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House of Commons Hansard
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General Committees
11 February 2019

Delegated Legislation Committee

Draft Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2018

The Committee consisted of the following Members:

Chair: Sir Edward Leigh

† Blackman, Bob (Harrow East) (Con)

† Clarke, Mr Simon (Middlesbrough South and East Cleveland) (Con)

† Esterson, Bill (Sefton Central) (Lab)

† Goldsmith, Zac (Richmond Park) (Con)

† Harrington, Richard (Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy)

† Harris, Rebecca (Lord Commissioner of Her Majesty's Treasury)

† Lammy, Mr David (Tottenham) (Lab)

† Lopez, Julia (Hornchurch and Upminster) (Con)

† Lucas, Ian C. (Wrexham) (Lab)

† McKinnell, Catherine (Newcastle upon Tyne North) (Lab)

† Monaghan, Carol (Glasgow North West) (SNP)

† O'Brien, Neil (Harborough) (Con)

† Paterson, Mr Owen (North Shropshire) (Con)

† Perkins, Toby (Chesterfield) (Lab)

† Sheerman, Mr Barry (Huddersfield) (Lab/Co-op)

† Smith, Henry (Crawley) (Con)

† Smith, Nick (Blaenau Gwent) (Lab)

Anwen Rees, Committee Clerk

† attended the Committee

Second Delegated Legislation Committee

Monday 11 February 2019

[Sir Edward Leigh in the Chair]

Draft Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2018

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I beg to move,

That the Committee has considered the draft Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2018.

It is normally said as a formality, but in this case, I reiterate what a pleasure it is to serve under your chairmanship, Sir Edward. Having served on Committees under your chairmanship before, I know that we can expect fairness and a sense of justice from you in the Chair. I am sure the shadow Minister agrees.

The draft regulations form an essential part of the Government’s contingency planning to ensure that copyright legislation continues to function appropriately if there is no negotiated agreement on the terms of the UK’s exit from the EU. Copyright law is largely harmonised internationally by a series of multilateral treaties to which the UK and most other countries are party. Those agreements ensure that music, books, art and other copyright works that originate in any treaty country are protected in all others. Fortunately, our membership of those treaties does not depend on our relationship with the EU. As such, regardless of whether a deal is agreed, UK copyright works will continue to receive protection around the world.

However, a body of EU law on copyright goes beyond the provisions of those international agreements. It has further harmonised copyright protection across the EU and has introduced EU-only rights and mechanisms for facilitating the use of copyright content in cross-border services, which includes the sui generis database—in my rather crude legal studies 40 years ago that meant “without categorisation”; I do not suppose the Latin has changed, but I am sure the shadow Minister will correct me if it has. That provides EU-wide protection for EU database creators and the copyright country of origin principle, under which satellite broadcasters that transmit films and other copyright-protected works across the EU need permission from the copyright owner only for the state in which a broadcast originates, rather than every state in which it is received.

A significant proportion of our copyright legislation derives from the EU copyright acquis and therefore includes reference to the EU, the European economic area and member states. Without amendment, many such references would become inappropriate in the event of a no deal, either because they presuppose the UK’s membership of the EU, which will not make sense when we are no longer a member state, or because they implement EU cross-border copyright mechanisms that will become inoperable in a no-deal scenario.

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I apologise for being late; some of us were trapped in the Chamber for a statement. Was the point that the Minister is pursuing not at the heart of the controversy and fuss around this statutory instrument in the House of Lords? I wonder if he could let me know.

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I cannot let the hon. Gentleman know, because I do not think that is the case, but I am sure I will be corrected if it is. Certainly, I have not been informed that the statutory instrument caused a problem in the House of Lords and I am sure that someone would have told me if it had. Their lordships, particularly certain friends of mine, such as Lord Adonis, do go into great detail on such statutory instruments, so it may well have been one of them. I am afraid I cannot answer the question now, but I will try to answer it by the end of the sitting.

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Because I am so popular with the Whips, they have been putting me on a lot of these Committees, so I am gaining some knowledge by experience. It seems that we pitch up to clear these instruments and say that we have given them the seal of parliamentary accountability, but so much of the information about these really complex areas is not here and, often, Ministers do not seem to know what the real impact of the measures will be. As far as I understand it, the implications for intellectual property of coming out of Europe are huge, but I am not getting that picture from the few words I have heard from the Minister.

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I hope that the hon. Gentleman will hear me out, because I do not think it is as huge as he does. We sometimes disagree on things, but I think it is fair to say that his heart is in the same place as mine. However, if he will hear me out—

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Will the Minister give way?

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I could correct that bit about the hon. Member for Huddersfield’s heart if it would pre-empt the hon. Gentleman’s question.

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I would like some clarification about the country of origin principle. Is the Minister saying that if this instrument were to pass, the country of origin principle would apply to the UK as it does now?

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If the hon. Gentleman will give me a few minutes, I will finish. If he is not satisfied with what I have to say, I will be happy to take his questions.

On the point made by the hon. Member for Huddersfield about this being a controversial SI in the House of Lords, as I thought, it is yet to be debated in the House of Lords. That does not, of course, mean that he will not be right in future, but it has certainly not been debated up until now, so I clarify that for the record.

The SI will preserve, where possible and appropriate, existing arrangements in UK copyright legislation by making minor correcting amendments. The only exception to the principle of continuity arises from our implementation of some of the EU cross-border copyright mechanisms. It is unavoidable that the reciprocal elements of those mechanisms between the EU and the UK will become inoperable in a no-deal scenario, because they depend on reciprocal provisions that only apply between member states. We have therefore considered how best to address our implementation of those mechanisms.

In some cases, it is appropriate to continue to extend the cross-border provisions to the EU on a unilateral basis, because providing continuity in that way would be beneficial to UK consumers or businesses. That is the case for the copyright country of origin principle in satellite broadcasting. In that case, the regulations will support UK consumers and give them continued access to foreign television programmes by not introducing new barriers to broadcasts in the UK. For other mechanisms, doing so would be detrimental to those in the UK. For example, continuing to provide database rights for EU creators without reciprocal action by the EU would put UK businesses at a competitive disadvantage. This instrument restricts those mechanisms to operate on a purely domestic basis or brings them to an end, as appropriate.

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On a point of order, Sir Edward. I have been on several Delegated Legislation Committees, and this is the most complex SI I have dealt with. I did not have access to this material before I walked into this room. As a Member of Parliament, I find myself floundering, because it is so highly complex—I speak as someone who has a lot of sons-in-law, one of whom is an intellectual property lawyer, and as someone who has been given a little bit of information about how important this issue is to businesses. Could this meeting be deferred so that we can actually read this stuff? I feel that I am not doing my duty, and you, Sir Edward, are more punctilious than anyone else in the Palace in how you regard parliamentary accountability. I have walked in here on a busy day, after three statements, and I am faced with all this material that I have not had advance notice of and have not had a chance to read. How can I do my job as a Member of Parliament?

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Mr Sheerman, you are a very experienced Member of Parliament. You have, I think, been here since 1979. It is incumbent on Members of Parliament, if they really are interested—and I am sure that everybody here is interested—to read all the material beforehand. However, we are only halfway through the Minister’s speech. He has several more pages of wonderful prose still to go, so we may be more enlightened if we are patient.

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Further to that point of order, Sir Edward. I am a pretty hard-working Member of Parliament, as are you, and I take my job very seriously. I only complain when I have cause to complain—when, for instance, I come into a meeting such as this in which I feel that I cannot do justice to the proceedings and I feel on the back foot. This is the tip of the iceberg. I have just come from the statement about Seaborne Freight and preparations at ports. We are well into the 21st century. I have not had the chance to talk to some of the leading people in the industry, as I would normally do, to say, “Guys, what do you think about this?”.

