Intellectual Property (Unjustified Threats) Bill [HL]
Baroness Neville-Rolfe ExcerptsTuesday 13th December 2016
(7 years, 5 months ago)
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The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)
My Lords, before moving the Motion, I should like to take a moment to reflect on the Bill and to say thank you. This is a small Bill of limited scope, but we have taken steps to ensure that it will work effectively for businesses whether in physical or online environments. I want to record my thanks to the Law Commission for bringing its great expertise to this most technical of subjects. Along with the Scottish Law Commission, it played a key role in the development of the legislation.
This has been a delightful new experience for me. It gave an opportunity to see the benefit of the Law Commission special procedure, which ensured that there was both a wide-ranging debate on the key issues and a robust examination of the Bill. The evidence sessions in particular provided access to a rich seam of expertise, and the procedure, having worked as intended, has produced a Bill that is much the better for it. This is a valuable route for much-needed and uncontroversial reform, and the Law Commission has asked me to express its gratitude to the House for the time and care it has given to undertaking its work. That is perhaps code for our careful scrutiny and the amendments we made.
I should also like to take the opportunity to put on the record our thanks to the noble and learned Lord, Lord Saville of Newdigate, for his chairmanship of the Special Public Bill Committee, as well as our thanks to our excellent clerk. I am grateful to all noble Lords for their polite, considered and probing questions. In particular, I thank the noble Lord, Lord Stevenson of Balmacara, for his constructive approach, and the noble Baroness, Lady Bowles of Berkhamsted, for bringing her expertise to our deliberations. I also thank my noble friend Lady Wilcox, a former IP Minister, for her doughty championship of small businesses, along with our Whip, my noble friend Lady Mobarik.
Because of the structure of the Bill, we enjoyed not only the usual groups of amendments but vast families of amendments—a phrase coined by the noble Baroness, Lady Bowles—across the various IP rights. Some of these families were quite large and, like any family, not always easy for outsiders to understand. Some of the families also appeared to be happier than others, but I would observe that we successfully manoeuvred our way through all the complexities.
I finish by putting on the record my thanks to the Bill team, the Intellectual Property Office and my private office officials for their support throughout the process. I believe that the Bill is being sent to the other place in great shape. I beg to move.
Lord Stevenson of Balmacara (Lab)
My Lords, I should like briefly to echo the words of the Minister. This Bill has been a good experience and a novel and, for me, different way of doing Bills—something we might learn from, in fact, as we go forward. The Minister said that there were families of amendments, which was certainly true; and we became a little family as we tried to deal with the rather odd way in which the Bill is organised. That was because, every time we looked at one area, we discovered that we would have to amend the Bill in every other clause as well. We were in some danger of extending the small coterie of your Lordships who actually like IP matters, but that is a danger which I think not many would survive.
Like the Minister, I thank all those who gave evidence both in writing and in person. It was a rich and interesting experience. The Special Public Bill Committee worked very hard, and I would particularly like to thank, in addition to our chairman, the noble and learned Lord, Lord Saville of Newdigate, the representatives from the Labour side, my noble friends Lord Plant of Highfield and Lord Hanworth, who served a noble part on the Committee. I also echo the Minister’s thanks to the Intellectual Property Office and the Law Commission. Lastly, I thank the Minister. She has been rather modest in saying that we had improved the Bill; actually, it was she who took on the burden of heavy lifting not only by daring to go back to her own department and other departments to get clearance for various things, but also by taking on, in full measure, the Law Commission itself—and winning.
Brexit: Consumer Rights Policy
Baroness Neville-Rolfe Excerpts(7 years, 5 months ago)
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Baroness Hayter of Kentish Town
To ask Her Majesty’s Government what discussions they have held with representatives of consumer bodies about the continued protection of consumer rights following the United Kingdom’s departure from the European Union.
The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)
Ministers and officials frequently meet representatives from a range of consumer bodies to discuss issues of the day, including EU exit, and we will continue to do so. Details of ministerial meetings are published quarterly on the GOV.UK website. The Government see no reason why the UK’s departure from the EU should have significant adverse effects on consumer rights in this country.
Baroness Hayter of Kentish Town (Lab)
My Lords, we read at the weekend that consumers are already worried about what this will mean for their prices—but there are other rights at risk, such as consumer redress being possible in this country for goods made abroad, victims of accidents in another member state being able to use our courts to pursue insurance claims, air passengers getting compensation for delays and cancellations, and also the many others we have because we are part of a consumer alert system for faulty or dangerous goods. So may I ask the Minister to agree to undertake an audit of EU consumer protections that are at risk after Brexit, and also to meet relevant consumer organisations to see how to reduce the risk of losing those protections?
Baroness Neville-Rolfe
My Lords, next week the Secretary of State for BEIS is chairing a round table with representatives from a range of consumer bodies and charities, and academics, to discuss, among other things, the impact of EU exit on consumers. These are exactly the sorts of issues that he will want to look at. Of course, the great repeal Bill, which has already been mentioned, will convert EU consumer law into UK law wherever practical, and we will want to ensure that cross-border enforcement is effective, and that our ADR landscape is preserved. These are important aspects of a consumer framework which is very strong: we should be proud of it in this country.
Lord Clement-Jones (LD)
My Lords, if we leave the single market, will not some of the real problems for consumers be over online and mail order purchases? When consumers no longer have the right to bring actions here against EU suppliers post-Brexit, what is the Government’s cunning plan? Is it for consumers to run around with small claims in all the other EU member states?
Baroness Neville-Rolfe
We will want to work to ensure that enforcement is effective across borders. There is, of course, a mutuality of interest here, because online goes both ways, and there are issues online, such as cyber and counterfeits, which need to be addressed. We are continuing to develop the digital single market in our ongoing work in the Competitiveness Council, and our enforcement regimes are well respected. The noble Lord is right to highlight this area, but I am optimistic that we can find a way forward and that there will be opportunities to do things better, from the studies that we shall be doing and the work that we shall be taking forward.
Lord Wallace of Saltaire (LD)
My Lords, the Minister said that EU consumer law would be converted into domestic law where it is practical. Could she give the House an example of where the Government consider it will not be practical to do so?
Baroness Neville-Rolfe
That is a difficult question to answer—I am always straight. What I would say is that, as I mentioned earlier, we have planned a series of engagements with consumer bodies. That applies right across Whitehall, so that, for example, the Economic Secretary to the Treasury has been talking to consumer groups—because, of course, financial services are very important—and there have been talks between MoJ and the Legal Services Consumer Panel. It is clear to me that we will be able to highlight, well before March, the particular pinch points, so that in our negotiations we will know which are the important areas that we need to preserve. This is an important piece of work, and I am grateful to the noble Lord for his comments.
Lord Christopher (Lab)
My Lords, we do not need to wait for Europe to part company with us—there are already problems. Ryanair has already given an indication of its intention that claims against it by passengers should be made in Irish courts. If I may say so, there is a lot to be done now with consumer rights that is not happening. My personal recent experience was that the telegraph and postal system refused to give a cash refund for faulty goods that it supplied until I suggested that we went to court. It has now said that it will pay. This is happening on a wide scale to those who are making online purchases from companies which are doing rather less than they should.
Baroness Neville-Rolfe
In general, consumers enjoy strong protections in this country, and we want to seek to preserve those. But where markets fail—the noble Lord has given an example—and competition is not as strong as it needs to be, they may not get a good deal, and the Government will not hesitate to take steps where we need to. We are bringing forward a Green Paper in the spring of next year that will closely examine markets that are not working fairly for consumers. It will look at both specific markets and cross-cutting items, and I look forward to hearing more on those sorts of issues so we can ensure that they are properly looked at as part of that process.
Lord Teverson (LD)
My Lords, British holiday- makers have a history of being ripped off by mobile phone companies while on holiday abroad through communication and data charges. Europe has thankfully sorted this out over the past couple of years, and the charges will be the same. Will the Government insist that British communications and mobile telephone companies keep to that agreement in future so that the rip-off stops and the service remains equitable for British consumers?
Baroness Neville-Rolfe
I am glad that the noble Lord mentioned roaming, because it is one of the key advances that general EU effort has achieved in recent times. When you go to Europe now, depending on your provider, you can sometimes get your calls within your contract, which I have been fortunate enough to experience. In general, consumer regulations in the area of telecoms will not be affected by EU exit—and, of course, as I have said, the market is changing. However, I assure the noble Lord that roaming, and the benefits of that, will be an important ingredient in influencing our thinking in our exit negotiations.
Lord Faulks (Con)
My Lords, given that we have agreed to participate in the Unified Patent Court, does my noble friend agree that this is an indication of how we can participate in various European organisations, even post-Brexit, to the benefit of consumers?
Waterson Review
Baroness Neville-Rolfe Excerpts(7 years, 5 months ago)
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Lord Addington
To ask Her Majesty’s Government when their response to the Waterson review of secondary ticketing will be published.
The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)
Professor Michael Waterson’s independent report on consumer protection measures applying to online secondary ticketing makes a number of recommendations which deserve to be fully considered by all those concerned with ticketing, live entertainment and law enforcement. The new Government are taking time to look very closely at the recommendations and will publish a response in due course.
Lord Addington (LD)
I thank the Minister for that response. What would be her response to somebody who discovers that they have purchased the wrong ticket, when the Government have yet to implement the Act in question?
Baroness Neville-Rolfe
The Act has of course come into force and there have been prosecutions on ticketing, although they are often made through fraud law rather than consumer law. The advice I would give to consumers is to get in touch with the excellent Citizens Advice service. If they have evidence of fraud they should contact Action Fraud, and there is also the possibility of trading standards taking action. One of Professor Waterson’s recommendations is that more work should be done on that.
Lord Moynihan (Con)
My Lords, does my noble friend agree that modern-day touts who use bots in the form of software that stores hundreds of credit card accounts and can instantly sweep the market of tickets the moment they go on sale, only to reappear half an hour later through their colleagues on the secondary market at highly inflated prices, corrupts the market and denies the true fans of sport and musical events the opportunity to buy tickets? These touts should be subject to legislative action by the Government through the Digital Economy Bill.
Baroness Neville-Rolfe
As always, my noble friend makes some powerful points. He will be glad to know that the Secretary of State for Culture, Media and Sport has asked for a round table to be held with the industry on this matter next week, on 30 November, in order to bring together all the interested parties to look at the issue of bots following very useful discussions on the Digital Economy Bill.
Baroness Hayter of Kentish Town (Lab)
My Lord, the Minister told me in May this year that the response to Waterson would be coming in due course but we are still being given the same answer. Meanwhile, the law, passed in this House and elsewhere, is being flouted. Justin Bieber tickets on sale at £70 can be bought for £1,600, while a £127 rugby ticket is selling at £1,250. None of these people are keeping to the law because they are not giving the information. Given the Government’s very welcome ban on letting agents charging tenants fees, will the Minister take similar action to deal with ticket touts?
Baroness Neville-Rolfe
I have already explained that we are looking at the problem of bots, which has delayed the formal response to the report, but of course, we published the report straightaway and action is beginning to be taken. I do not recommend that consumers pay such prices. The report makes it clear that there is also a duty on the part of primary ticket sellers to think about how they can distribute tickets in a sensible way, perhaps by holding ballots or selling to fans. I know the disappointment this can bring—I have seen my own nieces in tears because they could not get tickets—but sometimes tickets do become available later. However, this is an important issue and that is why we spoke to Professor Waterson. The bots issue is very much on our minds and we are looking at it to see if the existing law on computer misuse is adequate.
Lord Clement-Jones (LD)
My Lords, the Minister has clearly made herself extremely conversant with digital ticketing purchasing software, but the clue is in the name, is it not? Will she confirm that she is favourably disposed towards dealing with bots well in advance of the final government report on and response to Waterson, which, ominously, she describes as coming “in due course”?
Baroness Neville-Rolfe
We are certainly keen to get to the bottom of the issue of bots and to find the right way forward. There was consensus in committee in the other place that it was right to try to sort out the bots issue before our formal response. But as I said, the Waterson report is with us and work is in hand on this important issue. I am told that there is a proposed federal law on bots—“better online ticketing service”—although I understand the situation is a little different in the United States.
Baroness Corston (Lab)
My Lords, in response to the Question asked by the noble Baroness, Lady Doocey, the noble Baroness, Lady Williams, suggested that a form of redress could be sought through citizens advice bureaux. Given that very few councils can now afford to have a trading standards department, is the Minister aware that Citizens Advice has had huge cuts in its funding?
Baroness Neville-Rolfe
I am of course aware of the problems Citizens Advice and trading standards have with funding; we have discussed that in this House before. One of the points Professor Waterson made in his very useful report, which we are looking at very seriously, is how we make sure there is appropriate funding for the kind of investigations we all want in this area. Interestingly, secondary ticketing is not top of the complaints we get. They are often about the primary ticket sellers, rather than the secondary market we have been debating through this report.
Lord Harris of Haringey (Lab)
My Lords, I again refer to my interest as listed in the register. Is not what the noble Baroness is describing a failure in the market for entertainment tickets? Might not the secondary ticketing sellers be colluding with the primary ticket sellers—a situation that suits all the parties involved rather well, because they do quite well out of it? Should we not be looking at how the market as a whole functions?
