later date—I cannot remember exactly when; it must have been 20 years ago or more—and, clearly, that has not been the case. I think we are all apprised of the need to make sure that such constitutional situations are handled with extreme sensitivity and delicacy. In this instance, the Government, like Peers on all sides of this House—indeed, those in both Houses of Parliament—believe sincerely that it is only through this measure that we can be sure that people’s convictions are quashed. To confirm: this is an active statement of quashing of convictions; people are not required to apply to have their convictions quashed.

The issue of trust in the Post Office and the independence of the system and of the court processes has been raised, and this is the most effective way to ensure that we do the right thing by people who we believe have been wrongly convicted using evidence that we feel is clearly unreliable.

I would like to just cover the point the noble Baroness, Lady Brinton, made about the criteria in the Bill. The criteria governing who will qualify to have their convictions quashed are well laid out, and I am sure there will be a debate about the specifics when the Bill comes to this House. However, it is right that this applies between a set period of dates, that it relates to certain types of crimes linked to the Horizon computer system, that having used the Horizon system has to be part of the process of the conviction, and that, obviously, the person in question was working for the Post Office at the time. We are making, in my view, a series of pretty clear statements about what we are trying to achieve here. It is perfectly reasonable to raise the point about Capture. It was not felt appropriate to bring those cases into this process. However, Horizon trial periods, or the periods of beta testing for it, are included, as I understand it. If that is not the case, I will provide the House with a correction, but I believe that is right.

There has been a significant debate about the territorial scope of this Bill. The reality is that we operate different legal systems, and justice is devolved in Northern Ireland as it is in Scotland. This is not a question of the Government trying to get out of our responsibility or pass responsibility off. As the noble Baroness rightly said, the Government’s redress schemes cover the whole of the United Kingdom. There is no advantage to not having a system that covers the entirety of the United Kingdom. I am sure that many people believe that to be highly preferable, and it would make logical sense, but we have been especially careful to keep returning to the need to be sensitive to the constitutional realities of the unique action we are taking. It is right that, instead of looking at this stage for a complete UK-wide Bill, we allow this to be devolved to the common-law authorities in Scotland and Northern Ireland. I reassure the noble Lord and the noble Baroness that we are in regular contact. In fact, as we speak, a meeting is going on with the devolved nations about how to achieve this. Everyone has the same goal. I have not heard the comments made by the Scottish Justice Minister, but if anything, that continues to point to a high degree of collaboration.

We want justice to be done for these individuals as quickly as possible, across the whole United Kingdom. I have spoken to my colleague, Kevin Hollinrake, who has done a fantastic job in driving this process forward. We are all of the same opinion. Whatever measures are required to do this in the most appropriate and speediest way, we will certainly take. We will look into any way in which we can help the devolved authorities achieve their goals, in line with ours.

The principle of a target timeline for settlements, which was mentioned in the report cited earlier, was rightly raised. I feel strongly that it makes a lot of sense superficially, but the reality is that these are complex processes. We have already delayed having a cliff edge, which we did not think would be helpful. Some of these cases will take time to assess.

We agree on many things, but I am afraid that I do not agree with the idea that there is a huge amount of unpaid compensation, as if it is sitting in a bank waiting to be paid out. It does not work like that. In fact, over three quarters of the claims filed under the HSS scheme have been paid, a large proportion of those under the GLO scheme have been paid, and a large number of overturned convictions have been settled. We are working very fast. I can reassure this House that it is not in the interests of any member of this Government to delay in any way. We have made very good progress.

Importantly for noble Lords listening today, we have raised the fixed-rate payments so there is equality between GLO and HSS schemes, and I believe we have also raised the interim payment received. As soon as you submit a claim, you get £50,000 if you do not take the minimum £75,000 pay, and there is a £450,000 interim payment for overturned conviction compensation. That is important. We want to get money immediately into the pockets of people who need to be compensated. Clearly, there is a margin for discussion and debate, and it is absolutely right that that be done carefully. I hope that we can get the right outcomes. Of course, there is no limit to the compensation that can be paid.

The noble Baroness, Lady Brinton, asked about the accounts of the Department for Business and Trade and how this is accounted for. I believe that it would be too soon for last year’s accounts, but our next year’s accounts close in April and will be filed in July or August. I assume some element of the accounting will appear there. In terms of the billion or so that has been set aside, I am told by the Treasury that it does not sit in a ring-fenced account; it is part of the reserves that have been estimated as required. Of course, we also expect contributions from other areas as well. I am very comfortable coming back to noble Lords who will clearly ask in more detail how the accounting process works. I would be delighted to report to Parliament on that and I am sure that there will be plenty of discussions and question around it.