I was on a Delegated Legislation Committee two or three weeks ago on the important issue of air safety, which I know a lot about because I chair the Parliamentary Advisory Council for Transport Safety. I found that the Minister did not know about it; he had not done his homework. He just gabbled his statement and left me alone.

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I think the hon. Gentleman has made his point. We have nearly an hour and a half to go. Let us listen to the Minister. If the hon. Gentleman and other Members want to speak later, we can stay here for a long time and really delve deeply into this. So far, we have heard from the Minister that this is minor amending legislation, but let us listen to him.

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Further to that point of order, Sir Edward. I obviously do not have the experience of my hon. Friend the Member for Huddersfield, but I made an effort to read all the papers about these very important regulations that we are being asked to pass or oppose. One thing that alarmed me about them was that they referred to the regulations having an impact on UK businesses, but said that there will be no significant impact on charities, voluntary bodies or the public sector. Clearly, the regulations will have an impact, but I could find no evidence of an impact assessment. Is one available? If so, could it be provided to us during the debate so we can properly scrutinise this issue?

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That is an interesting point of order, but it is not actually a point of order to do with procedure. It is a point of information for the Minister, who can deal with it now if he wishes, because he has the knowledge.

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I shall do my best. Impact assessments are worked out on what is called the de minimis threshold. That means that if the impact is expected to be less than, from memory, £5 million, there is no need to do an impact assessment. In the judgment of the people who work these things out, it is below that level. That is why there is no separate impact assessment.

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Five million?

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Yes.

I will continue and then, if this is acceptable, Sir Edward, I can pick up other points after I have finished, if hon. Members feel that I have not covered them. The shadow Minister usually feels that I have not done so.

In support of the instrument, we have published three impact assessments, each of which has been green-rated by the independent Regulatory Policy Committee. They correspond to three of the most significant cross-border mechanisms: sui generis database rights, the copyright country of origin principle, and cross-border portability of online content services, which allow EU consumers to access their online streaming or rental services as if they were at home when they visit another member state.

The Secondary Legislation Scrutiny Committee and the European Statutory Instruments Committee commented that the assessments did not provide sufficient detail on the impact of no deal on UK stakeholders. The reasons for that are the same in each case: the impacts on UK consumers, broadcasters and other stakeholders will result from the UK’s being treated as a third country in a no-deal scenario, not from these regulations, which amend the UK’s portion of the cross-border provisions and will primarily affect EU right holders, consumers and broadcasters.

In line with the “Better regulation framework”, the impact assessments consider the effects of the instrument under consideration and not—this is significant—the impacts that arise from other countries’ legislation, which we cannot avoid in a no-deal situation. However, we recognise that those impacts exist and that UK stakeholders will need to be aware of them. That is why in November 2018, the Government published a long-term economic analysis of the impacts of leaving the EU. We have also published technical notices and detailed guidance on what a no-deal Brexit would mean for copyright and related rights. This gives consumers, right holders, businesses and other organisations the information they need in plain English to make informed preparations for all outcomes.

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Will the Minister give way on that point?

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If the hon. Lady does not mind, I will not. I will be finished in literally two minutes.

These regulations will provide certainty, clarity and, as far as possible, continuity for UK businesses, right holders and consumers as we leave the EU. I commend the draft regulations to the House.

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On that point, will the Minister give way before he finishes?

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Is the Minister giving way?

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The Minister rightly says that the information should be available to businesses so that they can prepare for Brexit, whatever the scenario might be. I did not get the exact wording that he used. Are the Government not concerned that, at this stage in proceedings, that luxury will not be available to businesses before the event? How many businesses have the Government consulted on a formal basis in order to arrive at their conclusions on the impact that these changes would have on those businesses?

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I will do my best to answer those questions. I may have misled the hon. Lady on the impact assessment. I thought she was referring just to the charities. We published three full impact assessments in December 2018, but there was no significant impact on charities, which was the point I think she was making.

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The point I was making is that the explanatory memorandum says that some changes could have an impact on UK businesses, but I went on to note that it says there will be

“no significant impact on charities”.

I am concerned that it has been acknowledged that there will be an impact on businesses. My point relates to our ability to scrutinise that impact, the accessibility of information and the amount of consultation that has taken place in order to be able properly to assess and scrutinise what the impact will be.

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I now fully understand what the hon. Lady was saying. The Government did not carry out a formal consultation. Given that it was during the negotiations with the European Union on the future trading relationship, it was felt at the time that making everything public would have impaired our ability to do that. However, I can confirm that the Department conducted industry roundtable discussions with individuals from a range of organisations across all sectors. In this sector, that included the Commercial Broadcasters Association, Directors UK, the PRS for Music—the performing rights society—techUK, which represents over 900 technology firms, the Libraries and Archives Copyright Alliance, the British Library, the Publishers Association, the Society of Authors, the Association of Photographers and the Authors Licensing and Collecting Society, among others. In roundtable discussions, the Department talked to and listened to the concerns of stakeholders from right across the affected industries.

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rose—

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Has the Minister finished, or is he giving way?

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I think that is the end of my giving way.

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Can I have a further intervention? Were any senior figures in the industry involved, such as Richard Branson or the heads of the big conglomerates? There are a number of key players in this area of intellectual property, and it is vital for the vibrancy of our film, television and creative sectors. The Minister and I get on very well and I like him—I do not like all Ministers, but I like this one.

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That’s my career finished.

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No. The fact of the matter is that I am learning the lessons, Sir Edward. It has been a heavy day and I have been trying to catch up on this as the Minister was speaking.

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You are starting to wander.

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No, I am not wandering. I have been in so many Delegated Legislation Committees in which I have asked the Minister, “What is the downside of this?” Ministers keep saying to me, “It’s all going to be all right. These few regulations will make it all right,” and then I go out and talk to the industry, which says, “It’s not all right. There’s going to be severe dislocation.” Is the Minister suggesting that participants in those roundtable discussions said, “It’s all right, Minister, wonderful; steady as you go,” or did they have serious reservations about leaving the EU and about the impact on their sector?

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I can answer that question in the following way. The hon. Gentleman knows that I have a lot of respect for him and that we share many views. I do not know what the views of the stakeholders on leaving the EU were—I imagine they would have thought it detrimental to their businesses, but I was not party to that. Today, we are talking about a specific piece of secondary legislation for the event of crashing out of the EU—a hard Brexit.

I do not know the rank of the people involved, and I cannot say whether Richard Branson was involved. He is offshore and is allowed only 90 days here, so perhaps he was not allowed to come. I cannot comment on that. However, I assure the hon. Gentleman that there were proper senior people representing proper companies and proper entities. I do not think that the Department had a plan for only low-level people to attend. I cannot say who was there. I am not withholding information; I am afraid I do not know. Having had more than two years’ experience of the Department, I can say it is fairly thorough in its consultations with stakeholders.

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The Minister said that there were no formal consultations as part of the exercise, but there were roundtables with key people from the relevant sectors and businesses. Where is the feedback from the roundtable discussions that took place? I am quickly flicking through the information on the analysis and evidence, and I cannot find it. Will the Minister tell us more about what businesses said during the roundtables so that we can understand what occurred?

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I must apologise for not sitting down, Sir Edward. I have never had so many interventions in an SI.

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It is good exercise.

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Yes, it is. The hon. Member for Huddersfield has been to far more than I have.

I hope the shadow Whip will accept that I am not generally one for waffle on this kind of thing. I do not know the answer to his question, but I know that formal minutes were not published because there was a discussion rather than a formal consultation. He does not have a copy of the minutes in his pack because there are not any.