Baroness Neville-Rolfe
That was one of the reasons why we asked Professor Waterson, who is an economist from Warwick University, to look at this, and that is not the conclusion he came to in his report. There are benefits from the secondary platforms, which give greater protection than buying from a tout or on social media. They guarantee a replacement if you cannot get in. We have a big tourist industry in this country, and it is very important that when tourists come here—there are more and more of them since the depreciation of the pound—they are able to access our amazing sporting events, theatres and so on. There are difficulties, which I acknowledge, but in general this market works well and has its advantages. Obviously, the bots issue is a big one.
Intellectual Property (Unjustified Threats) Bill [HL]
Baroness Neville-Rolfe ExcerptsWednesday 23rd November 2016
(7 years, 5 months ago)
Lords ChamberRead Full debate Intellectual Property (Unjustified Threats) Act 2017 View all Intellectual Property (Unjustified Threats) Act 2017 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 4-R-I Marshalled list for Report (PDF, 74KB) - (21 Nov 2016)
The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)
My Lords, I start by saying how pleased I am to bring this Bill to the Floor of the House for the first time. The reforms contained in it support business in driving economic growth and they will help the Government deliver their manifesto commitment to make the UK the best place in Europe to innovate, patent new ideas and set up and expand a business. The Bill’s provisions will make the intellectual property system more easily navigable for rights holders and third parties alike. It will help ensure that rights holders can enforce their IP rights fairly, while preventing the misuse of threats to sue for infringement as a way to distort competition.
As noble Lords will be aware, the detailed recommendations for reform in this area were made by the Law Commission, and I thank it warmly for its thorough and detailed approach to this project, including extensive stakeholder consultation, which has brought the Bill to this House in such good shape.
The Bill has a narrow scope and follows the special Bill procedure available for uncontroversial Law Commission reforms. This procedure included a number of very informative evidence sessions during Committee. I take this opportunity to thank the chair of the Special Public Bill Committee, the noble and learned Lord, Lord Saville of Newdigate, who is unable to be in his seat today, and colleagues on the committee, several of whom are here this evening, for their time and efforts in considering the Bill thus far. Our discussions have been productive and helpful.
The first group of amendments addresses concerns raised by both stakeholders and members of the committee. I believe that they improve the clarity of the provisions, which is a key aim of the Bill as a whole. The first of the amendments would delete “solely” from new Section 70B(1)(a), and the equivalent sections for the other rights. The Law Society has long pushed for this amendment. Both CIPA and the IP Federation also agreed, at the evidence stage, that the term should be removed. I thank the noble Baroness, Lady Bowles, for raising this point during Committee and for emphasising its importance to stakeholders. The intent of the person sending a communication is not relevant in determining whether that communication is “permitted”. This has always been our position and the amendment makes it even clearer.
The second family of amendments in this group also relates to the permitted communications provisions. A common complaint is that, under the existing threats law, there is no guidance on what type of communication is allowed and what is not. It is therefore easy for rights holders inadvertently to fall foul of the threats provisions.
The subsections in issue provide guidance on what types of information are necessary for a permitted communication by providing a list of examples. However, it has become apparent that these subsections are not as clear as they should be. The amendments make it clear that the examples will always be considered necessary for a permitted purpose. A rights holder who wishes to make a permitted communication may confidently provide the types of information listed. The list is also clearly non-exclusive, so appropriate flexibility is provided.
The next amendment addresses an issue raised by the noble Viscount, Lord Hanworth, in Committee. The issue relates to what he termed a “piece of illogic” in new Section 70C(4) and equivalents regarding the reference to “T”, curiously used to refer to the person who made the threat. To solve this problem, we have simply opted to remove the reference altogether and substitute it with a reference to the person, which, given its context, clearly means the person who made the threat.
Finally, I come to the fourth set of amendments in this group. These seek to amend new Section 70E and equivalents to clarify the position in relation to pending rights, particularly with reference to the justification defence available to the rights holder. As the noble Baroness, Lady Bowles, highlighted in Committee, expert stakeholders have concerns with the current drafting on this point. This family of amendments—a term that the noble Baroness kindly invented in Committee—addresses these concerns by stating explicitly that the question of whether there has been an infringement will be determined on the basis of the IP right once it has been registered or granted. I hope that this deals neatly with the comments from the noble Baroness, Lady Bowles, on this issue.
Lord Hope of Craighead (CB)
My Lords, perhaps I may take this opportunity to say on behalf of my noble and learned friend Lord Saville of Newdigate, who chaired the Special Public Bill Committee, how much he regrets that he is not able to be present at this stage of the Bill. He has authorised me to say that he, having read all the amendments, fully supports them. The fact that they have been brought before the House in this way indicates the hard work that the committee did, and the Bill will no doubt be greatly improved by their being moved.
Baroness Neville-Rolfe
My Lords, I thank the noble and learned Lord, Lord Hope of Craighead, my noble friend Lord Lucas, the noble Baroness, Lady Bowles, and the noble Lord, Lord Stevenson of Balmacara, for their kind and constructive comments. As the noble Lord, Lord Stevenson, said, we all learned a lot. These provisions are indeed an improvement.
Baroness Neville-Rolfe
My Lords, this group of amendments seeks to address concerns raised in Committee about the practical application of the new threats provisions. These changes amend the discretion afforded to judges in applying the new permitted communication provisions and improve the ability to access the defences available. Both these changes particularly help to address concerns expressed about the challenges of working in an online trading environment.
I turn first to Amendment 3 and its family. The provisions as drafted allow that the courts may treat another, additional purpose as a permitted purpose if that is necessary in the interests of justice. I have now had the opportunity to consider the arguments put forward by the noble Baroness, Lady Bowles, and to reflect further on the evidence given by Mr Justice Birss, Professor Sir Robin Jacob and others to the Special Public Bill Committee regarding the extent of the judges’ discretion in this area. By removing the word “necessary”, these amendments provide additional flexibility to the courts when considering whether a particular communication was made for a permitted purpose. The provisions still give clarity and certainty for those using the system, which is a key requirement for all stakeholders.
The wider discretion afforded to the courts under this amendment allows them to add to the list of permitted communications when appropriate. This would include treating the use of an online form as permitted, if that is suitable in the particular circumstances. This amendment, therefore, helps to address concerns raised about the use of particular online forms.
The next family of amendments relates to the defence available to rights holders, whereby they are allowed to send a threat to a trader, or other secondary actor, who is not the source of the alleged infringement, if a search for the primary actor has been unsuccessful. The amendments deal with two issues discussed in Committee. There were concerns that, first, the bar was set too high to access the defence, and, secondly, this was particularly problematic for rights holders dealing with potential infringements in an online trading environment. Under the current patents law, the test is that the rights holder must have used “best endeavours” to find the source but failed. During the Law Commission’s work, the “best endeavours” requirement was the subject of much criticism. As a result, the phrase “all reasonable steps” was used in the Bill. However, in evidence taken by the Special Public Bill Committee, this phrasing was also described as being too onerous.
As the BBC explained in its evidence, in the face of high-volume, low-value online infringements, the requirement to use “all reasonable steps” would be disproportionate and burdensome. It was therefore suggested that the word “all” should be left out. Compelling arguments were also put forward by the committee’s distinguished chairman, the noble and learned Lord, Lord Saville, the noble Viscount, Lord Hanworth, and the noble Baroness, Lady Bowles. On reflection, I agree that “all reasonable steps” does place the bar too high. The amendment would instead require the rights holder to simply take “reasonable steps” to find the source of the infringement. What is reasonable will depend on the circumstances. The assessment can take account of what it is reasonable for the rights holder to do in an online environment, and what is reasonable in the economic circumstances of the case.
There is a balance here. We need to ensure that we restrict potentially damaging unjustified threats but also that rights holders can take action to tackle infringement online when they need to. I beg to move.
Baroness Wilcox (Con)
My Lords, after being on the committee entrusted by the House with scrutiny of this Bill, I am only too fully aware of what a complex area of law intellectual property is—it is crucial that we get it right. We must ensure that we create a climate as positive as any in the world for businesses to innovate and grow, especially after we leave the European Union.
I thank the Minister for her clear thinking and her ability to make me understand exactly what was going on. I thought when I started that I would never get to the end of it all. However, it was quite amazing: with her experience as a fine civil servant who then transferred over to work in the wild business world, she came back with all kinds of straightforward thinking that I could understand and comply with.
I am confident that the Bill will make a valuable contribution to achieving this goal. It will make it easier for businesses to make legitimate threats to protect their intellectual property and for those businesses subject to unjustified threats to protect themselves. I am particularly glad that the Bill will harmonise the law across different types of intellectual property and make it simpler and cheaper for businesses, especially small businesses, which can often be the most intimidated by threats, to seek legal advice and negotiate before there is a need to involve the courts. The greater clarity created by the new category of permitted communications is most welcome in this regard. The Bill is therefore a significant improvement on the current law and has the potential to make a real difference for businesses in practice.
As a former small business owner who has been subject to threats to sue for intellectual property infringement, a consumer protection representative and a Minister for Intellectual Property, I also understand, however, quite how impenetrable intellectual property law can be for businesses. This is especially the case for small and medium-sized enterprises, which often struggle to understand complex legal points and are least able to afford expert legal advice when they encounter difficulties.
When I was running my small business, I was once contacted by a well-known company in the same industry alleging that I had fringed its intellectual property rights. It turned out that it did not have a leg to stand on from a legal point of view. Nevertheless, the whole episode still caused me and my business a great deal of disruption. While I recognise that I would have been a primary actor for the purposes of this Bill, and therefore not protected by the threats provision, I empathise wholeheartedly with those businesses for which these are crucial protections but for which intellectual property law is incredibly hard to understand.
For this reason, getting the legislation right is only half of the battle. Just as important—perhaps even more so—is how we seek to ensure that businesses understand what is in the Bill and how it helps them in practical terms. If we do not do this properly, we might as well not pass the Bill at all.
While I know from my time as a Minister that the Intellectual Property Office works hard to help businesses understand intellectual property, it needs to ensure that it keeps improving its efforts in this area. It would be unacceptable and a tragedy if even one start-up or SME capitulated to an unjustified threat to sue for intellectual property infringement out of a lack of awareness of the provisions of the Bill once enacted.
I was grateful to the Minister for her comments in Committee on how the Government intend to proceed to make sure that the provisions of the Bill are communicated to business, especially SMEs, so that it has the positive impact in practice that it ought to. However, this is one of the things about which we cannot ever have too much information or too many reassurances. I therefore continue to press the Minister to assist the House and businesses with further reassurances, wherever she can, on this matter.
Baroness Neville-Rolfe
My Lords, I am grateful to the noble and learned Lord, Lord Hope of Craighead, and to the noble Baroness, Lady Bowles, for the welcome they have given to the extension of sensible judicial discretion through these amendments. I also warmly thank my noble friend Lady Wilcox for her very kind words and for her strong support for the Bill, particularly from the perspective of someone who has experienced threats as a small business person. She rightly highlighted the importance of providing appropriate guidance and she may be aware that we have already published some guidance to business. The IPO has got up early in terms of what the reforms could mean in practice. I have copies of the guidance if any noble Lord would like one.
In our debate in Committee I happily committed to communicating to businesses the changes and benefits being brought by the introduction of this Bill. They will form an important part of the IPO’s work and its outreach programme. I know that my noble friend is keen to learn what this would mean in reality, so I can say that the IPO will go the extra mile for SMEs. It will update its popular online tools, publish guidance, add information on the new threats provisions to the range of IP educational materials as appropriate and include presentations about these changes at its outreach events, many of which are of course aimed at SMEs. It will also update businesses via social media channels and signpost users to the relevant guidance. It is crucial that the material produced is clear and accessible, and the IPO will road-test the guidance in draft with small business representatives to ensure that it is understandable. These changes will be communicated direct to SMEs by the IPO as well as by others who provide advice and support to small businesses, which is equally important. The IPO will work with representative bodies to ensure that their members are aware of the reforms. Emails will be sent to those stakeholders who have signed up to receive updates, which will ensure that sources of IP advice such as the patent library network, growth hubs and professional IP advisers are best able to help our SMEs.
The noble Baroness, Lady Bowles, repeated some of the concerns that we discussed at length in Committee. I continue to believe that to include online notifications automatically as a permitted purpose would completely undermine the protection from threats which is at the heart of these provisions. It cannot be right that retailers and others lose all protection from threats simply because those threats are made via a particular medium, in this case online. As I have said, submitting an online form normally results in a listing being taken down, so making online forms permitted would not encourage parties in dispute to talk first since the rights holder could, justifiably or not, prevent at a stroke any further trade in an item. The amendments proposed address the issues in the most appropriate way. The wider discretion that we have given to the courts, which I started with, is useful because it allows the law to evolve as, for example, technology moves on so that over time it can be applied in a clear, fair and appropriate way. In addition we have made defences more readily available to rights holders who need to approach a secondary actor.