I hope that I have covered the main points, but I would like to return to two final questions. In terms of postmasters who have passed away, the estate is entitled to the compensation. There are also issues where families who have lost joint homes, or where there are additional complications around that, can receive compensation as well.

The question of independent oversight is absolutely to be raised, particularly regarding how these schemes are run. I am delighted to report that the overturned convictions compensation scheme will be run by the Department for Business and Trade, which I think was demanded by the postmasters. It is very important that people feel a sense of independent oversight, so we have therefore appointed a number of senior judges to provide us with that.

I do not have an answer on whether a postmaster will be included, for example, on the oversight board. I think that is an extremely good idea and I am sure that my colleague Kevin Hollinrake would agree that it is an excellent idea. I cannot commit to that now, but these are all very reasonable policy points to make sure that the postmasters who have been affected feel a sense of confidence. It is not just a question of having their convictions overturned and receiving financial compensation; they need to feel respected by the system that treated them so badly.

It is very important that all sides of the House feel able to make contributions in terms of how we can make the system work more effectively to achieve these goals. I am grateful for the ability to have this debate. I think we have made extremely good progress under the leadership of my Secretary of State, and particularly Minister Kevin Hollinrake. Clearly, there is more work to be done and we cannot move too fast to give these people redress. I hope that I can count on the support of all Peers in this House to bring this legislation through so that we can have these convictions quashed in July.

--- Later in debate ---

[Lord Young of Norwood Green (Lab)]

My Lords—

[Lord Johnson of Lainston (Con)]

The noble Lord will have his moment; he will definitely be next, I am sure of it.

My thanks go to my noble friend Lord Arbuthnot. As we all know, a huge amount of thanks should go to him for his tireless efforts over many years. It is a huge lesson for all of us who want to make a difference in public life to see someone like him battle away at the forces of the machine. He has given me personally a great deal of inspiration and I am grateful to him also for the way that he has handled debates such as this and for the sensitive and thoughtful way that he has approached these complex subjects.

On the matter of claimants who have had their appeals refused or who, not being part of this scheme, have been unable to go forward to appeal, I have listened to that comment and will have further conversations with my colleagues about what we can do to ensure that the right level of information is given to those people to enable them to assess their position in the process. Noble Lords must forgive me, I am not a lawyer and there may be some specific issues around this, but I am told that those who have not been able to go through to appeal are not prevented from appealing again. It would strike me that, given the situation around this whole process, the system would certainly bear this in mind. I cannot speak on behalf of the courts; it is essential that they retain their independence on that front.

I was interested to hear my noble friend’s suggestion of support for those individuals, in terms of legal advice, or whatever it may be. I will certainly take that back to the department and I would have thought it would receive a very sympathetic hearing. My noble friend is absolutely right that it would be very unfair if there was a small section of individuals who lost out on this process simply because they had tried to appeal before their peers had done so. That would not be right and it is worth looking into in some considerable detail.

[Lord Young of Norwood Green (Lab)]

Third time lucky, my Lords.

First, I concur with everything that my noble friend Lord McNicol said from the Front Bench. I am not going to repeat all those points; he covered the waterfront. I share some of the concerns expressed by the noble Baroness, Lady Brinton. I also need to declare an interest because I was a junior Minister at the time. I was not dealing with this issue; I was dealing with what seemed a bigger issue at the time—the privatisation of Royal Mail, which never actually took place then.

Before I go on with my contribution, I pay tribute to somebody who I know wanted to be here today, but ill health prevented him: my noble friend Lord Clarke of Hampstead, whose track record on involvement with the Post Office and Royal Mail is second to none. I saw him last week and he was hoping he would manage to make it, but, clearly, he could not—that is for the record.

I come to paragraph 33 in the Statement, which says that

“we will exonerate those who were so unjustly convicted of crimes that they did not commit”.

Of course, I welcome that, but the people I want to focus on are those who did commit crimes; what are the Government going to do about them?

We heard recently that Fujitsu, unbelievably, was still being involved in government contracts, although it has given back some of the money. There are other people who ought to be held responsible for what turned out to be crimes: deliberate attempts to conceal a system that they knew was faulty. That includes Fujitsu itself. So I would welcome the Minister making some statement about when this particular aspect is going to be dealt with.