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How were the companies invited to the roundtables? How were they selected?

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They were selected because the officials concerned understood them to be the main stakeholders in the field. They are experienced at their jobs. As I have said before, I have found the Department for Business, Energy and Industrial Strategy to have a very good system of consultation.

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I thank the Minister for giving way. He is being very generous. I am here to scrutinise the legislation. Members of the public, businesses and consumers who will be affected will take a great interest in this process, and they will be concerned that the Government are comfortable to proceed with these legislative changes without any formal consultation. It creates the impression that there is an avoidance of democratic scrutiny, which is typical of much of the Brexit legislation passing through Parliament at the moment and is causing concern.

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I thank the hon. Lady for that contribution. I disagree with her because there has been a fairly thorough informal consultation, although I fully accept that is not the same as a formal consultation. I noticed a look of disdain on the shadow Minister’s face, which his face does not normally give away, but it did in this particular case.

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This is a nice intervention in the sense that we are here to learn. That is our job. Sir Edward is the expert on this and people respect his experience. We are trying to do a thorough job. I apologise for pushing the Minister on this, but what he has just described is almost a secret meeting that took no minutes. There was a meeting. We do not know who was there. There is no record of who was there and no record of what was discussed and whether people said, “Steady as you go, mate. Get on with it,” or whether they had severe reservations. The consultation seems a bit strange.

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There were roundtable discussions, not a formal consultation that was put online. It was a group of stakeholders that the Department thought were the relevant ones. The Department wanted to hear their views and listen to what they had to say, and that is reflected in this no-deal statutory instrument. The point that the hon. Gentleman makes—he usually makes it—is about the view of industry and business on leaving the European Union. In this case, we are talking about a limited amount of what we might call crash-out, emergency, hard-Brexit statutory instruments. No minute was kept because it was not a formal consultation, but roundtables are like that—people raise their views and officials take note of them.

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I am grateful for the Minister’s generosity in giving way. He has used the term “crashing out” twice now. I appreciate that there are a range of opinions across the Committee about the merits or otherwise of Brexit—I see some well-known suspects in the Committee Room, and I think I know the Minister’s view, too. When industry stakeholders were brought in, was their selection conducted with a bias towards “remain” opinions, or was it more random?

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I do not want to mislead my hon. Friend. I do not know about this specific case, but I could give him other examples in which the Department has consulted with stakeholders. I assure him categorically that their views on Brexit would be the last consideration. The Department is a professional organisation run by very professional civil servants. From a ministerial point of view, I have come across no case in which any Minister would say, “We are having that company in, but not that one.” That would be very improper. I reassure him categorically on that point.

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The Minister was the first person to start using extravagant language about crashing out of Europe. Most of us still want to see a harmonious process with a smooth transition out of Europe. His term “crash-out” is extremely worrying for people in the creative industries in this country, many of whom would be deeply disadvantaged by our crashing out of Europe with no protection for their intellectual property or their many years of creative work. The Minister used the words “crash-out”. Were there any people at the roundtable like Sir Bob Geldof, who is a leader in the industry and runs a large number of companies? He would have known what to say. Let’s get him in—let’s talk to Sir Bob! [Interruption.] The Minister thinks I am star-struck because I have mentioned two well known figures, but they are well known figures in the industry. Why were they not consulted?

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Order. I think we are in danger of getting overexcited about terms such as “crashing out”. We need to tone down the whole debate and use very careful words. The scope of the debate covers the amendments that the draft regulations will make to UK copyright legislation; it is quite a technical and detailed debate. Let us avoid getting overexcited about crashes, shall we?

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On a point of order, Sir Edward. I pointed out that we were having a very civilised conversation, using all these technical terms, until the Minister started talking about “crashing out”. I am an expert on road and transport safety, so I am worried about crashing out of anything.

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We are going to calm down now. The Minister will bring his remarks to a conclusion, and then we will hear from the Opposition.

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May I clarify that I should probably not have used that expression? I really meant a hard Brexit or leaving without a deal, but I used a euphemism. I find that Opposition Members—and indeed Government Members—need a little raciness and excitement when debating statutory instruments, so I felt that the expression might have been appropriate. However, it clearly was not, so I apologise to the Chair and the Committee. It was like saying “a rollercoaster” or something like that. Now that I think I have clarified that point, may I finish the point about consultation?

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I am not so interested in the Minister’s terminology, but I am very interested in the consultation. In asking us to support the draft regulations, he is asking us to take quite a lot on faith. We all remember being told that the Government’s documentation was excruciatingly detailed, but it was subsequently exposed that there was very little detail at all. Opposition Members therefore want a little reassurance about the consultation with the industry, which we recognise is a very important one. On reflection, does the Minister think it would be useful to give us a bit more information about the feedback from the Government’s roundtable discussions, given the huge upheavals in their EU negotiations?

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I think we have covered the consultation. The hon. Gentleman’s point is that we should have published the response as if it were a formal consultation, but I have accepted that it was not.

I reiterate that the Department hosted a whole series of industry roundtables to discuss no-deal planning generally with publishers, collection management organisations, broadcasters, technology firms, museum archives and educational institutions. During the drafting of the regulations, we listened to the concerns of stake- holders that published their views on the issues and opportunities for IP arising from Brexit, such as the Alliance for Intellectual Property and the British Copyright Council, which are representative bodies that cover a broad range of copyright interests. We also published the technical notices with detailed guidance on what no deal might mean for copyright and regulated rights.

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Can I be helpful, as someone who was a Select Committee Chair for 10 years? When we did an inquiry, we put out a call for evidence, which was printed in the papers and shared on social media and so on, so anyone who wanted to give evidence to the Public Accounts Committee or the Education Committee could write in. Was this wider consultation publicised and broadly known about? Were people told about it and could they submit their evidence or signify their interest in the topic? Did the Minister get many responses?

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I can clarify that it was not like a Select Committee inquiry, which is online and public. This was a series of meetings of stakeholders to talk about the issues, so it is not a fair comparison. I fully accept, however, that in the hon. Gentleman’s opinion, the Department should have held a full public consultation, but for the reasons that I explained before, it did not. We are satisfied with the results, however, and we are happy to stand by the draft regulations.

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It is a pleasure to serve under your chairmanship, Sir Edward. This is already close to being the longest statutory instrument Committee that I have served on in my nine years in this place and I have only just stood up to respond as Opposition spokesman.

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You haven’t had us behind you before.

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I find the answers we have had to the numerous interventions absolutely remarkable—and not in a good way. The Minister’s inability to answer some pretty simple questions from my hon. Friends the Members for Huddersfield, for Chesterfield and for Newcastle upon Tyne North is staggering. I do not blame him in particular, because it is not his brief, but the fact that the answers are not available for him to give is baffling.

If the Minister cannot tell us what was said in the consultation, what was the point of it? What concerns were raised? He cannot tell us that either. How do we know whether the consultees at those roundtables truly reflected the breadth of views in the sector? If we cannot answer those questions, how on earth can the Committee judge the responses—he cannot tell us what they are anyway—and whether they justify us supporting the regulations? I am afraid that we are in a bit of a pickle.

The regulations are about whether holidaymakers can watch Netflix, Sky, Amazon Prime or any other content provider on the continent or in the Irish Republic; uncertainty about satellite TV broadcasts between countries staying in the EEA and our own; and businesses not knowing whether they can share databases. There is also an element in the regulations about the Marrakesh treaty and disabled people who copy material so they can use it in a different country to their country of origin, which I do not remember the Minister mentioning in his opening remarks.