The noble Baroness and the noble Lord, Lord Stevenson, talked about online and reference was made to the Digital Economy Bill, which all being well will come before this House on 13 December. We have two amendments today to improve the online situation and I feel that we have addressed the concerns raised in Committee and by the BBC. The amended clauses should therefore be allowed to run. Further, it is only fair to say that we do not have any plans to revisit the issue in the Digital Economy Bill when it comes to this House.
We have made some significant changes to the Bill in response to the concerns that were well expressed in Committee and I hope that noble Lords will feel able to support the amendments before them.
Lord Hope of Craighead
My Lords, I am fairly new to this argument as unfortunately I was not able to be present as a member of the committee. Judges faced with the nature of this clause, in looking at the word “instructions”, would give the word a purposive meaning and would tend to look for a specific instruction as a necessary condition even if the words were not expressed in the Bill. For the avoidance of doubt, I respectfully suggest that the amendment moved by my noble kinsman has great force behind it. One would want to put the matter beyond doubt. For what it is worth, I support the amendment.
Baroness Neville-Rolfe
My Lords, I understand that this is an area of concern. I welcome the amendments from the noble Lord, Lord Stevenson, and the noble Baroness, Lady Bowles. I very much appreciate the noble Lord’s constructive approach to the Bill and his commitment to careful scrutiny. I think he said the amendment was probing in nature. I will start by setting out why I remain convinced that the exemption for professional advisers is so necessary, before talking about the specific amendment.
The Law Commission’s consultation demonstrated that the tactic of suing a professional adviser for making a threat has been used to hamper the legitimate client-adviser relationship. This causes problems not only for the adviser but for the client, who may as a result need to find a new adviser. I believe we heard convincingly during the evidence stages that this is a significant and common issue. It leaves rights holders in the position of having to pay indemnities before a legal adviser will write an entirely justified letter on their behalf. SMEs are more likely to be asked for such indemnities and are most affected by them.
I am aware that there were concerns regarding such an exemption, which might give rise to an increase in the use of unscrupulous threats. However, I do not agree for the following reasons. Where the professional adviser is exempt, the instructing client will remain liable. This ensures that recourse is available to those damaged by threats. A legal adviser who advises their client badly, leaving them liable for threats, risks a negligence action. The exemption does not prevent this. The exemption has been carefully and appropriately limited in its availability. The amendment would restrict the protection available for professional advisers to just those who are acting on “specific” instructions from another person.
In an increasingly global market—that was mentioned —we need to capture the many different types of foreign and domestic IP legal practitioner who may risk facing a threats action under UK law. As discussed in Committee, this should clearly include those in private practice as well as “in-house” advisers. For that reason, I do not agree that the exemption principle should apply only to the very limited category of circumstances envisaged by the amendment.
In practice, instructions come in all shapes and forms, written and oral. It is therefore unclear what would be required in order to demonstrate that an adviser was acting on a “specific” instruction. Such lack of clarity about “specific” instructions would be particularly problematic for in-house legal advisers, who are often acting on a general mandate to protect their company’s IP rights. The Law Commission agrees that the amendment risks leaving in-house advisers without protection. I apologise to the noble Lord, Lord Stevenson: I think that that is the response that he was expecting in relation to the amendment.
Lord Stevenson of Balmacara
I thank those noble Lords who contributed to this short debate. It is right that we recognise that there are particularities in relation to in-house lawyers and I take the point made by the Minister that the exemption would be particularly useful for them. It does not get round the fact that this could easily be the thin end of the wedge. While that should not detract from the specifics of what we are discussing today, it would be odd if a very small part of a very small part of the law—while I in no sense diminish the contribution made by this Bill to the greater good—was to be adapted to allow this exemption, which then spread.
Baroness Neville-Rolfe
It may be clearer if I make one final point. My understanding is that the underlying law on agent liability is left undisturbed, so no precedent is being set here for other areas of law which concern agent-client relationships. I recall that being a concern expressed by the noble Lord, so perhaps my making that clear to the House will help him in agreeing to withdraw the amendment.
Lord Stevenson of Balmacara
Yes. The Minister anticipated exactly what I was going to say. We were all looking for some words of reassurance so that those who had to interpret the provisions later would be better informed. We have not had the chance to see the Explanatory Memorandum in that regard. Perhaps we could receive that in correspondence before the final stages of the Bill, so that I might be more satisfied. On that basis, I am happy to withdraw the amendment.
Contracts for Difference (Allocation) (Excluded Sites) Amendment Regulations 2016
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Baroness Neville-Rolfe
That the draft Regulations laid before the House on 11 October be approved.
The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)
My Lords, the regulations amend a statutory instrument made under the Energy Act 2013. The instrument makes some straightforward amendments to the current regulations to strengthen the non-delivery disincentive mechanism. This mechanism is an important part of the CfD scheme. It encourages developers to stick to the delivery milestones in their contracts and sets a penalty for developers who apply for, and win, a CfD but then either fail to sign the contract or terminate it early. In the first CfD round, two small solar projects failed to sign their contracts. Both had bid at a price that was considered by the industry as not economically viable at the time. It is right that we tighten up the regulations to ensure that such speculative projects are not able to enter future rounds. Two others did not meet their milestone requirements in the view of the LCCC—the Low Carbon Contracts Company, not, of course, Leicestershire County Cricket Club.
Before I go into more detail about how the mechanism currently works and how we propose to change it, I will touch briefly on the latest developments around the CfD scheme. On 9 November we published further details on the second contracts for difference allocation round. This has put an end to the uncertainty that the industry was facing and is a key plank in our commitment to move to a low-carbon energy mix, help tackle climate change and meet our carbon budget requirements. In the announcement, we gave investors, developers and the supporting supply chain the certainty necessary to drive forward investment. Some £290 million of the annual support for new renewables projects has been allocated to the upcoming round.
The noble Lord, Lord Grantchester, will be pleased, in view of what he said in our previous debate, that we have also reaffirmed that £730 million per year will be available to support renewables through the CfD during this Parliament. In our announcement we also set out key parts of the allocation process, including strike prices and supply chain guidance. The supply chain guidance is an important part of the package. It is a compulsory requirement for projects of 300 megawatts and over, and means that projects must provide the Secretary of State with a “good degree of confidence” that the project will make a material contribution to the development of the supply chain. That is all part of the Government’s commitment to growing and strengthening the industrial base.
We have already seen a number of positive developments, particularly in the offshore wind industry, where investment is supporting long-term supply chain development, which is also of lasting value to the UK economy and helps to build a competitive supply chain that is ready to export. This has included investment in the ports of Great Yarmouth and Lowestoft to support Greater Gabbard and East Anglia ONE, as well as the development of the Siemens blade factory in Hull.
This draft instrument will help to strengthen the next CfD allocation round by making sure that developers who win a contract face an appropriate penalty if they do not deliver it. The non-delivery disincentive sets out a penalty for developers who apply for and win a CfD but then either fail to sign the contract, or terminate it early. This may prevent other potentially viable projects receiving a CfD and tie up budget that could otherwise have been used to deliver our objectives. It is right and proper that this behaviour should be discouraged and developers should pay a price. The non-delivery disincentive exclusion already prevents developers from applying to any subsequent round in respect of the same site for 13 months after a CfD is awarded. The intention is to prevent companies who fail to deliver on contracts from entering a future round with essentially the same project. This amendment will extend this exclusion to include the first of any rounds occurring in the following 11 months, so up to a maximum of 24 months. It allows us the flexibility to run rounds less frequently but maintain the same protection against developers gaming the system.
Lord Grantchester (Lab)
My Lords, I thank the Minister for her introduction of these regulations, which are limited in scope and technical in nature. As she says, they will deter non-delivery of contract projects by excluding participants from taking part in future periodic allocation rounds should they not fulfil certain aspects of their projects. I am happy to agree to the regulations today as they would deter applicants to the CfD scheme from making speculative bids for projects that are unlikely to be delivered, thereby tying up parts of the budget for the scheme so that it cannot be delivered. As allocation rounds are being run less frequently than originally anticipated, this would ensure greater delivery of the wider objectives of investment in power-sector decarbonisation.
The Minister has already spoken of some of the effects in the first round but perhaps she could clarify a little further why these measures are being introduced. Can she explain the overall difficulties seen in the evidence from the non-delivery of projects in the first round of contracts for difference allocation? Has there been a certain amount of “hogging” or poor fulfilment of the projects by some participants in the first round? The Explanatory Memorandum was relatively quiet on the consultation outcome and reported generally supportive responses.
I am grateful to the Minister for confirmation that the sum coming forward to support renewable investments in the second round will be the one that has been widely reported. Is she satisfied that there is an adequate appeals process should the applicant consider that he or she has been unfairly treated? Are there adequate provisions for genuine non-compliance should circumstances out of the applicant’s control result in poor fulfilment? Is she satisfied from the experience of the first allocation round that interpretations of what it means not to have delivered are adequately defined?
I would like to follow up on one further aspect of these regulations. What happens to projects that make slow progress or are even abandoned? Can that part of the budget be reallocated to a later round, or are there some residual rights of the applicant to fulfil the project? It is not clear from the memorandum whether the CfD is terminated as a consequence such that it could not be recycled in an orderly manner. The impact assessment considers the overall CfD scheme, objectives and process without considering these regulations specifically. Is there a risk that exclusions to future bidding rounds could give rise to a series of legal actions that could undermine the allocation process more generally?
I would be grateful if the Minister could clarify those aspects of how the regulations might work in practice so that the operation of CfDs will continue to bring forward schemes at least cost to the electricity consumer over the longer term.
Baroness Neville-Rolfe
I thank the noble Lord for his helpful remarks and his welcome for these regulations. As I said earlier, the contracts for difference scheme is designed to incentivise the significant investment we require in our electricity infrastructure to keep our energy supply secure, to keep costs affordable for consumers and to help meet our climate change targets. The instrument being debated today enables us to maximise the effectiveness of future CfD allocation rounds by increasing disincentives for non-delivery and preventing those who have failed to deliver a project in the past from gaming the system.
In my opening remarks I ran through the reasons for the failure of the two small solar projects and the other two projects that failed to meet the milestone requirements of the LCCC. I am satisfied in general that the contractual details and exemptions before us are fit for purpose, especially as amended by these regulations.
The noble Lord asked about using up proceeds of frozen CfDs. We always keep under review the total budget allocated to CfD projects. If any projects that are successful in the next auction fail to sign their contracts or have their contracts terminated we will consider—I think this is probably what the noble Lord wants to hear—the possibility of recycling budget to future auctions. This decision will, however, depend on factors including the pipeline and what will ensure the best value for bill payers. We do not expect this to be significant. In the first auction, as I have said, there were the two small solar projects that failed to sign their contracts and the two projects that had their contracts terminated out of a total of 25. I think I explained last time that there was an overspend against the levy control framework for that period so there was no scope for recycling on that occasion.
On legal action—which is always something I am rather cautious about commenting on—complaints can be made to the LCCC. Ultimately, judicial review would be the legal remedy and there is normally an appropriate and narrow window for this.
As I think we are agreed, this is another step—a small but important technical milestone—towards getting the next CfD auction going. I look forward to the work on the supply chain in the new year and to the auction commencing in April. In the meantime, I commend these regulations to the House.
Brexit: Medical Research and Innovation
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Baroness Andrews
To ask Her Majesty’s Government, in the light of the numbers of European Union scientists working on British research programmes, what assessment they have made of the impact of the United Kingdom’s exit from the European Union on medical research and innovation.
The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)
The Government are looking at more than 50 sectors and at the cross-cutting regulatory issues to build a detailed understanding of how withdrawing from the European Union will impact on the UK, including in the important area of medical research and innovation. The recently formed UK EU Life Sciences Steering Group is engaging with a wide range of stakeholders to help us ensure a positive outcome for this sector and for UK science.
Baroness Andrews (Lab)
I am grateful to the noble Baroness for that Answer. Does she appreciate that what medical researchers in the UK really want to know is what is going to happen after Horizon 2020? Are the Government aware of the risk that there will be to the great progress now being made by UK researchers working with European teams, networks and funding in, for example, the treatment of cancer and rare diseases? If those researchers are excluded from the next research framework, Framework Programme 9, that progress will come to a halt. In short, can she say what specific plans the Government have to ensure that we are not excluded from framework 9?
Baroness Neville-Rolfe
My Lords, it is too early to speculate on our future relationship with Horizon 2020 and its successor programme, No. 9—I am assured that it is going to be given a better name. Whatever happens in the future, we are committed to ensuring that the UK continues to be a world leader in international research and innovation and that collaboration with Europe and others continues. Separately, and as part of our industrial strategy, the Prime Minister has today announced a substantial real-terms increase in government investment in R&D worth £2 billion per year by 2020 as well as a new industrial strategy challenge fund which will also help medical innovation. This is good news.