I understand that there will be some aspects of this that might be considered sub judice or whatever, but I would welcome an initial comment on when and how the Government are going to deal with this situation. The idea that Fujitsu should continue to be seen as a reliable contractor, working with the Government, is in my view somewhat doubtful. I look forward to hearing the Minister’s response.

[Lord Johnson of Lainston (Con)]

I thank the noble Lord, Lord Young, for his comments. I wholeheartedly agree with him about how the order has come out. Our first priority is to make sure that the victims are compensated and justice is speedily done.

The second part—which, I am afraid, will take longer—is a thorough analysis of what actually happened and why, over many years, there was a persistent type of activity and a culture in an organisation that was classified as an arm’s-length government body: who should have done what, and at what time. Of great importance is the role of the “state”—and I say that in inverted commas, because I am not trying to play party politics here. I am afraid that many people in this House over many years had positions of responsibility that should have enabled a higher degree of inquiry than clearly took place.

How do we make sure that these organisations function properly, and how can we make sure that government officials, Ministers, and so-called independent directors and other directors of these organisations behave in the right way to ensure that they are run properly, and we do not see a repeat of these activities? It is very important that we have a broad and wide debate. That is why it is always very important that we regard the untrammelled power of the “state” with great suspicion.

I refer briefly to the noble Lord’s comments in relation to Fujitsu. As I understand it, we are looking to work with Fujitsu on how it can assist in compensating victims. I think that conversation is ongoing, but at the end of the day, it is the inquiry that will allow us to decide what to do next. It is absolutely without question that there are people who need to be held to account for these actions over the past 15 or so years. I am grateful for this prompt; this will continue to be a part of the process.

[Baroness Buscombe (Con)]

My Lords, I join my noble friend Lord Arbuthnot in paying tribute to my noble friend the Minister and other Ministers in another place, along with all those in government who have got us to where we are so far. It has been a hard and difficult road, and it has been too long. The Minister is quite right that whatever happens, we must see that justice is done, and we must do all that we can in our power to ensure that this kind of abuse never happens again.

However, I am curious. I am probably being a little premature, but I do not understand why there has been no question, so far, about the role of the board directors who came and went through this appalling scandal: Tim Parker, Adam Crozier, Ken McCall, Carla Stent, Zarin Patel, Allan Leighton, Alice Perkins, and Susannah Storey—who I gather is now the Permanent Secretary at the Department for Digital, Culture, Media and Sport. What role did these people play? Is this being looked at thoroughly in the inquiry?

We do have something in our power: corporate manslaughter. That might sound extreme, but four people committed suicide because of what was done to them over a period of years, while this stellar list of, as Private Eye would call them, “City slickers” came and went, well paid as directors of the Post Office. Do they get off scot free? Is the inquiry going to take so long that it gets thrown into the long grass? Does my noble friend agree that we should at least consider how these people should perhaps be charged with corporate manslaughter, so that they can prove their innocence at their own expense?

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

I thank my noble friend for raising the salience of these very important issues. It genuinely would not be helpful or appropriate for me to make a comment on any specific case. The inquiry itself is, in my view, extremely well led and very detailed. We are going to draw a number of conclusions from the extremely forensic amount of investigation that is being undertaken at the moment.

On a broader point, my noble friend is absolutely right: the principle around the leadership of these organisations, how they function, how they report to their boards, the independence of various directors on those boards and how those boards interact with government departments and Ministers, is absolutely something that I believe everyone in this House wants to look more closely at. The principle of arm’s-length still being within the reach of Ministers and responsible entities is also extremely important. I hope that while that may not be the specific outcome of the review relating directly to the Post Office, it will be the next stage in the investigation by Ministers and Parliament.

Regulator of Community Interest Companies

Lord Johnson of Lainston Excerpts

Monday 11th March 2024 Lords Chamber

[Lord Harris of Haringey (Lab)]

My Lords, in begging leave to ask the Question standing in my name on the Order Paper, I refer to my interests in the register as chair of the Fundraising Regulator, which oversees charitable fundraising.

[The Minister of State, Department for Business and Trade (Lord Johnson of Lainston) (Con)]

The regulator is funded on a cost-recovery basis from fees and has significant powers, including the ability to investigate and dismiss directors. Community interest companies have been an enormous success since their introduction almost 20 years ago. There are now around 31,000 CICs delivering substantial benefits to communities throughout the UK. My department maintains ongoing dialogue with the regulator to ensure that this growing market continues to have the appropriate oversight applied.