We have yet another statutory instrument, which describes detailed changes to regulations relating to the UK’s exit from the EU, including in the event of, as the Minister puts, crashing out—on the Opposition Benches we are happy with that term, but others might call it no deal. Yet again, the analysis leaves significant gaps in the ability of hon. Members to scrutinise and adequately decide whether the regulations do what they are supposed to, or whether what they propose addresses the objective of preparing for life after Brexit, including in the event of no deal.

On numerous previous occasions, my Labour Front Bench colleagues and I have spelled out our objections to this Government’s approach to secondary legislation. The volume and flow of EU exit secondary legislation is deeply concerning for accountability and proper scrutiny, especially when the evidence does not back it up, because the evidence is not able to be provided to us, as we have just heard. The Government have assured the Opposition that no policy decisions are being taken. However, establishing a regulatory framework, for example, inevitably involves matters of judgment and raises questions about resourcing and capacity. Secondary legislation ought to be used for technical, non-partisan, non-controversial changes, because of the limited accountability that it allows. Instead, this Government continue to push through contentious legislation with high policy content via this vehicle.

As legislators we have to get it right. These regulations could represent real and substantive changes to the statute book and, as such, they need proper and in-depth scrutiny. In this light, we in the Opposition would like to put on record our deepest concerns that the process regarding these regulations is not as accessible and transparent as it should be.

Let us look at the explanatory memorandum, to see in a bit more detail what is being addressed. Paragraph 7.2 refers to the EU satellite and cable directive, which allows broadcasters to gain copyright clearance for broadcasts across the EEA, while only having to obtain permission in the country of broadcast. The explanatory memorandum says that the regulation will apply only within the UK, with consequences unresolved as to the impact for broadcasting across the EEA. This appears to have significant consequences for broadcasters, the impact of which is not addressed by the impact assessment.

Speaking of the impact assessments, when I walked into the room, I did not see copies of the three impact assessments that the Minister referred to available for hon. Members to scrutinise. On previous occasions, when the Government have bothered to publish impact assessments, they have been available to members of Delegated Legislation Committees. I do not understand why that is not the case on this occasion. My hon. Friends, who have raised their concerns about their ability to do their job this afternoon, are absolutely right to make that point, because how can they possibly comment without that information, when they are not given such detail? I have a copy of it, because I got a copy before the meeting. However, unless those copies are available here, hon. Members will not be aware of everything that might be available to them.

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Order. On that point, is the Government ensuring that this information is available now to all Members?

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My understanding is that it was published in December and therefore available on the website and through every other form of public means. I do accept that they were not in this room and if they should be, I will ensure in future that they are.

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I think it is quite important that the Government should ensure that these are available in the room on all occasions. I think it is a fair point.

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I will clarify the position. I agree with your position, Sir Edward, and I will ensure that in future, if I am involved in statutory instruments, and if the documents are available—as they would be, if they were published in December—they will be available here. I think that is a valid point and I would like to apologise for that.

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The Government must take this seriously, because in the past, the Opposition have moved dilatory motions on this sort of issue. Therefore, the Government must take this sort of thing very seriously indeed.

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I agree.

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rose

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Will my hon. Friend give way?

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I will.

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I am grateful to the Chair for raising that point. Does my hon. Friend share my concern, and the concern of those businesses and consumers potentially affected by these changes, that in not providing the impact assessments for hon. Members to scrutinise as part of this process, the Government are giving the impression that they have something to hide, thereby increasing the level of anxiety about the potential impact of these changes?

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I think my hon. Friend has made an extremely good point, and the Minister and his colleagues have heard what she has said. And I thank you, Sir Edward, for your intervention there as well.

This situation simply is not good enough. I came to this Committee today expecting that all Members would have the information that I have, or that it would be available to them in the room, but it is not here. Of the papers that are emailed around when the Committee of Selection selects the Members for a Committee, the impact assessment is not one of the documents that is usually sent; it is usually waiting here in the room for us. It would usually only be the Front-Bench spokespersons who would get a copy in advance.

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As I said directly to the Minister before, I noted the comments about the impact assessments and actually looked for the impact assessments that are relevant to this legislation, but I could not find sufficient impact assessments to clarify for me what the impact of the legislation would be. So it is not even a failure of the Government to make them available today; actually, this process is all very unclear, in terms of what the impact is and how it has been assessed. So, even if the information that is available was provided, I do not think that it would be clear enough.

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I completely agree with that, and there are a number of points here, Sir Edward. In previous Committees, we have had a discussion about the fact that impact assessments have not been produced at all on numerous occasions when significant changes have been made, and there has been an issue with the nature of the impact assessments that the Government have chosen to produce.

I will discuss a little later the content of the three impact assessments that have been produced. My hon. Friend the Member for Newcastle upon Tyne North is quite right that they do not actually give Members the ability to scrutinise thoroughly what we are being asked to scrutinise.

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My hon. Friend knows, as I do, that if someone had not asked an urgent question last Thursday on roaming charges after Britain comes out of the European Union, that very complex issue would have been dealt with in one of these Committees up here, with as little information as we have now. As it was, the Minister had to come to the Dispatch Box and there was a thorough airing of a very important piece of delegated legislation. Many of us, Sir Edward, will be coming up to Committees time and again—there are hundreds of these pieces of delegated legislation. So, early on, and it is quite early on, we have to get this process right, so that we have the information that we need to do our job.

So I want the Minister to reflect on what happened last Thursday. The Opposition had to call for an urgent question to find out what was going on in an important area of policy regarding roaming charges after we leave the European Union, which is not dissimilar to the policy area that we are considering now.

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My hon. Friend is absolutely right. There is a similarity with the portability of content and the ability for consumers to watch Netflix or Amazon Prime, on the one hand, or for satellite broadcasters to reach their customers in a country different to the one where their broadcast comes from. It is very similar to the point about mobile phone roaming charges. Who knows? Maybe somebody will table an urgent question on those points in the days ahead. So I completely agree with my hon. Friend’s point; it had occurred to me, as well.

I mentioned the apparently very significant consequences for broadcasters, which have not been addressed by the impact assessment. Just to emphasise the consequences of these regulations, a European Commission notice to stakeholders states that in the absence of an agreement between the UK and the EU, broadcasters in the UK will no longer benefit from this mechanism when providing cross-border broadcasting services to EU customers, and they will have to clear rights in all the member states that their signal reaches. I do not think we are talking about a situation where it is just one side of the Irish border or the other, although there are some interesting questions there about where someone lives and which signal they receive. I do not see how the regulations address the Commission’s point. That must be of major concern to UK broadcasters. I wonder whether that was one of the technical points raised in the roundtable to which the Minister referred—he was not able to tell us before, but perhaps he will be when he responds.

Paragraph 7.4 of the explanatory memorandum refers to the implementation of the EU term directive and to copyright duration for copyright works originating from EEA states. It also says that copyright works originating in the UK will be treated with consistency in the EEA. I can see how we could guarantee consistency of treatment of works originating in the EEA, but how can the regulations guarantee the same in return? Has a mutual recognition agreement been finalised in that respect?

In paragraphs 7.5, 7.8 and 7.15 of the explanatory memorandum, it is claimed that there will be consistency of treatment for EEA citizens in the UK and for UK citizens in the EEA. Again, when was a mutual recognition agreement signed? Or, in the event that it was not, why is that claim being made? As far as I can see from what has been published, we have no way of verifying whether the regulations will hold up in court. That lack of published consultation—or informal roundtable consultation, or however the Minister wishes to describe it—would suggest that I am right to have such concerns.