Baroness Morgan of Drefelin (CB)
My Lords, perhaps I may remind the House of my interest in this area. The Minister in the other place said in June that the life sciences industry was worth around £60 billion a year to the UK and supports some 220,000 jobs, We in this House know that the role of the industry in promoting better patient outcomes through clinical research is absolutely vital. Is the Minister able to give us some reassurance that regulation will be put on a more even footing in the future, and will the Government commit to signing up to the agreed 2014 clinical trials regulations when they come into effect in 2018?
Baroness Neville-Rolfe
I entirely agree with the noble Baroness about the importance of our unique life science industries. Regarding the clinical trials regulation, preparations are continuing to implement that regulation in 2018 because we remain in the EU while negotiations continue. Of course, a great repeal Bill will come before Parliament after the next Queen’s Speech. That will end the authority of EU law and return power to the UK, but we will transpose current EU law into domestic law while allowing for amendments to take account of the future negotiated UK-EU relationship in this and other areas.
Lord Foster of Bath (LD)
My Lords, does the Minister accept that if we are to succeed in medical science research and innovation we need more home-grown science and maths graduates? That requires more science and maths teachers in our schools. Is she aware that teacher training targets are being missed, that vacancies are rising, that retention rates are falling, and that now more than a quarter of maths and science teachers have no relevant post A-level qualifications? What action are the Government taking?
Baroness Neville-Rolfe
The situation on STEM teaching is incredibly important. Indeed, thinking about our skills and how they relate to our industrial base, and our research and innovation will be a key strand of our industrial strategy, on which we will issue a consultation paper this side of Christmas.
Lord Anderson of Swansea (Lab)
My Lords, is it not inevitable that we will lose the European Medicines Agency in Canary Wharf, with its consequent expertise and jobs?
Baroness Neville-Rolfe
All I can do is repeat that it is too early to speculate on detailed issues such as the future of the European Medicines Agency, but our approach remains to be fully open and supportive of scientists, researchers and our medical strength. This is particularly famous in the UK because of the National Health Service, which provides such a good base for our medical and pharmaceutical industries.
Lord Naseby (Con)
Is my noble friend aware that one has only to go up to Cambridge and look at the number of start-up companies that are there, then open up the file on the new companies dealing with medical discovery going on the AIM market, to have some considerable reassurance that the industry is confident of the future, recognises that there will be some transitional challenges but, as before we joined the EU, will continue to be a leader in medical research?
Baroness Neville-Rolfe
I entirely agree with my noble friend. The fund for backing priority technologies, which we have announced today, will further support the UK’s potential to turn strengths in research into a global, industrial and commercial lead.
Lord Kakkar (CB)
My Lords, I declare an interest as professor of surgery at University College London and business ambassador for healthcare and life sciences. The announcement of £2 billion a year of additional funding to support research and development is most welcome, but are Her Majesty’s Government able to confirm that that funding, in addition to driving an industrial strategy in this area, will be delivered through the activities of the research councils, secure excellence in terms of the purpose of research funding, and be used to ensure the ongoing participation of our great institutions in global collaborative networks, which are vital for the delivery of excellent science?
Baroness Neville-Rolfe
I entirely agree with the noble Lord on the excellence of our research and development base, and on the great work being done by the research councils. I look forward to debating the way forward when the Bill on education and research reaches this House in the coming weeks. New funding has been made available today. This vision and direction of travel is excellent news for our science and research base in every part of the country.
Lord Hunt of Kings Heath
My Lords, the Minister ducked the question on the European Medicines Agency. Will she answer a question about the MHRA, the UK medicines regulator, which is regarded as the finest regulator in Europe and is one factor behind the large investment in medical research in the UK? In the Brexit negotiations, will she ensure that there is mutual recognition, so that medicines licensed by the MHRA will continue to be recognised throughout Europe?
Baroness Neville-Rolfe
I will feed the noble Lord’s suggestion into the process that is going on to make sure that we get the best deal in the Brexit negotiations on all these issues. He will know that Jo Johnson has a set up a forum with senior representatives of UK Research and Innovation to look at such matters, and that work continues in the Department of Health. This is a very important area. A lot of the detail is complex, but we are aware of that and, as I said in my opening comment, a great deal of work is going on.
Intellectual Property (Unjustified Threats) Bill [HL]
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Lord Stevenson of Balmacara
My Lords, I support the amendments introduced so well by the noble Baroness, Lady Bowles of Berkhamsted. There is very little that I need to add in terms of the general case—she made it very well. In the context of the remarks that we have just heard, a broader concern about the role of SMEs should carry weight in these debates. The anomaly of the omission of those commissioned by others who perhaps should know better is a point strongly made—the Lego example is rather a good one, even though we perhaps should not put it around too much in case people get ideas. The fact that such provision already exists elsewhere in statute suggests that, if we are trying in this Bill to level things up, this amendment and those consequential on it are very important. The amendment in the name of my noble friend Lord Hanworth is also worthy of consideration, although we will need to hear him speak to the other amendments in later groups to get a full picture of where he is coming from.
The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)
My Lords, on interests, I am the Intellectual Property Minister, and I have the pleasure today of speaking on behalf of the Government.
I am very grateful to the noble Baroness, Lady Bowles, for her comprehensive introduction to this large group of amendments. I am also grateful to my noble friend Lady Wilcox for her support for the Bill as whole and for the good work done by the Law Commission.
It is common ground, I think, that Section 70A and its equivalents set out the definition of an actionable threat. The sections replicate the existing exception whereby a threats action cannot be brought if the threat refers to a primary act of infringement. The existing statutory definitions of what is an infringing act lie at the heart of the threats provisions.
The amendments in this group would mean that threats to someone “commissioning” another person to carry out a specified primary act cannot trigger a threats action. Commissioning infringing goods is not an infringing act within the meaning of any of the existing statutory definitions. This is a key point. Treating commissioning as if it were infringement, for the purposes of the threats provisions, would be a highly significant change to the law. It would introduce a novel concept and create confusion in the law of threats and more generally.
Unjustified threats are those threats which are made in respect of invalid rights, or where there has been no infringement. Amendment 1 and its equivalents would remove any protection from unjustified threats for a particular class of people who are not actually infringers at all—that could easily include the SMEs we are concerned about, on which I will come back to my noble friend’s comments at the end—and, to me, that cannot be right.
The amendment would also have other unwelcome consequences. For example, there is the defence which is available to the threatener, if they can show that the infringement did in fact occur. That defence is made unworkable in these circumstances.
I am concerned that, as with Amendment 3, there is a risk that the amendment would have unintended consequences on the interpretation of IP provisions more widely—specifically, the provisions which define infringement. Furthermore, the meaning of what amounts to “commissioning” a primary act would only become clear after a substantial body of case law had been built up. I do not think that that would be acceptable or welcome to business.
I shall now move on to Amendment 20—with many thanks to the noble Viscount, Lord Hanworth, for his explanation—which relates to use of trade marks in an online environment. I do not agree that there is an inconsistency in the threats regime. The noble Baroness, Lady Bowles, suggested that infringement law could be aligned better for the rights, but that is a wider question, as we discussed, that relates not just to threats or this particular Bill. If the amendment is intended to ensure that “applying” a trade mark in an online environment is covered more explicitly as a primary act, then in my view this is unnecessary when the threats provisions are read in the wider context of the parent Act.
This Bill will insert the individual threats provisions into the existing framework for the relevant rights. While the provisions appear in isolation in this Bill, they must be read—as I have just said—in their wider context.
The relevant sections of the Trade Marks Act 1994 do not expressly require a sign to be in physical form. It is accepted that services may be offered online under a sign in electronic form, and this applies whether the sign is included in a listing or as an AdWord. Nor do they require that the sign must be physically applied to physical goods or their physical packaging. Where goods themselves are electronic, then it follows that the sign applied must also be electronic.
That is a long way of saying that changing the provisions in the Bill to set out expressly that the online application of a sign is covered is unnecessary and, as we discussed in some of the hearings, could cast doubt on an already settled view.
I turn finally to the position of small businesses, which was so well expounded by my noble friend Lady Wilcox. I do not think that a champion is a matter for this Law Commission Bill, although she and I had a good discussion about it. I believe, as I have said several times, that this will benefit smaller-sized businesses by helping them to gain access to justice at reasonable cost in order to enforce and make best use of their IP in the sort of circumstances that she was talking about.
I hope noble Lords will allow me to enlarge a little on the measures that government has taken to help SMEs, as I think that might help my noble friend. We heard in the evidence sessions from Mr Justice Birss about the benefits to SMEs of using the Intellectual Property Enterprise Court. Recent reforms made to the IPEC—in particular, the small claims track—help to level the IP playing field for SMEs that previously struggled with cost. The Government are fully supportive of the IP pro bono initiative, launched last month, which is designed to help small businesses and individuals who are involved in a dispute about IP. The IPO also undertakes a wide range of activities that are aimed at SMEs—partly as a legacy of the time when my noble friend was Minister—and geared to promote understanding, such as: the government-funded IP audit programme; the IP for business tools; and the IP finance toolkit. I make no apology for taking this opportunity to explain that.
Regarding the guidance on the Bill, the IPO has committed to publish business guidance 12 weeks before the new provisions come into effect. In addition, the IPO will implement a full communications plan, update the online tools, make presentations at outreach events—many of which are aimed at SMEs—update stakeholders who have signed up to receive updates and use social media channels to try and ensure that we take this opportunity to raise awareness of the changes. Actually, this is a good opportunity to expound the importance of IP. The IPO works tirelessly to increase awareness of IP and to provide guidance and education at every level. I am happy to commit the IPO to communicating to SMEs in a helpful way about the changes and benefits that will be brought by the Bill.
An important point is that we will ensure, as we did for the Consumer Rights Act, that the material is pitched at the right level. I have asked the IPO to road-test the guidance in draft with small business representatives. So we will have material suitably targeted for SMEs, but also communicate to the people who provide advice and support to these businesses, such as the patent library network, growth hubs and professional IP advisers. As IP Minister, I have tried to make sure that people understand IP a bit more and, with my noble friend’s assistance, I think that this Bill is an opportunity to do a bit more of that.
Coming back to the amendments, I believe that they would in fact complicate what is currently, as drafted, a clear and consistent definition, developed by the Law Commission, of what is and is not an infringing act. I therefore ask the noble Baroness to withdraw the amendment.
Lord Lucas
My Lords, I apologise for being backward when it comes to IP law, but I am surprised that the “commissioner” is not committing anything actionable. In this internet world, if I commission a product that infringes a patent, it is easy to get it made somewhere that is hard for the patent owner to get at and then arrange to sell it over the internet so that the importer is actually the final customer, rather than anyone who can be got at. That leaves the patent owner with no sensible place to go to enforce their patent. Is it really the case that “commissioning” a manufacturer to infringe a patent is not in itself actionable, or did I misunderstand the Minister?
Baroness Neville-Rolfe
These are quite fine points of law, but that is a fair question. Are there any other points, while we try to ensure that we answer your question accurately?
Lord Lucas
I thought that the Minister was saying to the noble Baroness, Lady Bowles, that she was seeking to introduce something new by saying that “commissioning” was not an infringement and, therefore, one could not make a justified threat to someone who was not doing anything that was actionable.
Baroness Bowles of Berkhamsted
If I may, I think that in the kind of scenario where there is a commissioning person and a manufacturer and you can find them both, you would take action and the commissioner could be brought into it as a joint tortfeasor. If the commissioner was the big guy and the manufacturer was the small guy and you could take action just against the commissioner, as you could with a trademark, you might leave the small guy out of it. They become the prime person in the action, with the other person potentially joined in, but the issue is that you cannot write to the source of the problem.
It is true, as the Minister said, that there is a missing link in “causing” in everything except trademarks. When the Law Commission started its review in preparation for this Bill, it asked whether the law was working properly in various places and was told that it was not working as well as it could, including in relation to the amendments that had been made to Section 70 of the Patents Act following the Cavity Trays case. That has been rolled out with no change, not taking account of suggestions of areas where there could be improvement. Given that such suggestions have been made, it is appropriate that policy discussions and decisions take place. I can accept that the Law Commission does not have that power, but the legislature does. Therefore, I lay those points before the legislature.
I must quibble slightly with the suggestion that the point about unjustified threats is about getting at people who try to threaten you under an invalid patent or where there is obviously no infringement. Those are actions that, by and large, cannot be caught with a threats action; that is what the more blanket tort is needed for, or you have to go to different things, such as declarations of non-infringement or declarations of invalidity, because the threats action is not there. The law says that if you are the manufacturer or the importer anyway, you can threaten to your heart’s content.
If I may paraphrase Judge Pumfrey, as he then was, in the Quads 4 Kids case, he said that unjustified threats actions are about a rights holder who tries to keep enforcing their rights with the threat of going to court but never intending to go to court. That is why you are not allowed to threaten the customers, because that would be a soft option for doing that. However, that does not mean that people who are selling things are not infringers; they are—you do infringe if you are selling, but one is supposed to go for the person at the core of it, the manufacturer.
What I am saying, and have been supported in, is that in this day and age the notion of causing is far more relevant. Historically, it was always relevant for trade marks, because you got somebody else to mark the carton—that is where it all started—but now that we are into remote access, commissioning in one country and selling over the internet, there is definitely a missing link that is being made use of, particularly in respect of designs as well as trade marks, and probably patents to some extent as well.