[Lord Harris of Haringey (Lab)]

The very phrase “community interest company” generates a warm feeling among the public. It makes the organisations concerned sound like charities. But charities are subject to charity law and to regulation, in particular about how they fundraise or raise money on the street; they require licences and are obliged to follow a code of conduct. Why does the Minister think that there are organisations that decide they do not wish to register as charities but as community interest companies? Why are they trying to avoid that sort of regulation to protect the public? If he wants an example, perhaps he should look at the Inside Success Union, which has ignored a whole series of complaints against it. Why does the Minister think that is adequate?

[Lord Johnson of Lainston (Con)]

I congratulate the noble Lord, Lord Harris of Haringey, if I may, on his work to oversee the Fundraising Regulator. The comments he has made and recent example that he has just given are things that we take very seriously. I have communicated with the registrar at Companies House today and she is also ensuring that she is available for further inquiries relating to this particular situation. However, without giving too long an answer, community interest companies are a fabulous idea. They allow social entrepreneurs to take up opportunities in their community, to distribute dividends back into the company and to incentivise people to invest in social benefit. Communities across the country have benefited from these fabulous concepts, and we want to do more. They have been growing in number every year—we now have just over 30,000; I think that they have doubled in the past four years—and, frankly, this Government will do everything we can to see them continue and flourish.

[Lord Razzall (LD)]

My Lords, first, to follow on from the noble Lord’s question, bearing in mind that this has been going on—as the Minister indicates—for over 20 years, does the Minister not think that it might now be time to update the community interest test with clearer guidelines, which might meet some of the points that the noble Lord, Lord Harris, has made? Secondly, does the Minister not think that this might be an opportunity to increase the annual turnover test to encourage small companies to become CICs and to register accordingly?

[Lord Johnson of Lainston (Con)]

I am grateful to the noble Lord for his input in this important area. These principles absolutely need to be kept under review. I have looked into this myself in great detail; only 38 complaints were made last year about these entities, which, considering there are 31,000, is not a significant amount. I do not believe that any CIC has been struck off the company register. We have updated the procedures around Companies House—director verification, statements of accounts, and so on—which will also apply to CICs. I am therefore very hopeful that we will see continuing reforms. I refer back to my original comment about the work that the noble Lord, Lord Harris, is doing to regulate fundraising. That is a separate point that is not necessarily related to company law, and we fully support his efforts in trying to make sure that it is properly regulated and ordered.

[Lord Leong (Lab)]

My Lords, as the Minister said, there are 31,000 CICs in the UK. They deliver significant benefits to communities across sectors including the environment, education, health and sports. However, the number of CICs being dissolved is increasing year on year, reaching an alarming 3,100 last year. What assessment have the Government made of whether dissolutions are the result of fraudulent activities, potentially putting community assets at risk?

[Lord Johnson of Lainston (Con)]

I thank the noble Lord, Lord Leong, for that point. This is not an assessment that the Government have undertaken; it is the responsibility of Companies House. With more data now available following our reforms, the registrar will be able to undertake this research. I would say, however, that this is a sector where there will be relatively high turnover. A lot of these are social businesses with very limited amounts of capital; some are experimental and it is absolutely right that they behave like companies, with the element of success or failure. Ultimately, the number of CICs is growing every year, in significant compensation for those that are being dissolved, and we are very pleased to see that.

[Baroness Bennett of Manor Castle (GP)]

My Lords, the rules allow for 35% of a CIC’s distributable profits in one year to be paid out in private dividends. What figures do the Government have on the average amount across the sector that is being paid out in dividends, and how is that monitored?

--- Later in debate ---

[Lord Johnson of Lainston (Con)]

The noble Baroness asks a good question. This is information I requested today, ahead of this Question, but have not yet received, so I will be delighted to provide that to her and other noble Lords. I am also interested in looking at some of the CICs which have become multimillion-dollar enterprises. This is not just a café or a local book-lending club, although those are to be lauded; they are significant community health businesses providing enormous value to the local community and to patients, and sometimes doing things differently and innovatively. This is charity entrepreneurship of the sort that this Government support.