In contrast to the paragraphs that indicate a continuation of mutual recognition or an establishment of new agreements on mutual recognition in some areas, paragraph 7.10 of the explanatory memorandum refers to the ending of mutual recognition and to the end of information sharing with respect to UK cultural heritage institutions. It is impossible to predict the consequences of the end of those arrangements for the arts and for heritage objects.

Paragraphs 7.12 and 7.21 refer to the Marrakesh treaty and rights for disabled people to copy copyrighted materials and to exchange such copies. Paragraph 7.12 refers to the loss of rights for disabled people to have copies of copyrighted works without infringing copyright. I do not pretend to understand the consequences of the EU’s membership of the Marrakesh treaty—unlike some of the lawyers sat behind me, I do not have the training or qualification for that—but can the Minister tell us when we will ratify the Marrakesh treaty in our own right as the UK, as indicated in paragraph 7.21?

According to the Government’s September guidance on no-deal planning, the answer is “after we have left the EU.” Can the Minister confirm whether we will be able to do what is suggested in the explanatory memorandum between exit day and ratification of the treaty? Can he confirm when we will become signatories to the treaty in our own right, or whether something already happened in that respect that is not mentioned in this paperwork?

Paragraph 7.20 concerns the portability regulation—this affects Netflix and Amazon Prime—which allows us to watch content when we visit the EEA by moving rights and permissions with the consumer. The draft regulations appear to end that arrangement. That change will have a significant impact on consumers and on the providers of content. Who will pay for holidaymakers to watch Netflix or Amazon Prime when in the EU after 29 March? I wonder whether we will be able to watch the “House of Cards” series—it springs to mind in this place—using a UK subscription, or if we will need to buy a new EU subscription to do so. Can the Minister clarify that?

The sifting Committees of both Houses of Parliament recommended that the statutory instrument should be upgraded from the negative to the affirmative procedure. The House of Commons sifting Committee gave the following reasons:

“The amendments to primary legislation are considerable, and the combined number of changes to other legislation is significant, all relating to intellectual property, a cornerstone of the internal market in services.”

The Committee set out its concerns about the country of origin principle for satellite broadcasting and the portability or otherwise of online content. It stated its reservations about the inadequacy of the impact assessments, just as my hon. Friends have this afternoon:

“The Committee is concerned about the impact on business and the loss of consumer rights and is disappointed that the Government has chosen not to provide further information on these issues to assist the Committee in its decision making.”

That is sounding very familiar. The House of Lords reached a similar conclusion. The sifting Committee conclusion is confirmed in paragraph 3.2 of the explanatory memorandum to the regulations.

Without more detailed impact assessments, how is it possible for the Government to claim that the statutory instrument does what is needed to protect businesses, workers and consumers? The EU approach to impact assessments for regulatory changes is so much stronger than the narrow version chosen by the Government. It addresses the wider economic and societal impact. It is absurd that the Government refuse to use such an analysis for complex far-reaching changes. The lack of full analysis and consultation leaves open the question of whether regulations such as these are fit for purpose and whether they might be open to challenge in the courts. This side of the House has made that point repeatedly in Delegated Legislation Committees that have considered multiple and complex regulations related to exit from the European Union.

The Government guidance published on 24 September 2018 sets out the consequences of a no-deal scenario in this area. It raises concerns about universal database rights, portability of online content services, country of origin for copyright clearance of satellite broadcasting, the potential for UK heritage institutions to infringe copyright, the non-ratification of the Marrakesh treaty before exit day, and the potential implications. All those concerns are apparent from a detailed analysis of the regulations and the explanatory memorandum, yet the information before us does not explain how or why they should be, and have been, addressed. It does not address the concerns raised by the Government’s own guidance.

According to the impact assessments—I return to the intervention by my hon. Friend the Member for Newcastle upon Tyne North—inadequate as they are, the Government’s aim is to maintain the status quo for UK database creators and to avoid any costs to rights holders. The logic of what is proposed is that there will be a cost to EEA creators of databases that will likely be passed on to UK consumers. It is hard to believe that consumers will not have significant concerns about the idea of having to pay more for their services. The consumer affairs experts we spoke to in preparing for this Committee had not been consulted about that. I wonder what was said at those roundtables by consumer representatives about those concerns. So much for the championing of the cause of the consumer, which we often hear from members of the Government, in particular the Secretary of State for International Trade.

Meanwhile, again in the impact assessments, we see that EEA broadcasters will not need separate rights clearance in the UK. But without a reciprocal agreement post Brexit, EEA nations could choose to suspend country of origin broadcast rules between member states. While the statutory instrument preserves the status quo, EEA broadcasters into the UK may be affected by familiarisation costs. Some 33,000 UK businesses would be affected—that is a Government estimate—as their work is broadcast by EEA rights holders into the UK. Again, there is potential for costs to be passed on to the consumers. Was that point raised in the roundtable, and what was said? We do not know.

UK online content services with EU equivalents will not be able to give customers access to their material when present in the UK unless access is reciprocated—that is in the impact assessment. That will not be in place from day one after Brexit, and there is no indication of how long such arrangements might take to put in place. What was the basis for the statement in the impact assessment that tourism in the UK would not be affected? Were broadcasters consulted? What was their view? What was the view of the UK hospitality industry of the impact on tourism in this country? Were they at those roundtables?

The explanatory memorandum states that the regulations achieve certain objectives. I wondered how it was possible for someone who is not an expert in the relevant law to confirm those claims, so I sought advice from a number of legal experts, since the Government did not publish any analysis from lawyers. One lawyer told me,

“I don’t have the bandwidth to think the implications through”.

That goes to the first intervention by my hon. Friend the Member for Huddersfield. Another lawyer told me:

“The draft regulations simply need as much Parliamentary scrutiny as time permits, and the goal is more technical than policy driven - to make the regulations as good as they can be under the circumstances, so that the courts don't have to spend the next decade unpicking them. It would be a very considerable undertaking to quality assure these very complex amendments to existing UK law.”

That came from a lawyer with 40 years’ experience of UK intellectual property law. The specialist IP lawyers who looked at this do not have the bandwidth to consider these matters. They tell us that making good regulations matters, so the courts do not have to spend the next decade unpicking them, but lawyers are unable to say whether the Government guidance on no-deal consequences have been addressed. If the lawyers cannot say whether the regulations can be relied on, what chance do we have, as Members of the House of Commons with limited access to information?

The Minister confirmed there was no formal consultation. Had there been, perhaps the lawyers could have advised the Government and avoided any potential that the regulations would be inadequate. Perhaps the lawyers would have had time to tell us whether the Government’s proposed regulations were fit for purpose. We have not even had that from the people at the roundtable.

I return to the expert advice. That lawyer with 40 years’ experience in IP told me,

“The one thing that can be said with certainty is that it is a shocking departure from minimum standards of Parliamentary scrutiny to allow such wholesale changes to our existing intellectual property laws to be made without proper stakeholder or expert scrutiny.”

That lawyer confirms what we have been saying about a number of the SIs we have been asked to consider. The Minister’s response will need to be remarkable to address the yawning gap in his analysis.

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It is a pleasure to be here, Sir Edward. I want to make a couple of brief points to add my concern about the general tenor of these proceedings.

First, the only reason we are discussing the statutory instrument is that the European Statutory Instruments Committee, on which I sit, recommended that it should go through the affirmative resolution procedure rather than the negative. The Government’s original intention was that we would not even discuss this very important piece of secondary legislation, which is indicative of their understanding—or lack of understanding—of a proposal that clearly has substantial impacts and effects.