That is where I stand on this. I think that I would like to test the level of support in the Committee.
Baroness Neville-Rolfe
Before the noble Baroness sits down—I say that for the cameras—I should say to her that this is obviously a Law Commission Bill. The extent of that has been explained to us as a Committee from day one. We are getting here almost into a treatise on the general law of infringement. The threats Bill needs to match the existing law, which it does. I have explained why I think the amendments go beyond that and have potentially perverse consequences.
The noble Lord, Lord Lucas, was essentially right in what he said, so I thank him for that. I think that the right thing for us to do is to stick with this wording, which the Law Commission has spent a lot of time clarifying, rather than move into these new areas.
Baroness Bowles of Berkhamsted
I would still like to test the opinion of the Committee. We do not have to do it for all the amendments; we can test on Amendment 1.
Lord Stevenson of Balmacara
Luckily, I do not have to answer that, but we have expertise beyond parallel at the Minister’s end of the table.
I just want to support the points made by the noble Baroness, Lady Bowles of Berkhamsted. The question here is not so much whether this is an issue that we should take into account ab initio, which was slightly the case with the previous amendment, although I supported that as well; the support here comes because there was clear evidence from those whom we consulted that this issue needs further attention, and the noble Baroness has made that case very well. If we have gone to the trouble of taking evidence but then do not consider it and take it forward, that seems to be a slightly casual way of approaching things. I hope that we will take this point very seriously.
I also take the noble Baroness’s point that, if we were to amend the Act in the way that she suggests, this would reduce the impact on small and medium-sized enterprises and other organisations, because there were would be fewer court actions and more such matters would be dealt with in the right way, which is directly between the participants. So I support these amendments.
Baroness Neville-Rolfe
My Lords, I am grateful to the noble Baroness, Lady Bowles, for her comments which, it is fair to say, were wide-ranging. I will explain how I see things and then address the various amendments, to use her words, on their merits—I should say her “family” of amendments, which is a good new collective term that she has invented today.
It is crucial that the threats provisions encourage rights holders to communicate with the trade source of an infringement—that is agreed—and provide much-needed protection for secondary actors, such as retailers and customers. To facilitate this, the Bill sets out a clear statement of primary acts. Threats in respect of these primary acts, namely the manufacture or import of a product, in the case of patents, will not give rise to a threats action. To answer the point made by my noble friend Lord Lucas, the manufacturer of the cornflakes—to use his example—is the primary actor. The point has been made by my advisers that this assumes that they are patented cornflakes; I am not sure how likely that is in reality, but it is a fair point. I think that there are people, as we discussed during the evidence session, who are in both the primary and secondary markets.
As we have discussed in this Committee, the provisions make a distinction between primary actor, such as the manufacturer, and secondary actor, such as the distributer and retailer, or the person with that hat. This provides protection for secondary actors from being exposed to threats. They are less likely to be able to make an informed decision on whether the threat is actually justified. Secondary actors are more vulnerable to threats because of the fear that they will become embroiled in an infringement action that they cannot afford. As a consequence, mere threats can—and do—persuade secondary actors to move their custom elsewhere.
This group of amendments would introduce circumstances where threats in relation to secondary acts would not give rise to a threats action. This clearly starts to undermine, to my mind, the protection for those who should rightly be protected by the provisions before us. The first set of amendments, concerning where a person presents themselves as doing a primary act when they are not, would mean that a threat sent to a person who claims to do a primary act could not be the subject of a threats action. The rationale for the proposed amendment is that the rights holder may not find out that the recipient is not a primary actor until after the letter has been sent, and then only if the recipient draws back from previous statements.
The amendment introduces an exception to secondary actor protection that is based on a new concept—as the noble Baroness explained—of “claiming” to be a primary infringer. This is an inherently vague concept not found elsewhere in the main Acts for the rights concerned. It would be complex and very difficult to bring evidence to prove in court. A significant body of case law would be required before businesses would have clarity about what amounts to “claiming” to be a primary actor. There may be different views to the one that I took on whether satellite litigation might result, but it certainly seems possible and unfairness could result in any case. Critically, the amendment would undermine protection for retailers who inadvertently use ambiguous language. If a secondary actor somehow implies, even accidentally, that their product was made by them, then under this amendment they lose all protection from unjustified threats, which also seems unfair. Under the current drafting, rights holders can make threats that refer only to primary acts. These are not actionable, so that is one solution. If a rights holder is uncertain about whether a retailer is also a primary actor, they can use a permitted communication to seek clarification of the identity of the primary infringer, without the risk of a committing an actionable threat.
I turn to the second group of amendments, which extend what is a primary act—for example, the manufacture of a hair dryer whose patent is owned by the threatener—to include any products or processes having the same features. To continue the example of a hair dryer, it would be one which is not the same but is similar in all material respects. Where threats are made to a primary actor in respect of one product, it is correct to approach them. They are potentially the greatest risk to trade and the source of the alleged infringing. But if threats are made in relation to equivalent or similar products, where the same business is only a secondary actor, it should be possible—in my view—to bring a threats action. To remove this option would chip away at the principle of protection for the secondary actor, which is at the very heart of the threats provisions. Mark Bridgeway noted in his evidence session that asking secondary actors for undertakings to cease doing something for commercial purposes is expressly excluded from being a permitted purpose. Yet the effect of the amendment would be to allow this to happen.
The amendment would also make the provisions more, not less, complex. It would blur what is intended to be a clear line between what is and what is not actionable. In addition, the concept of “the same features” is very vague and I can foresee great uncertainty for business. The noble Lord, Lord Stevenson, rightly mentioned SMEs. For the reasons that I have stated, I believe that including the amendments would reduce clarity and, therefore, make the provisions more complex and advice potentially more expensive for SMEs. In reducing the protection for secondary actors, I fear that the amendment could open up SMEs to unjustified threats. I know that it is a very complex area but, for these reasons, I ask the noble Baroness to consider not pressing her amendments.
Lord Stevenson of Balmacara
My Lords, I pay tribute to the noble Baroness, Lady Bowles of Berkhamsted, for her ability to expand such a wide range of interests within one group. The grouping has been necessary, but possibly not in the best interests of a focused series of discussions. It rebounds on the Minister to try to respond in like mind to whichever one of the very large number of points we could have picked up on. I am sure she is well prepared, but I will not trouble her too much because I will not range very widely on this. I do not need to repeat what has been said so eloquently.
I wanted to focus my remarks on Amendment 13, which, more by luck than good judgment, I managed to get my name down to. I support what was said here in the context of the evidence we had. If the Committee will recall, a lot of what we talked about with one or two colleagues who came and gave evidence was the question of whether the Bill could be seen as evolutionary in any sense, leading to a broader understanding of the nature of the regulatory structure within which business in the UK should be conducted. I do not wish to put words into the Minister’s mouth, but I think she is not unsympathetic to the idea that we should instil good ethics in the business community. I hope for her support later on, perhaps, on this point.
The narrow issue here is that the decision of the Law Commission after much discussion was to accept that, while there was a teleological approach to this area of law in the sense that, in time, a wider tort could be introduced because it would encompass this and other areas, and in the process allow us to engage more directly with the Paris convention—which is where we might have to seek a wider international relationship post Brexit—it was not the time to do that and it had not carried out the necessary consultations it would wish if that was indeed where Parliament wanted to go. If we are not going the whole way, was there a midpoint?
It was interesting to hear the evidence from Sir Robin Jacob in particular that new Section 70B(3), if he read and interpreted it correctly, provided a little bit of breadth of discretion to the courts when approaching the issues that the noble Baroness, Lady Bowles, mentioned. I am keen that that should be the case. I align myself entirely with the noble Baroness’s remarks on this. It would be unfortunate if the wording as it currently stands, with the word “necessary”, was seen by some as a barrier to the sort of thing we think is appropriate, which is that, on occasion, only in appropriate circumstances and only for good reason, the judges should have the right to take a wider view about some of the issues before them.
It would be helpful to get a sense from the Minister of whether she understands that. It may be that she cannot go as far as the proposal here, although the words “reasonable in all the circumstances” or “proportionate” that the noble Baroness would introduce, would be better than “necessary”. Perhaps the Minister could reflect a little on what she takes from the current wording. If, on reflection, we look at that in Hansard and think it probably takes us as far as we need to go, it may be sufficient to leave this. It is probably one of the key points in this Bill where we could be doing something rather wonderful in trying to move the whole way this is taken forward from a rather tight set of constraints to a much more open approach. That would be for the benefit of small businesses in particular, which cannot always necessarily see the narrow point and come forward with ideas that would make it easier for people to move forward with their business. I support the amendment.
Baroness Neville-Rolfe
My Lords, new Section 70B introduces a framework of “permitted communications”, which sets out clearly how a rights holder may communicate with a secondary actor without being at risk of a threats action. It is important to note that a request for this certainty came from businesses and legal professionals during the Law Commission’s work. I have listened to the points that have been made with great interest. I am rather a fan of Latin, which is a very politically incorrect thing to say. I did Latin A-level and was probably one of the last to do so—people do not study it much nowadays.
Baroness Neville-Rolfe
You learn a lot from the mistakes of the Romans in terms of public policy.
I shall start with Amendment 6 and its equivalents. One of the requirements for a permitted communication is that the specific part of the communication which relates to a threat is made for a “permitted purpose”. The phrase,
“so far as it contains information that relates to a threat”,
is there to limit properly the scope of the provision about permitted purposes. We believe that deleting the words “contains information that” would risk the test being read as meaning that the entire communication had to be made for a permitted purpose—even the parts which were not a threat. The current drafting was inserted precisely because stakeholders—the Law Society and CIPA—expressed concern about that result. The amendment would mean that the permitted communications provisions might not apply if a communication happened to contain harmless, extraneous material. The hurdle would be so onerous that the protection offered by the permitted communications provisions would not, or might not, be used. Those less experienced would also easily be caught out by adding additional material.
I move on to Amendment 7. For a communication to be permitted, the part of the communication which relates to a threat must be made solely for a permitted purpose. The term “solely” ensures that the part in question cannot also be made for a non-permitted purpose. We heard that the Law Society and others have been concerned that the word “solely” somehow imports a need to look at the motives of the sender, but I do not really see how that would come about. The motives of the sender are not a consideration under either the current law or the new provisions. I think that the noble Baroness disagreed but my view is that that is right. As Professor Sir Robin Jacob said when he gave evidence, litigating over what someone believed,
“just leads to applications for discovery and claims for privilege”.
That is a bit of a red light to me because it could mean more costly litigation.
The “permitted purposes” in the Bill are based closely on the current patent exceptions. The law in this regard is unchanged—it remains an objective test—and, in legal terminology, making a threat will remain a strict liability tort. The requirements clearly relate to assessing the purpose of the communication itself, based on its wording alone. The amendment therefore seeks to resolve an issue which simply does not exist.
Turning to Amendment 8, to my mind the non-exclusive list of examples of information which are necessary for a permitted purpose provides valuable clarity. It gives stakeholders the certainty they desire, making it possible for disputing parties to know how and what they may communicate effectively without risking litigation. The amendment seeks to undermine that certainty by adding a requirement that not only must the information be necessary but it must also be “proportionate”. The term casts doubt on whether a business can rely on the examples listed. This decreases the value of the guidance that paragraph (5) is meant to provide and which stakeholders asked to be spelt out.
Amendment 14 has a similar effect by saying that the examples given are only “prima facie” to be regarded as necessary information. In other words, these examples can be regarded as necessary information, which it is safe to convey, only until it is proven otherwise. Noble Lords can see that this will introduce considerable doubt for business about whether the examples can be relied on.
Both amendments raise many possibilities for how to assess whether a particular communication can safely be made. They risk both confusion and even satellite litigation, and the resulting uncertainty about what information can be communicated risks encouraging a return to the “sue first, talk later” approach, which we are trying to avoid. That goes against the direction of the Bill as a whole.
Finally, I will address Amendments 12 and 13. The noble Lord, Lord Stevenson, spoke to the latter. As I said, the Bill provides a list of permitted purposes in order to give the much-needed clarity and certainty that stakeholders have asked for. However, consultees also warned against being too prescriptive. For this reason, the courts have discretion to treat other purposes as permitted, but only if necessary in the interests of justice.
The requirement for something to be necessary in the interests of justice is in fact intentionally high, and it is expected that the discretion will be used sparingly. “In the interests of justice” is a familiar and steady concept to shape how the law develops. A new test of “reasonable in all the circumstances” could make it difficult to ensure that the law provides the required level of guidance and certainty. These amendments could provide the courts with a wider discretion to treat other purposes as permitted, and that could create uncertainty for users over what communications can safely be made. That is undesirable both for those wishing to enforce their rights and for secondary actors in receipt of a threat. It would make legal advice more complex and perhaps more costly and it could risk the erosion, over time, of the valuable protection for secondary actors which is at the heart of the threats provisions.