[Lord Harris of Haringey (Lab)]

My Lords, I hesitate to prolong this, but the Inside Success Union is not the only example of a community interest company that has decided that it does not wish to be subject to regulation, in particular concerning raising money directly from the public. The Minister talked about the relatively small number of complaints received by the regulator. Is he aware that the regulator prides herself, in her last annual report, on the fact that she did not open any investigations into the complaints received? Surely we would expect a regulator to take those responsibilities more seriously.

[Lord Johnson of Lainston (Con)]

I am not delighted to hear that phrased in that way, but the noble Lord is right to suggest that these complaints should be properly investigated. I have received reassurance today personally from the registrar, Louise Smyth, who I believe does an extremely good job running Companies House, that any allegations around the behaviour of CICs in relation to their relationship with Companies House will be thoroughly investigated. It is important that we do not confuse this with their work in terms of fundraising, which the noble Lord has done an extremely good job of investigating. Of course, the Government support having a well-regulated fundraising sector so that all charities can operate effectively and the public can have trust in the philanthropic sector.

[Lord Naseby (Con)]

I thank my noble friend and the Government for the support they have given to the whole mutual movement and the support they are giving now to these community groups. There is a move in the country, and any of us who live outside London know that there is considerable interest in this sort of newish structure. Certainly, on behalf of those in Bedfordshire and Northamptonshire, I say a huge thank you to His Majesty’s Government.

[Lord Johnson of Lainston (Con)]

I am extremely grateful to the noble Lord for his comments. As he well knows, I support the mutual movement wholeheartedly. It actually goes hand-in-hand with CICs, and this Government are doing all we can to get more money into the philanthropic sector. My own office, the Office for Investment, working with my new noble friend Lord Petitgas, has been working very hard internationally to get more donors into the UK. I also congratulate the chairman of the Charity Commission, Orlando Fraser, who has been doing an excellent job in ensuring that our charity sector is seen as a beacon around the world.

[Lord Berkeley (Lab)]

My Lords, I declare an interest as a board member of a CIC. We were trying to buy a village shop in Cornwall which was about to close down and we found the regulations and the structure very easy to operate and it worked very well. But there are an awful lot of other pubs and shops in Cornwall and other places that are on the brink of financial failure at the moment and it is very important that CICs exist to help them. At the same time, when you are doing this with not very much money, my noble friend’s Question about regulation is also very important. We need the comfort to know that the regulator is doing its job properly if this is really going to work, as it needs to.

[Lord Johnson of Lainston (Con)]

I thank the noble Lord for those comments. Of course, I wholeheartedly agree that it is very important that CICs have the confidence of the public. People are going to invest in them and they are expected to operate at the highest possible level of probity and integrity. That does not mean to say that all of them will be a success, but the principles of combining philanthropy with private enterprise, with the outcomes that that has achieved in a very easy to operate and low-cost format, seems to have been enormously successful. It is something that we want to continue, but I am very aware of the comments made to me today and I will make sure that they are passed on to the relevant authorities.

[Lord Vaizey of Didcot (Con)]

My Lords, my noble friend the Minister mentioned the importance of philanthropy. Echoing the spirit of these questions, I congratulate him wholeheartedly on a recent advertisement I spotted inviting appointments to an office of philanthropy for inward investment. It is a very perceptive move for the Government to have a strategy to contact foundations around the world to encourage them to invest in the UK’s cutting-edge science, for which we are justly world renowned.

[Lord Johnson of Lainston (Con)]

My noble friend, as always, says wise words in a passionate manner and I congratulate him on them. I appreciate the salience of raising the Office for Investment’s philanthropic division in this House. It is important that we are able to project the extraordinary opportunities for venture philanthropists in the United Kingdom and I call on Members on all sides of the House to assist me in projecting our incredible philanthropy opportunities to the rest of the world.

Electricity Supplier Obligations (Excluded Electricity) (Amendment) Regulations 2024

Lord Johnson of Lainston Excerpts

Wednesday 6th March 2024 Lords Chamber

Moved by

[Lord Johnson of Lainston]

That the draft Regulations and Order laid before the House on 22 and 23 January be approved.

Relevant document: 12th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 5 March.

Motions agreed.

Renewables Obligation (Amendment) (Energy Intensive Industries) Order 2024

Lord Johnson of Lainston Excerpts

Tuesday 5th March 2024 Grand Committee

Moved by

[Lord Johnson of Lainston]

That the Grand Committee do consider the Renewables Obligation (Amendment) (Energy Intensive Industries) Order 2024.

Relevant document: 12th Report from Secondary Legislation Scrutiny Committee

Motion agreed.