My second point is about the impact of the statutory instrument. Paragraph 2.5 of the explanatory memorandum says:

“This instrument will ensure retained EU law contains appropriate references to the ‘European Union’, ‘Member State’… Additionally, the instrument aims to give continued effect to cross-border mechanisms and their underlying policies wherever possible.”

Therefore, the intention of the statutory instrument is to continue with arrangements that are agreed by the EU, or by the EU states, after we leave the EU.

The explanatory memorandum goes on to say:

“Where this is not possible…the mechanism is given unilateral effect within the United Kingdom.”

The statutory instrument therefore gives EU member states the power to determine the arrangements that are going to apply within the UK. Government Members who think that the process of taking back control means giving other nations control over the legislation and laws that apply to this country, without us having an input, have the ideal statutory instrument to support. We are, it seems, passing to other countries authority over not only past legislation, but future legislation. On the basis of this statutory instrument, we seem to be binding ourselves to having our laws set by other jurisdictions and members of the EU after we have left. That seems quite an extraordinary proposition, which goes way beyond the ambit of a Delegated Legislation Committee such as this one.

In summary, what we have here is a catastrophic mess. I have great respect and affection for the Minister, but frankly, this whole thing is a massive embarrassment. There has not been proper consultation. We have a piece of secondary legislation that appears to give other countries the authority to legislate within the UK without us having an input. The Government need to go away, rethink, have a proper consultation, and come back with an appropriate statutory instrument for this Committee to consider.

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I shall do my best to go through the many points that have been raised. I hope that I can persuade Opposition Members to rethink their objection to the statutory instrument—I very much doubt I can, Sir Edward, but if you will be patient with me, I will do my best. I nearly said “if the court will be patient”, because this is like a courtroom drama, but I know that you are a patient man, Sir Edward. If the Committee will bear with me, I shall do my best.

The shadow Minister raised many points. There was a general one about his concerns. [Interruption.] Perhaps he could listen to what I have to say.

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It is perfectly okay, but I would like the hon. Gentleman to concentrate on my points, as I did my best to concentrate on his. I hope he will feel that I have answered them properly.

To deal first with the hon. Gentleman’s fundamental concern about the process as a whole, I reiterate our view that the regulations are not intended to make significant changes to existing policy. In line with the powers of the European Union (Withdrawal) Act 2018, they aim for continuity as far as possible, and so provide the minimum necessary changes to ensure that our internationally renowned UK copyright legislation continues to function in a no-deal scenario. We have really tried to provide continuity and certainty.

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Will the Minister give way on that point?

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Would the hon. Gentleman wait? I listened to him.

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I think I might be able to help the Minister.

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This is a new policy. I shall sit down.

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I am grateful to the Minister for giving way. I have a great deal of respect for him, and I do listen to him. The Opposition understand that this series of statutory instruments is about preparing for no deal and trying to avoid disruption. The problem is that the information available to us and the answers we have had from the Minister raise serious questions about whether that is exactly what is happening. That is the heart of the matter.

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I accept fully that that is the Opposition’s intention, but I felt that I should make it as clear as I can that the regulations are not intended to make any significant change to our existing policy.

The hon. Member for Sefton Central asked whether any rights will be lost in the event of no deal. I can categorically say that they will not. As I said previously, certain reciprocal arrangements that facilitate cross-border use of copyrighted material will end, but that is distinct from the underlying intellectual property rights. I hope that his lawyer of 40 years’ experience will confirm that. Our continued membership of the international treaties on copyright will ensure that UK works will continue to receive protection abroad, while foreign works will continue to be protected in the UK. These changes also ensure that copyright duration will not change for UK rights holders on exit.

The hon. Gentleman also asked what we are doing to support UK broadcasters who are facing the loss of the copyright country of origin principle. It is still our intention to secure an agreement with the EU on our future relationship—I think that is very well known—and as we set out in our White Paper last July, we want any deal to involve the best possible arrangements for the broadcasting sector. If we leave without a deal, broadcasters may face disruption due to the fact that the EU copyright country of origin principle would cease to apply to the UK. We have tried to give broadcasters and other businesses as much information as possible about the implications of no deal by putting this in the technical notices and detailed guidance about what it means for copyright. The UK cannot address that issue unilaterally in a no-deal scenario.

The shadow Minister mentioned the Marrakesh treaty. The UK has implemented the provisions of the treaty in UK law, and they will be retained after exit. Currently, the treaty has effect in the UK due to the EU’s ratification of it in October 2018, and we are on track to ratify it in our own right, but that cannot happen until we leave the EU, because it is an EU competence at the moment. Until we ratify the law, other treaty countries could prevent the cross-border exchange of copies of works in accessible formats in the UK. Our domestic copyright exceptions stemming from the treaty, which provide disabled persons with improved access to copyright-protected works, will not be affected by our departure from the EU.

The shadow Minister asked when we will ratify the Marrakesh treaty. We are on track to do that. It will be literally as soon as possible after exit. Our ratification must then be accepted by the World Intellectual Property Organisation, before we are once again individually treated as a member of the treaty. There will be a delay between exit and the acceptance of our ratification in a no-deal scenario. We are doing our absolute best to ensure that it will be as short as possible.

On the impact assessments, the hon. Member for Sefton Central asked why we did not consider wider impacts. The impact assessments that accompany the instrument describe in detail the effect of introducing the regulations relative to the pre-exit status quo. That is in line with the “Better regulation framework” and HM Treasury’s Green Book guidance. They are not intended to analyse the impact of no deal more broadly, such as the effect of the EU cross-border copyright mechanism ceasing to apply to the UK. Those impacts arise from the fact that the EU will treat the UK as a third country in a no-deal scenario and will happen regardless of whether this instrument is made. We considered the wider impacts of our exit from the EU in a long-term economic analysis published last November.

The shadow Minister asked why the Government are using secondary legislation for EU exit. This matter has been discussed widely in relation to many statutory instruments, but fundamentally, using primary legislation is inappropriate for the large number of mechanistic changes that are needed. It is normal to use secondary legislation in these circumstances. Furthermore, the changes are dependent on the outcome of the negotiations. This method was heavily debated and agreed to by both Houses during the passage of the European Union (Withdrawal) Act last year. It would not be practical to make all the required legislative changes through primary legislation. However, I reiterate that these changes do not include major policy changes or decisions on policy.

We are very pleased to have—and we do accept—recommendations from the sifting Committee, on which the hon. Member for Wrexham serves, to ensure that sufficient scrutiny is in place for the secondary legislation made under the principal powers in the Act. I accept what the shadow Minister said about not regarding this as enough scrutiny, but we did accept straightaway the recommendations of that Committee.

The shadow Minister asked what the effect will be on UK consumers. The EU portability regulation works by reciprocal application of cross-border rules. It will not cover UK-EU travel in the event of no deal, and we cannot replicate the effects of existing arrangements on a unilateral basis. It is true that UK consumers may see changes to their content services when they visit the EU, but the law will merely revert to its pre-April 2018 status quo.

The shadow Minister asked why the UK is unilaterally applying the country of origin principle for EU satellite broadcasters. The proposed plan is consistent with how UK legislation already treats satellite broadcasters from outside the EU. Continuing to apply the country of origin principle in this way will support UK consumers’ continued access to foreign television programming, because it is not introducing new and unnecessary burdens on broadcasts to the UK. I am sure that the businesses to which the shadow Minister refers will be very pleased about that.

The hon. Member for Wrexham continued that theme and asked why we give unilateral effect to certain mechanisms. It is unavoidable that some cross-border arrangements will apply. In some cases, we will apply these arrangements to the EU on a unilateral basis. That does not mean that we will unilaterally implement EU law; we will just provide continuity where we feel that it is appropriate.