The noble Lord, Lord Stevenson, was making a wider point, but I do not think that we can tackle business ethics in this Bill. However, I agree that being responsible in business leads to better business, not only in the long term but in the shorter term.
I have listened to the debates about “solely” and “necessary”—we have now debated this over five sessions—and I can see that noble Lords share the same objective that we have, which is to ensure that this key area of the law operates in the best possible way and that these permitted communications work well. I cannot promise anything today but I, along with perhaps other noble Lords, will look at the Hansard report of the debate and I will consider carefully the various detailed points that have been made today. On that basis, I hope that the noble Baroness will feel able to withdraw the amendment.
Baroness Neville-Rolfe
I am grateful to the noble Viscount, Lord Hanworth, for his clear explanation of these amendments. I liked his example of the Doctor Who birthday cards, which I look forward to researching.
It is true that the internet is growing. It is increasingly international and it is very important, but I am not sure that that necessarily means that we should be changing the Bill. The amendments seek, in various ways, to include the sending of an online infringement notice in the list of permitted purposes, the result being that such notices can be used to communicate with an online secondary actor, without fear of a threats action being brought. Unfortunately, such amendments would completely undermine the protection for secondary actors provided by the Bill. Noble Lords will remember that Mr Justice Birss was clear in his oral evidence that these forms should not be made an automatic exception from the law of threats. He noted that he was aware of the notification process being used in exactly the way the threats provisions aim to prevent. Furthermore, the amendments would distort the policy behind permitted communications, which, of course, is to encourage a conversation to resolve a dispute. If an online form is used, rightly or wrongly, and the product listing is taken down, then the rights holder has prevented further trade in the item, so that closes the door to discussion.
Amendment 11 defines the new permitted purpose in relation to the e-commerce regulations 2002. These regulations do not specify how the notification must be made or what it should contain. There is no conflict, as we see it, between the Bill provisions as they stand and these regulations. It is possible to send a communication which fits within both the requirements of the regulation and the permitted purposes. Given the undefined nature of an e-commerce notice, the range of communications exempted by this amendment would potentially be large. That could create a gap in the protection for secondary actors.
Amendments 9 and 11 in particular would allow malicious and unjustified threats to be made to a secondary actor simply because a particular online form is used. The parties damaged by that threat would have no form of redress. That cannot to my mind be the right outcome. A rights holder facing a threats action as a result of using such a form can take advantage of the defences set out in the Bill. One defence available is that “all reasonable steps” have been taken to find the primary infringer. What is reasonable in the case of high-volume online infringement, to which the noble Viscount referred, is very likely to be a lower hurdle than in other situations. If a step is reasonable, then I see no problem in expecting a rights holder to take it. In light of this, the permitted purpose set out in Amendment 10, with its explicit reference to the impracticality of finding a primary actor, is not necessary. A suitable defence already exists.
The other defence for a rights holder facing a threats action is that the right has in fact been infringed. As the BBC noted in its evidence, it is very well aware, before it makes contact, of who is permitted to use its brand, and therefore whether others are infringing. The provisions as drafted in no way prevent rights holders from legitimately enforcing their rights. Sir Colin Birss says about not including standardised/online letters in his evidence:
“I would not include them in the exemption. That kind of thing can cause real damage. … I would be wary of a draft that went too far the other way and simply excluded that kind of thing altogether. That would be unfortunate. It is a place where SMEs can get damaged”.
Finally, I will try to pick up a couple of the points made by the noble Baroness, Lady Bowles. As I am sure she knows, the list of permitted purposes is based on the current threats provisions where it is permitted to notify a recipient of a right or, for patents only, to give factual information about the right or make inquiries to find out if a right is being infringed and by whom. That is not changing. Also, mere notification, to which she referred, is the first of the permitted purposes, and notification is not a threat to the platform.
These are complex matters. They have obviously been discussed at length with the Law Commission. I hope that, on reflection, the noble Viscount will feel able to withdraw his amendment.
Viscount Hanworth
I shall consider carefully what the Minister has said, as recorded in Hansard. Therefore, I beg leave to withdraw my amendment. I wish to give notice that I may bring it back on Report, in collaboration, I would expect, with the noble Baroness, Lady Bowles.
Baroness Neville-Rolfe
New Section 70C and equivalents set out remedies in the case of a successful threats action and the defences available to those who have a threats action brought against them. Subsection (4) sets out a defence if it has not been possible for the threatener to identify the primary actor.
As has been said, the first amendment would amend the subsection to reflect a drafting preference by moving the location of the reference letter T. That may relate to the person who made the threat, which begins with T, but I will discuss the wording with parliamentary counsel in the light of the Digital Economy Bill to see whether we feel that it is right. I do not think that anybody thinks that it is a material point.
The second group of amendments under discussion relate to the defences available for someone who is faced with a threats action. The 2004 patents reform introduced a defence for a person making a threat to a retailer or the like. The defence applies if their efforts to find the trade source of the infringing patented goods were unsuccessful. The Bill extends this limited but useful defence to trade marks and designs. The provisions clarify that the person making the threat must have used “all reasonable steps” to find the importer or manufacturer of the product in question before they are safe to approach the retailer.
The phrase “all reasonable steps” was carefully chosen in response to stakeholder feedback, discussions with the Law Society and the Law Commission’s working group. Stakeholders thought that the previous phrasing used in the patents defence, “best endeavours”, carried too much legal baggage, as it has a special meaning in commercial contract law. In addition, it was felt that this could require disproportionate efforts by a rights holder attempting to identify a primary infringer. “All reasonable steps” therefore strikes the right level. It requires the person making the threat not just to do something which is reasonable but to do everything which is reasonable. The wording is fair; it does not require the person making the threat to go beyond what is reasonable.
Amendments 18 and 19 and equivalents seek to deal with pending rights. It is well established that threats to sue for infringement of an IP right, when an application for that right is still pending, are nevertheless subject to the threats provisions. New Section 70E for patents, and equivalents for other rights, ensure that there is no change to this principle—the threat will be interpreted as a threat to bring infringement proceedings once the right has been granted.
The effect of the amendment is to state explicitly that the issue of whether there has been an infringement will be determined on the basis of the granted right. It would add words in respect of the justification defence at new Section 70C(3) to state that a reference to the word “patent” means, in the case of an application, “patent as granted”. It would also make similar changes in relation to the other rights. The amendment is unnecessary. The threatener has a defence that the acts were in fact infringing ones. It is already the case in law that he must be able to show that the acts are infringing at the point of trial. If, at that time, there is not yet a granted IP right, there is no valid right to infringe and so the defence is not available to the threatener. That is the right outcome.
It is only where an IP right has been granted by the time of the trial that the defence is available. The new threats provisions do not change this legal principle. They fit into the relevant Acts, which themselves make clear at what point and in what way infringement of an IP right can occur. Let us take patents as an example: to understand references to infringement of a pending patent, it is necessary to refer to Section 69 of the Patents Act 1977. This makes it clear that you will not infringe a patent until it is granted and explains how infringement works for pending patents.
I have tried to explain why the provisions are drafted in this way. I will look again at our friend T. I ask the noble Viscount to withdraw the amendment.
Lord Lucas
My Lords, I would be grateful if, between now and Report, the Minister could write to me with some examples of cases decided on the basis of “all reasonable efforts”, so that I can get a real grip on what that means. It is a very uncertain phrase in English. If I wrote to Tesco asking, “Who made the cornflakes?”, and it said, “It’s not our policy to divulge that information”, would that be “all reasonable efforts”, or should I ask five or six times? If I cannot find a way on the website to communicate with somebody who appears to be selling products off a platform, are no efforts “reasonable efforts”? Particularly in the context of being asked to give way on Amendment 11 or whatever comes back on Report, knowing that, for example, the things that we are asking the BBC to do in defence of “Doctor Who” are actually reasonable and are not a ridiculous burden in defence of a 20p commission on a Doctor Who birthday card is something that we as a House should do. I would be grateful for an opportunity to see the sort of evidence that a court will see, against which it will judge whether a particular course of action involves all reasonable actions rather than just reasonable actions.
Baroness Bowles of Berkhamsted
This is the last group to move, and I can be relatively brief. The amendment speaks for itself. I have harvested suggestions from the chartered institute and the Law Society with the intention of making this wording a bit less clunky but also international. During hearings we looked at what duties regulators had when people were behaving badly. I have not gone so far as to name just the club of advisers envisaged in the CIPA amendment, but I thought it would be good to say that they should be regulatory bodies that were authorised by statute. I did not mention a statute because even one statute did not fit the whole of the United Kingdom. “Statute” is well understood in other jurisdictions. I thought the words “entitled to legal professional privilege” that the Law Society suggested was useful. I have done it in one line instead of three, so at least it is brief. I beg to move.
Baroness Neville-Rolfe
I am grateful to the noble Baroness, Lady Bowles, for her very brief introduction. We have debated this issue through the oral evidence. Not least for the benefit of people who feel strongly about this, I will set out why we are not inclined to accept these amendments.
The tactic of suing a professional adviser for making a threat has been used to disrupt negotiations and hamper the legitimate client-adviser relationship. We heard that convincingly from several people who gave evidence. Exempting professional advisers from the threats provisions has long been called for, because it stops game-playing.
The Bill delivers an exemption in a carefully limited way. The amendment seeks to restrict the protection available for professional advisers to just those who are regulated by statutory regulatory bodies or entitled to legal professional privilege. It is right that a professional adviser should not become personally embroiled in a threats action, when they were acting only on behalf of their client. I do not agree that this principle should apply to only a limited category of particular professional advisers. Neither should the law on threats be the place to define which regulatory bodies are considered appropriate to oversee exempted advisers. As we were discussing, it is an increasingly global market. The definition must capture the different types of foreign and domestic IP legal practitioner, who may risk facing a threats action under UK law. The current draft does that.
The first limb of the amendment would seek to restrict protection to those whose services are regulated by a “statutory” regulatory body. The term is unclear, leading to uncertainty about the exact scope. In addition, the requirement of statutory regulation would exclude international lawyers with a system of professional self-regulation, such as the American Bar.
The second limb provides that, as an alternative to being regulated by a statutory regulator, professional advisers might fall within the exemption only if they are entitled to legal professional privilege. We all know that the law on privilege is complicated and inconsistent in different jurisdictions. An adviser may not be able to be sure whether they can rely on legal professional privilege in particular circumstances. Again, that could restrict options available to business and advisers might therefore—this is always the problem—continue to seek the indemnities we heard about in our evidence sessions.
We have delivered a careful, limited exception that requires the legal adviser to be regulated but is not overly prescriptive or complicated. I therefore ask the noble Baroness and the noble Lord not to press their amendments, as I think we have found a way forward.
Green Investment Bank
Baroness Neville-Rolfe Excerpts(7 years, 6 months ago)
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Lord Teverson
To ask Her Majesty’s Government what progress they have made in their sale of the Green Investment Bank.
The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)
My Lords, on 3 March this year the Government launched the Green Investment Bank sale process and it is currently ongoing. I can inform the House that good progress is being made. In particular, yesterday the GIB announced the names of the special share trustees appointed to be the custodians of its green purposes, and I congratulate the noble Lord on his selection as a trustee. The Government will provide a full report to Parliament once the sale is completed.
Lord Teverson (LD)
I thank the Minister for her reply and for the good work she has done in this area. Will the Government put additional conditions into the contract for sale to ensure not just that the green purposes are kept for the bank, but that it does not become a shell company with those investments placed elsewhere to avoid such constraints, and that the bank will continue to invest in the UK green economy so that it can continue to thrive?
Baroness Neville-Rolfe
In addition to the special share, which will protect GIB’s green mission, the Government have asked potential investors to confirm their commitment to the GIB’s green values and its investment principles, and explain how they propose to protect them. Green investment is, of course, what the GIB does—it is in its DNA. Investors will buy into its reputation, its green business plan and forward pipeline of projects, all of which are focused on the UK, although there could be international potential as well.
Lord Mendelsohn (Lab)
My Lords, we welcome the appointment of the trustees to ensure the Green Investment Bank will retain its green mission under new ownership, and we warmly applaud the appointment of the noble Lord, Lord Teverson. The crucial ability of the trustees to exercise this vital role now depends on the contracts and corporate arrangements between the buyer and seller. Will the Minister confirm that the trustees will have access to the transaction, contract and documents, and some funds for expert legal advice, to ensure that they can do the job this House voted for?
Baroness Neville-Rolfe
The trustees will have all they need to do their job, but the noble Lord will of course recall from our lengthy and useful discussions during the passage of the Bill that their role relates to the articles of association, ensuring that the green purposes of the bank are maintained. That is where they come in: they are not envisaged as a management board for the GIB, whether in its current state or whatever. They have an important role to play.
Viscount Ridley (Con)
My Lords, are green investments judged by their results or their intentions?
Baroness Neville-Rolfe
The GIB is a commercial operation. It has its purposes, and it judges where it should make investments. What we have in the GIB—a world first—is a dedicated green investment bank, which we should celebrate and which a number of bidders have showed an interest in acquiring so it can move forwards and expand.