I have done my absolute best to answer the questions raised. As I said in my opening speech, this statutory instrument is essential in preparing our copyright legislation for a no-deal scenario. I therefore commend the regulations to the Committee.

Question put.

Division 1

11 February 2019

The Committee divided:

Ayes: 9
Noes: 8

Question accordingly agreed to.

View Details

Resolved,

That the Committee has considered the draft Intellectual Property (Copyright and Related Rights) (Amendment) (EU Exit) Regulations 2018.

Committee rose.

Draft Northern Ireland (Ministerial Appointment Functions) Regulations 2019

The Committee consisted of the following Members:

Chair: Mr Charles Walker

† Campbell, Sir Alan (Tynemouth) (Lab)

Duffield, Rosie (Canterbury) (Lab)

† Hill, Mike (Hartlepool) (Lab)

† Jones, Susan Elan (Clwyd South) (Lab)

† Killen, Ged (Rutherglen and Hamilton West) (Lab/Co-op)

† McFadden, Mr Pat (Wolverhampton South East) (Lab)

† Pawsey, Mark (Rugby) (Con)

† Penrose, John (Minister of State, Northern Ireland Office)

† Pound, Stephen (Ealing North) (Lab)

† Pursglove, Tom (Corby) (Con)

Robinson, Gavin (Belfast East) (DUP)

† Stewart, Iain (Milton Keynes South) (Con)

† Sturdy, Julian (York Outer) (Con)

† Syms, Sir Robert (Poole) (Con)

† Warman, Matt (Boston and Skegness) (Con)

† Watling, Giles (Clacton) (Con)

† Whately, Helen (Faversham and Mid Kent) (Con)

Ben Sneddon, Committee Clerk

† attended the Committee

Third Delegated Legislation Committee

Monday 11 February 2019

[Mr Charles Walker in the Chair]

Draft Northern Ireland (Ministerial Appointment Functions) Regulations 2019

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I beg to move,

That the Committee has considered the draft Northern Ireland (Ministerial Appointment Functions) Regulations 2019.

It is a pleasure to have your hand on the tiller for our proceedings, Mr Walker. I do not propose to take a great deal of time setting out the statutory instrument initially, because it is simply one of those that are forced on us by the absence of a Northern Ireland Executive at Stormont. This is not something that anyone here particularly wants to have to pass as an SI through the Westminster Parliament, but we have to do that simply because there are a small number of ministerial appointments for the smooth running and good governance of Northern Ireland that have become both urgent and important and without which good governance in Northern Ireland would be increasingly difficult.

The positions, ranging from the Attorney General for Northern Ireland through to member or chair of the Northern Ireland Local Government Officers’ Super- annuation Committee, are listed in regulation 2(2) and (3). It is notable and welcome that the SI is short, covering just two sides of a piece of paper. I am very happy to go through any one of those offices for anyone who has particular questions about why it is included and when the current incumbents’ terms of office are due to finish, if the Committee is interested, but the initial indications informally, before we tabled the regulations, were that this is relatively uncontroversial and straight- forward legislation. Therefore, I do not propose to go into lots of detail unless required, but of course other members of the Committee may feel differently—I feel an intervention coming on.

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I am grateful to the Minister for letting me intervene. I understand why the Government have to introduce an SI such as this to cater for such appointments. As he rightly says, it reflects the absence of devolved government over quite a long period. May I ask him this? Apart from the piecemeal approach set out in such SIs, has there been a broader discussion in Government about the restoration of direct rule?

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I can confirm that those meetings and discussions—sometimes very privately bilaterally, sometimes more broadly—are ongoing. The right hon. Gentleman will be aware that we have primary legislation that we passed just over four months ago that is due to be extended, if Parliament feels that that is right, in order to allow time—two five-month consecutive periods—for the restoration of devolved government in Northern Ireland.

Until those two five-month periods have been completed, we are trying to create a space in which talks about talks and discussions about how to restore the Executive can be undertaken. If at the end of the first five months, we do not decide to renew for the second five months, or if at the end of the second five months we are still without a devolved Administration in Northern Ireland, at that stage that primary legislation lapses and at that point the Secretary of State’s existing legal duties to hold a local election in Northern Ireland come back into force—that is the purpose of the legislation—and therefore everybody, on all sides, has an interest in trying to ensure that the devolved Administration in Northern Ireland are restored as soon as that can be done.

I can see that the right hon. Gentleman wants to intervene again, but I will just make one more point before he does. These six examples of appointments are just the ones that are both urgent and important. There is a lengthening list of policy changes and other issues, which is growing every day, that would be far better served, for the people of Northern Ireland, if a devolved Executive were in place to take those decisions and to get government in Northern Ireland moving again. This is not something where pressure is going down; pressure is rising steadily. I am sure that I speak for everyone here—I hope I do—when I say that I am sure everyone wants to see the restoration of devolved government. That was central to the Belfast agreement. Everyone will understand that it is far better to have a functioning local democratic Administration in Northern Ireland, if at all possible, and with that I will give way once more.

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I am extremely grateful to the Minister for his patience. I agree, as we all do, I am sure, with what he says about the desirability of restoring devolved government. Most of his comments in response to me have been about how much effort the Government have been putting into that, which is absolutely great, but my question was: has there been any discussion about what happens if that does not work? Will the Government end up having to make a decision they do not want to make and restore direct rule?

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The legal position is that after the five months, which come to an end in March, Parliament must decide whether to grant a second five months, all the time working and hoping for and, we hope, supporting the notion of restoring devolved government in Northern Ireland. If at the end of the second five months, or if there is no renewal for those second five months, the Secretary of State has an existing legal duty that is currently in suspension to consider whether a further election in Northern Ireland would be required. That is the legal requirement, rather than a requirement to return to direct rule. I know that everyone would want to avoid going to direct rule and would, therefore, want us to consider direct methods of getting a local election going in Northern Ireland, if necessary. Clearly, the best option is to restore existing Members of the Legislative Assembly to their place in Stormont.

With that, I propose to do something unusual for a politician and that is to stop talking, sit down and see whether anyone wishes me to answer any questions.

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Normally, there is no greater or more dangerous hostage to fortune than to say that something is an uncontroversial, minor piece of legislation, because after three or four hours have passed we generally realise that perhaps it is not so minor or uncontroversial. However, in this case, I believe the Minister might be right.

May I take the opportunity not just to say what a pleasure it is to serve under your benevolent dictatorship—oversight—Mr Walker, but also to welcome the Minister? I have opposed him across the Dispatch Box but we have not had an opportunity to formally welcome him. He is one of a small but highly distinguished group of politicians who cut their political teeth in the borough of Ealing and went on, in most cases, to far greater things. I refer to him, the right hon. Member for Putney (Justine Greening), you, Mr Walker, and the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski). In the case of the Minister, I remember well that in 1997 he took on the then incumbent and managed to reduce the Labour majority to a knife edge—21,423. We still remember that with great affection.

This is something that Labour has consistently called for and we entirely accept and understand the Minister’s overarching point, that we would not be here out of choice and would much rather that the appointments, re-appointments and reconfirmations were handled where they should be, by an Assembly and an Executive in Northern Ireland. However, following up on the comments made by my right hon. Friend the Member for Wolverhampton South East, we need even more energy and activity on the part of the Minister and the Secretary of State in seeking to act on the appointments and to progress towards re-establishing the Executive.