Baroness Featherstone (LD)
My Lords, I was very pleased to hear the Minister say that a number of bidders are interested, because my understanding was that there is only one serious bidder. Am I right? If so and there is only one, would it not be better to wait for a better purchase price?
Baroness Neville-Rolfe
Given the commercial sensitivity of the sale process, I am sure the noble Baroness will understand that I cannot comment on the identity of any bidders. They have been required to sign confidentiality agreements, as is appropriate. As I have said, there will be an announcement once a deal is signed, and the Government will provide a full report to Parliament on the sale, proceeds and so on when the sale is completed.
Lord Geddes (Con)
Will my noble friend allow me to congratulate the noble Lord, Lord Teverson, who, unlike the vast majority of his colleagues, asked his supplementary without a note in his hand?
Baroness Neville-Rolfe
I agree with my noble friend that this is an excellent example of good practice.
Nissan: Sunderland
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The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)
With your Lordships’ permission, I will now repeat a Statement made in the other place by my right honourable friend the Secretary of State for Business, Energy and Industrial Strategy.
“Last Thursday, 27 October, the Nissan Motor Company Ltd announced that, following a meeting of its executive committee, both the next Qashqai and the next X-Trail models would be produced at its Sunderland plant. The plant will be expanded through new investment to be a super-plant manufacturing over 600,000 cars a year.
Eighty per cent of the plant’s output is exported to over 130 international markets. The decision is a massive win for the 7,000 direct employees and 35,000 total British employees in the plant and in the supply chain. It is a stunning tribute to the local workforce which has made the Sunderland plant, in the words of the chief executive of Nissan, ‘a globally competitive powerhouse’. We are immensely proud of it and proud of them.
Of course, the decision is great news for the people of the north-east more widely, our world-class automotive sector and the whole of the British economy. This is but the latest in a series of exciting investments in a United Kingdom that is proving to the world that it is open for business. Indeed, it is hard to think of more unambiguously good news.
I and my colleagues in government have been vigorous in ensuring that the Nissan board had no doubts about the importance of this plant and this industry to the British people. Through many conversations I and my colleagues had here and in Japan, it became clear that four reassurances were important to securing the investment for Britain. Three were about the automotive sector generally and one was about Brexit.
They were, first, that we would continue our successful and long-standing programme of support for the competitiveness of the automotive sector, including Nissan. This support is available for skills and training of the local workforce, research and development, and innovation in line with EU and UK government rules. Since 2010 the Government have invested £400 million into the UK automotive sector in this way, and we will continue to invest hundreds of millions more over the coming years. All proposals, from any company, must be underpinned by strong business cases and tested against published eligibility criteria. All proposals are subject to rigorous external scrutiny by the independent Industrial Development Advisory Board and are reported on to Parliament.
Secondly, we would continue our work with the automotive sector, including Nissan at Sunderland, to ensure that more of the supply chain can locate in the UK and in close proximity to the major manufacturing sites. Working with local enterprise partnerships, city and local growth deals have provided a way in which local councils, businesses and the Government can upgrade the sites and infrastructure for small and medium-sized suppliers. This programme will continue with vigour.
Thirdly, we would maintain a strong commitment to the research and development and take-up of ultra-low-emission vehicles. The opportunities presented by bringing the energy and climate change department together with the business department make us ideally placed to build on Britain’s strengths in low-carbon energy, the automotive sector and science and research.
Fourthly, in our negotiations to leave the EU we will emphasise the strong common ground that there is between ourselves and other EU member states in ensuring that trade between us can be free and unencumbered by impediments. A good deal for the UK can also be a good deal for other member states, and that will be how we approach the negotiations. Whatever the outcome, we are determined to ensure that the UK continues to be one of the most competitive locations in the world for automotive and other advanced manufacturing.
Last Thursday was a great day for Sunderland and for Britain, but the best is to come. Over 30 years Nissan has invested more than £3.7 billion in our country and created excellent jobs for a whole generation of world-beating British workers. Last week’s announcement means that a new generation of apprentices, technicians, engineers, managers and many other working men and women can look forward to a career filled with opportunity and success. This Government will always back them to the hilt, and I commend this Statement, and Nissan’s welcome decision, to the House”.
Lord Foster of Bath
My Lords, I too thank the Minister for repeating the Statement. On these Benches, we are of course pleased that 35,000—some people argue 42,000—direct and indirect jobs have been saved because of the Nissan decision. We too join the tributes that have been made to the workforce and to Nissan for its commitment to the United Kingdom. But we remain unclear about cost, unclear about whether or not the deal extends beyond the Nissan Motor Company, unclear about the implications for sectors other than automotive and, frankly, completely in the dark about where the Government are seeking to take us. Like the noble Lord, Lord Mendelsohn, we wonder whether we have heard all there is to be told about the Nissan deal.
The Business Secretary says his negotiating demeanour—to use his word—will be to try to ensure continued access to the markets in Europe without tariffs and without bureaucratic impediments. What is the fallback position if he fails? WTO rules do not allow compensation to be paid to Nissan for imposed tariffs, so what will happen then? Alternatively, are the Government seeking partial membership—for some sectors and not others—of the single market and customs union? After all, the Prime Minister has said that membership of the customs union is not a binary affair. Does the Minister agree with the Prime Minister? Is she aware that experts simply cannot see a system where there is, for example, free movement for cars but not for bicycles? Does the Prime Minister know something that the rest of us do not?
If the Business Secretary succeeds in a tariff and bureaucracy-free solution for cars, who will then have responsibility for the manufacturing regulations? Will the UK have a say on them? That will be so important, not least for the specialist car sector and for our work, as the Minister said, on electric and driverless cars. What guarantee can the Government give Nissan in the long term if we do not have a voice in any regulatory framework? What of those other sectors, including aerospace, pharmaceuticals, the service sector and many others including the millions of small businesses? The Business Secretary has made clear that the Nissan deal is not a general deal. So is it the case simply that those who shout loudest get the best deal from the Government? If the Government cannot have a sector-specific customs union, will they stay in the customs union entirely? If so, why do we have a Secretary of State for International Trade trotting around the world proposing deals which would of course be illegal?
The Nissan saga shows all too clearly that the Government do not have a clear plan and that their idea of not having a running commentary on Brexit is, frankly, laughable. When Cabinet discussions are leaked, and when some companies and not others are given specific assurances, it causes confusion and rumour that impact on the economy and the confidence of millions of business owners, savers and investors across the country. Does the Minister agree that it would be better if the Government came to Parliament with a clear statement of their intentions for negotiations and then let Parliament have a vote on that negotiating strategy? We would like to hear the answer.
Baroness Neville-Rolfe
My Lords, I start by thanking the noble Lords, Lord Mendelsohn and Lord Foster of Bath, for their support for this important investment by Nissan. We are right to welcome it so widely. It seems to me a very long-term decision—a new plant and a new supply chain—and I congratulate everyone involved. It is in everyone’s interest and shows the strength of our economy. It builds on three decades of success, supported by all parties, in Sunderland and for Nissan.
What is the best way to start on the nature of the assurances? I emphasise that this is not a compensation package. That is important in relation to all the points that have been made. This was about convincing Nissan of the UK’s continuing competitiveness. Governments regularly invest in UK competitiveness by supporting businesses making major investment decisions. This investment has been secured thanks to the highly skilled workforce, the strong partnership between government and industry that we now have, and long-term investment in new technology and innovation. Those same strengths are what matters to the other sectors and other companies that noble Lords have touched on. There is real progress with the announcement that these two important, new, potentially world-leading models will be made in the UK.
I set out in my Statement the importance of electric cars. I do not apologise for the fact that putting the two departments together helps with the electrification of vehicles and encourages those sectors of industry in the UK to tool up to be world-competitive. That is also helped by the departments coming together in BEIS, the curiously pronounced new department.
On Brexit, as the Prime Minister has said, the Government want British companies to have maximum freedom to trade with and operate in the single market and to let European businesses do the same here. People do not emphasise often enough the huge mutuality of interest. That has to be taken into account in the Brexit negotiations that are being developed.
I do not want to stray into a running commentary, which would go beyond my brief, but we have been showing Nissan and others that we are committed to getting the best possible deal from the future relationship that we will be negotiating with the European Union. We wish to ensure and assure the competitiveness of the British economy, which is what they have been so pleased about. We understand the concerns of industry, and it will be a priority of our negotiation to support UK car manufacturers.
We are working across government in a joined-up way, coming to the correct, mature decisions, and we have an ambition to do the very best for our industries. That includes the other industries mentioned. We have been working across the divide as part of the Brexit process. We have 50 streams of work looking at the different sectors, including aerospace, pharma and steel, where there has been some good progress since we last debated it in the Chamber, with the reopening of the plate mills in Scotland and progress in Scunthorpe and, I would say, Port Talbot.
Finally, I should mention the industrial strategy. We are determined to ensure that the UK is a competitive place to manufacture and to have financial services and all the other things that have been mentioned. As we develop the industrial strategy, we want to work with companies such as Nissan across the economy to ensure that we get the very best results for Britain.
I shall close at that point. I have tried to answer the questions. I will need to come back to the noble Lord on the training numbers.
Baroness Neville-Rolfe
In the discussions with Nissan, we emphasised the strong common ground that there is between us and EU member states, our intentions and ambition to get a really good deal and the mutuality of interest in the automotive industry. I am confident that the UK can get a good deal from other member states. That is the view that Nissan has come to, which is why it is making the investment it is.
Baroness Armstrong of Hill Top (Lab)
My Lords, does the Minister acknowledge the centrality of manufacturing to the north-east of England? Nissan is very important. I am probably the only person in this House who was born and brought up in Sunderland, and I well remember the challenge when Nissan was eventually persuaded to invest. It is a loyal company. I have just seen the Japanese ambassador, and that is precisely what he emphasised: the loyalty inherent in Japanese companies.
However, the supply chain is critical. The north-east manufactures more per head than any other region. It is more dependent on manufacturing than any other region in the country. The supply chain is critical, as are other industries, as the noble Baroness says. What discussions is she or are the Government having with Hitachi, which is critical to train development in Newton Aycliffe? It has made new investment there and is very worried because it now does not think, because of EU rules, that it will be easily able to make trains in this country for other European countries.
Baroness Neville-Rolfe
The noble Baroness is completely right about the north-east: I always love the opportunity to visit, and have been to Newton Aycliffe in the not too distant past. We have a catapult not far away researching world-leading innovation. We are in constant discussion with Hitachi on its investment plans, which are indeed very important. This is the sort of foreign investment that we need to continue to welcome to the UK and the north-east.
Baroness Ludford (LD)
My Lords, I would not wish to look a gift horse in the mouth, and it looks as if the Government intend to seek membership of the single market and the customs union. My noble friend Lord Foster’s question on that was not answered. On behalf of the Government, will the noble Baroness come clean about that objective, instead of all this secrecy, confusion and incoherence, as a Member of the other place, Andrew Tyrie, the Conservative chairman of the Treasury Committee, is urging? He is also saying that the secrecy has nothing to do with the conduct of negotiations but everything to do with the confusion and incoherence in government. Please can we have a clear answer about the single market and the customs union?
Baroness Neville-Rolfe
We have already said that it is a priority for our negotiations to support UK manufacturing and ensure that the ability to export to and from the EU is not adversely affected. We need to remain competitive. Our ambition is high. In relation to the customs union, we made it clear that we are seeking the best possible deal with the widest possible access and that we do not expect exports to the EU to be adversely affected.
Clearly, work on this continues, but your Lordships can be clear that our ambition cannot be denied. We are not giving a running commentary because, as the noble Baroness will know, in negotiations, you cannot reveal every detail as you go along. Talking about confidentiality, we have not published the correspondence with Nissan, which she was perhaps hinting at, for the very good reason that investors in the UK—I used to be in business—must be able to have confidential discussions with the Government on their plans and be sure that those will not be revealed to their competitors. That is the way you have to work in the modern competitive world.
Lord Liddle (Lab)
My Lords, perhaps I may press the Minister on the deliverability of what she is saying. If she had said, “Yes, we recognise that we’ve got to be fully in the single market”, or, “We’ve got to be in the customs union”, perhaps she would be able to say to us that she could deliver. Her refusal to say that effectively means that the Government are trying to negotiate a series of sectoral agreements without the wider obligations of single market membership. Does not she agree that this is an extremely hazardous process for the United Kingdom and that there is very little prospect of it being completed within the two years of the Brexit timetable? What will be the position in 2019 in those sectors if negotiations have not been completed? I strongly support Nissan, but does she agree that it will be much easier to get a sectoral deal in goods—where, overall, Britain has a trade deficit—than in services, where we have a huge surplus? If we are looking at our interests overall, how does what the Government are saying add up to an adequate pursuit of the national interest?
Baroness Neville-Rolfe
The noble Lord is right to express his concerns with passion. You can see that we have already made some important totemic advances. The Nissan statement is one and the other is the Chancellor’s statement about financing the Horizon 2020 investments, which we will ensure are guaranteed. We are working hard in a complex negotiation, moving forward with ambition and a determination to ensure that exports continue both ways. I perhaps have a more optimistic view of matters than the noble Lord does.
Lord Wrigglesworth (LD)
My Lords, I have had a long association with Nissan. I was chairman of the Port of Tyne until fairly recently, from which virtually all Nissan’s cars were exported to Europe and the rest of the United Kingdom. I was also a director of the Northern Development Company, which did such sterling work in bringing it to the United Kingdom 30 years ago. I have followed its prospects and ups and downs over the years. This is not the end of the matter for Nissan. It is very good news in the short term, but we have had this before in the north-east: will the model come or not? The great advantage with the Qashqai is that it has been the most successful model that Nissan has ever made there. It has been made there for the last few years, so it was obvious to carry on making it there and a much easier decision for Nissan to take than if it were bringing a completely new model to the plant. Therefore, the Government have to face up to the fact that, unless this is a complete blank cheque, the future of the plant is still going to be in question when a new model has to be built there. Has a blank cheque been given to Nissan? Is it going to be compensated for any tariffs that are put on goods coming out of the factory in the future? As other Members have said, what about Komatsu and Hitachi and all the pharmaceutical industries in the north-east and other parts of the country that are also going to be affected if we are not in the single market?
Baroness Neville-Rolfe
I have already made it clear that there is no compensation package. Indeed, Nissan has itself said that there is no special deal and nothing for it that the rest of the industry would not be able to have access to. I commend the noble Lord for the work that he has done in the north-east. It is very important that we continue to invest in these areas with things like the Sunderland and South Tyneside City Deal for new advanced manufacturing. The noble Lord asked about other companies: it is important to bear in mind that the nature of the deal is available to other companies as well, because we are investing in competitiveness right across the board. I already said in my opening remarks that we have invested £400 million since 2010. Companies can apply for support but, rightly, those applications have to underpinned by strong business cases. They have to be approved by the independent industrial advisory body. While we are in the EU, they have to respect state aid rules and even if we ended up in a WTO situation—which I am not forecasting—they would have to respect the rules there. All that is very important.
Lord Inglewood (Con)
My Lords, I declare an interest as chairman of a training company elsewhere in the north of England. Can the Minister confirm that Nissan will be treated like all other businesses in respect of the proposed apprenticeship levy and is not going to have some sort of exceptional status?
Baroness Neville-Rolfe
I am certainly not aware of any special arrangements for the apprenticeship levy. As I made clear, the sort of arrangements which I outlined in relation to training, skills and innovation are an across-the-board approach which Nissan is obviously welcoming. I know my noble friend’s interest in the north-west and how important it is to him that we ensure investment in Cumbria, not only in nuclear but in manufacturing and other areas.
Lord Lea of Crondall (Lab)
My Lords, is it not abundantly clear that what was worrying Nissan was the repeated statement that “Brexit means Brexit”? Is it not equally clear, from today’s Statement, that Brexit does not mean Brexit and that the absence of access to the internal market and the customs union was starting to worry the management of Nissan? If these guarantees are now being given—and we hope that people on the continent will accept them, which is another question which I have not heard much about—can this be replicated in other sectors? At the end of all this, I hope the agreement with the European Union will include a lot of industrial policy and, as my noble friend Lord Liddle said, that things will be much nearer to acceptance of the internal market and customs union.
Baroness Neville-Rolfe
I do not have a lot to add, except to repeat the point about the mutuality of interest between Britain and our European neighbours and our determination to approach the matter in a constructive fashion. The Secretary of State for Exiting the EU outlined to Parliament our ambition to get the best possible access to the European market that we can negotiate. I think he said that we want business to operate in the EU tariff-free area for the future. We must not forget that leaving the EU also offers us potential opportunities to forge some new relationships around the world and to stand up for free trade, which I believe strongly helps the world economy, the people of Britain and the people of Europe.
Lord Ashdown of Norton-sub-Hamdon (LD)
My Lords, the Government’s welcome clarity, albeit given in secret to Nissan, has assured the continuation of car jobs in Sunderland and the north. Does the Minister realise that their lack of commitment and uncertainty has contributed to costing some 290 high-tech aircraft engineering jobs in Yeovil? I will see if I can explain. The Government put an order for Apache to Boeing without any kind of competitive tender whatever. In consequence, the confidence has been eroded in the Government’s wish to see a continuation of the helicopter design and manufacturing industry in Yeovil—the only one in Britain. That has contributed to the loss of 290 jobs just recently, with Leonardo probably going to Italy. Does the Minister agree that any attempt to produce any kind of industrial policy that did not say clearly that it wished to see Britain’s aerospace industry maintained, and our standalone capacity to make helicopters sustained, would not be worth the paper it was written on?
Baroness Neville-Rolfe
I certainly agree with the noble Lord that the aerospace and aviation industries are incredibly important to Britain. I have already asked on a previous occasion to have a conversation with him about Yeovil in particular, so that I can report to my noble friend and other Ministers who deal with these issues. Especially at this time of uncertainty with Brexit, we need to engage more with business across the UK and discuss difficult issues that arise.
Viscount Ridley (Con)
My Lords, will the Minister confirm that Nissan’s practice, when choosing at which plant to build a new model, is to organise competitive tendering among its plants all around the world, that the best one wins and that that is why this decision has come? As recently as August, the BBC was reporting that Nissan in Sunderland would not even be able to bid for these new models, let alone win those competitions—a speculation in the long tradition of pessimism about the Nissan plant, going back to how it would be lost if we did not join the Euro et cetera. This is a tribute to the fact that, whatever the conditions, this plant is highly competitive thanks to the brilliant work done in the north-east of England.
Baroness Neville-Rolfe
My noble friend is entirely right. It is great news and a tribute to Sunderland and the people of Sunderland. I am delighted to know that Nissan in the UK scores so very well in the international league tables.
Lord Hain (Lab)
My Lords, since the great bulk of Nissan Sunderland’s production is exported to the European market and the typical life cycle of a new model is five to 10 years, can we assume that Nissan has been promised either tariff-free access to the single market or a transitional access of that kind over a 10-year period?
Baroness Neville-Rolfe
I have made it quite clear that there is no special sweetheart deal. I outlined in the Statement the broad ingredients of what we have agreed with Nissan, and it has endorsed this with a clear statement to that effect. Of course, we need to look ahead over 10 years. We need to tool our industry and ensure that it is skilled and that we have the right sort of investment and innovation. That can include things Nissan is expert in such as electric cars and, no doubt in due course, the move to autonomous vehicles. We can do all that together. Nissan is a very competitive company that likes Britain. There is plenty of opportunity. We do not need to be so pessimistic about the future.
Lord Campbell of Pittenweem (LD)
My Lords, are we to accept that Nissan was persuaded by the answers to the first three proposals, which are about continuing and maintaining, and the fourth, which is about doing the best deal we can for the United Kingdom? If I was making an objective judgment of Nissan’s capacity for negotiation, I do not think I would give it many marks out of 10 if this is all it amounts to. Why cannot we have sight of the correspondence exchanged between the Secretary of State with the relevant responsibility and Nissan? Surely this is not the normal run-of-the mill argument about confidentiality; this issue goes right to the very heart of the Government’s case and their chances of success in negotiation. Is not that exactly the kind of accountability which this House and, indeed, the other place are more than entitled to ask for?
Baroness Neville-Rolfe
I feel sorry for Nissan. Over 30 years, it has invested more than £3.7 billion here. We have had important exchanges and correspondence with it of a confidential nature. We have summarised the key ingredients of that in good faith. I do not think there is anything I need to add to give a truer picture. I look forward to Nissan continuing to invest in the UK over many years.
Lord Trefgarne (Con)
My Lords, I warmly commend what the Statement said about support for training. I speak as the former chairman of the Engineering Training Authority. I have visited Nissan on many occasions. Its training facilities are outstanding.
Baroness Neville-Rolfe
I very much agree with my noble friend. Part of our industrial strategy—to give a preview—will be that skills and training will be vital. As the world is changing, especially as it becomes more digital, they are becoming even more important, and we have to invest in skills and training to a much greater degree, as we have heard from the Prime Minister and the Secretary of State. I look forward to seeing a changing Britain with our new approaches and investments. We should learn from Nissan because it has obviously been so successful.
Solar Panels: Business Rate Exemption
Baroness Neville-Rolfe Excerpts(7 years, 6 months ago)
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Baroness Featherstone
To ask Her Majesty’s Government whether they will reverse their decision to end the business rate exemption for small solar panels from April 2017.
The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)
The Government are aware of the solar industry’s concerns regarding the application of business rates on microgeneration and changes that may affect businesses with solar more widely. We continue to engage with the affected parties. Following the business rates revaluation and this year’s Budget, nearly three-quarters of businesses will see no change or a fall in their bills next year, with 600,000 businesses set to pay no business rates at all.
Baroness Featherstone (LD)
I thank the Minister, but I have to say that if one parish council in Wokingham can find that its business rates are going from £7,000 to £14,000, this will be the death of non-domestic solar roof panels. I urge the Government to look at the impact on schools and parish councils, which will be devastating. Will she also address the unfair and unjust anomaly whereby schools with charitable status will be exempt from the new increased business rates, thus creating a two-tier system that penalises local authority schools?
Baroness Neville-Rolfe
The noble Baroness is right that there is in this area a curiosity, as I think I would describe it, which is that private schools and academies, being charities, as she said, get an 80% reduction, which is good. We have a system where the impact depends on the ownership, as she will know, of the affected solar project, so we have a situation in which there is a fall on new projects where the electricity generated is sold and an increase where the electricity is used directly by the owner—she mentioned the example of schools. It is not possible to estimate the impact of those changes because it depends on ownership but, as I said in my reply, we are considering the impact and any proposed changes will be made in due course.
Baroness Jones of Moulsecoomb (GP)
My Lords, last year I visited a school in Croydon, which has had to cancel an expansion of its solar installation because of the Government’s cuts to the feed-in tariff. I invite the Minister, when she is sure about the impact of this particular measure, to go with me to that school in Croydon and explain why its solar installation is now going to be taxed and how much it will be taxed by.
Baroness Neville-Rolfe
As I have said, we are looking at the rate issue. There is also an issue relating to VAT, where HMRC issued a consultation—at the moment, domestic VAT continues to be 5%. The feed-in tariff deployment actually continues. Obviously, the subsidies of solar have come down because the costs have come down to such an extent. Solar has been a big success in this country and it is obviously right that the subsidy levels reflect that innovation and productivity.
Baroness Neville-Rolfe
I do not think that there are business rates on domestic solar panels—that falls under my right honourable friend Sajid Javid’s department. Businesses have been caught because the rateable values reflect the value of the business property, and there have been changes to the regime that have led to the situation that I have described to the noble Baroness. We are looking at that, but rates reflect, in the long term, the value of property. However, I can see that there is an issue in relation to solar panels.
The Lord Bishop of Portsmouth
My Lords, may I press the Minister a little further on the impact—perhaps, I am hoping, the unintended impact—of this decision on some small schools? Is it really intended that small schools should pay business rates, often after significant community fundraising to install solar panels to increase awareness among children and young people of climate-change issues?
Baroness Neville-Rolfe
We are looking at this, and, in particular, this change to microgeneration, which has had these anomalous effects. In the past, schools have been totally exempt; now, as I have said, the rate system is coming in and biting in a way that perhaps was not intended in the first place. We are looking seriously at the impacts against this background of some doing better out of the system than others. We look forward to making some progress in this area.
Baroness Young of Old Scone (Lab)
Can the noble Baroness tell the House how many more changes of policy impacting on renewable energy and carbon reduction will come from the Government? We seem to have had quite a string of them, all of them rather unexpected. Perhaps they are in response to the cheaper generation issue that the noble Baroness raised, but they have certainly reduced confidence both among domestic and commercial investors and in the renewables industry. Are there many more changes to come?
Baroness Neville-Rolfe
I think the noble Baroness should take comfort from the signing of the agreement in Paris, the statements we have made and the comments I have made about the carbon budgets that will be put forward in due course. This Government and the last one have made enormous investments in renewables, but nobody could fault us now for looking properly at affordability and at where things can be affordable. Innovation—for instance, on solar—is making things less expensive, and then the subsidy regimes should change. However, of course we understand the need for investor confidence.
Lord Grantchester (Lab)
My Lords, solar PV has taken the brunt of corrective measures taken by the Government, as in their analysis it is the key reason for the overspend on renewables. In fact, the National Audit Office report shows that solar accounted for only 6% of this overspend. The technology is so popular and affordable. What steps will the Minister and her department take to review this overcorrection, encourage further solar deployment and restore confidence to the sector?
Baroness Neville-Rolfe
The noble Lord is right that solar has been a success. We have over 11 gigawatts now installed, with 49% of EU investment in solar, so we have strength. We have had to bring down the subsidies for that, although feed-in tariffs and so on continue. My own view is that solar is an important part of the mix, particularly internationally, because there is more sun and less intermittency, which helps us with our climate change targets. However, the noble Lord can be reassured that we are looking carefully at solar, and a lot of our innovation budget is going toward solar and storage to see whether, going forward, we can take those two together and make the technology even more cost effective.