The original focus on this side of the House was on the Northern Ireland Policing Board, which has oversight of policing and comprises political and independent members and the prisoner ombudsman. I am glad to say that that board has been appointed, and on 2 February Rev. Lesley Carroll was appointed as the new prisoner ombudsman. May I take this opportunity to put on record my best wishes for her? I have met the reverend on a number of occasions and she will be a first-class ombudsman. This is an excellent appointment and one that has the approval and approbation of the House and certainly that of the community in Northern Ireland.

We welcome the appointments being made under the SI, but we ask the Minister to outline what consultation the Government will have with Northern Irish political leaders and the leadership of Opposition parties in Westminster in the event of an incumbent not seeking reappointment. Although we all want to see devolution restored, the Opposition are not over-brimming with confidence in the Government’s ability to do that. As such, is the Minister considering any further appointments, given that we are two years on from the collapse of the institutions? We cannot allow a vacuum or any sort of hiatus in those appointments, because frankly there are people who flourish in the darkness. There will always be people there to take advantage of that vacuum. We would like to see those appointments progressed, but in the meantime we endorse the Minister’s comments. We wish him a fair following wind. We understand why he has had to table these regulations, and we support him in the spirit of bipartisanship.

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I thank the Opposition for their kind support. I appreciate that I tempted fate by saying this is an uncontroversial piece of legislation, so I am grateful for their support to avoid my being proven too badly wrong. Incidentally, I remember fondly my excursion to Ealing, Southall, where I ate a great deal of curry, although I cannot say I troubled the scorers much more than that. It was a great time to learn the basics of campaigning. I think that the hon. Gentleman was first elected at the same time as I was not elected, but he was campaigning with a great deal more aplomb and certainly a great deal more success than I was at the time.

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On a point of order, Mr Walker, the Minister and I both attempted to unseat the incumbent. In my case, it was Harry Greenway in Ealing North, and in his case, it was the late Piara Khabra in Ealing, Southall. One of us succeeded.

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I think that was a debating point, not a point of order. It was a very fine debating point.

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Moving swiftly on, the hon. Gentleman asked about the process of appointments and what would happen in a couple of different scenarios, such as if incumbents were not going to stand or if people might not be reappointed. The simplest answer is that the process for all the appointments will be governed through the independent regulation process. That is either the Commissioner for Public Appointments for the UK or the Commissioner for Public Appointments for Northern Ireland. We are required to follow some very important and straightforward rules, and we will of course be following them in every case. I am not sure whether they necessarily require full consultation with Opposition parties, but they are designed to ensure a proper, independent and, as far as possible, entirely transparent and meritocratic process is followed. We will of course follow that wherever we can.

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May I put down a marker and say that in the case of judicial appointments, we would very much appreciate at least being involved? I am not asking for a veto; I am saying that due to the serious and sometimes controversial nature of judicial appointments, we on the Opposition Benches would like at least to be in the picture.

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The hon. Gentleman brings me neatly on to the second point he raised, which was about appointments other than those listed in the regulations. May I at this stage keep our collective powder dry and say that were we to need to add to the list in the regulations by bringing forward other SIs to extend it—everybody hopes we will not have to—that would inevitably be subject to the normal parliamentary process of scrutiny? I am sure that he will have an opportunity to raise that point and/or any others, depending on what other positions are listed in those potential SIs, as those other positions come forward.

I hope that has answered all the hon. Gentleman’s questions and that I have not tempted fate or tested anyone’s patience too much in our consideration of this uncontroversial piece of legislation.

Question put and agreed to.

Committee rose.

Draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019 Draft Tax Credits and Guardian's Allowance Up-rating Regulations 2019

The Committee consisted of the following Members:

Chair: Sir Graham Brady

† Benyon, Richard (Newbury) (Con)

† Bruce, Fiona (Congleton) (Con)

† Bryant, Chris (Rhondda) (Lab)

† Cruddas, Jon (Dagenham and Rainham) (Lab)

Dodds, Anneliese (Oxford East) (Lab/Co-op)

† Grant, Bill (Ayr, Carrick and Cumnock) (Con)

† Heald, Sir Oliver (North East Hertfordshire) (Con)

† Huq, Dr Rupa (Ealing Central and Acton) (Lab)

† Jenrick, Robert (Exchequer Secretary to the Treasury)

Jones, Mr Kevan (North Durham) (Lab)

† Knight, Julian (Solihull) (Con)

† Smith, Jeff (Manchester, Withington) (Lab)

† Stephens, Chris (Glasgow South West) (SNP)

† Swire, Sir Hugo (East Devon) (Con)

† Tredinnick, David (Bosworth) (Con)

† Walker, Thelma (Colne Valley) (Lab)

† Whittaker, Craig (Lord Commissioner of Her Majesty's Treasury)

Dominic Stockbridge, Committee Clerk

† attended the Committee

The following also attended, pursuant to Standing Order No. 118(2):

Dowd, Peter (Bootle) (Lab)

Fourth Delegated Legislation Committee

Monday 11 February 2019

[Sir Graham Brady in the Chair]

Draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019

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Is it the wish of the Committee that the regulations be debated together?

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On a point of order, Sir Graham. My question, of which I have given you advance notice, relates to the explanatory memorandum to the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019. Section 3 appears to suggest that the English votes for English laws procedure will apply and that the

“instrument applies to England, Wales and Northern Ireland only”,

but section 4 seems to suggest that the instrument applies to the whole United Kingdom, so there is some confusion. My view, certainly, is that tax credits are not devolved under the Scotland Act 2016. May I ask for some clarity on the issue before we proceed?

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I am grateful for notice of that point of order. I have taken advice on the matter, and I gather that because it arises from the explanatory memorandum, it is not a matter of substance for today’s business. However, the Minister is at liberty to give it further explanation should he so wish.

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I beg to move,

That the Committee has considered the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019.

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With this it will be convenient to consider the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019.

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It is a pleasure to serve under your chairmanship, Sir Graham. I will now introduce the two sets of draft regulations and explain the changes that they will enforce. They both represent routine annual exercises necessary to ensure the collection of national insurance contributions and the resulting contribution to our public services. They will also increase certain benefits in line with inflation.

May I pause for a moment to address the point of order raised by the hon. Member for Glasgow South West? As he set out, there is a minor typo in paragraph 3.2 of the draft explanatory memorandum:

“The entire instrument applies to England, Wales and Northern Ireland only”.

It should, of course, have mentioned Scotland. Paragraph 4.1 states:

“The extent of this instrument is the United Kingdom”,

which, of course, includes Scotland. This version of the explanatory memorandum is only a draft; we will publish a corrected version. I am grateful for the opportunity to make that clarification.

Turning to the Tax Credits and Guardian’s Allowance Up-rating Regulations, as hon. Members know, the Government are committed to a welfare system that works, ensures that work always pays, and is fair to the taxpayer while maintaining protection for the most vulnerable in our society. In the Welfare Reform and Work Act 2016, we legislated to freeze the majority of working-age benefits—including child tax credit and working tax credit—for the four years up to 2020, which helped to put our welfare system on a sustainable long-term path. However, the disability elements of the child tax credit and the working tax credit were specifically exempted from the freeze. The guardian’s allowance was not affected either.

In introducing the draft regulations, we are legislating, as in previous years, to ensure that the guardian’s allowance and the disability elements of the child tax credit and working tax credit increase in line with the consumer prices index, which put inflation at 2.4% in the year to September 2018. The draft regulations will mean in practice that we will maintain the level of support for families with disabled children in receipt of child tax credit and disabled workers in receipt of working tax credit. The regulations will also sustain the level of support that we offer for children for whom one parent or more is absent or deceased. Increases to those rates are part of the Government’s wider commitment to supporting the most vulnerable people in our society.

The Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations will make changes to the rates, limits and thresholds for national insurance contributions and make provision for a Treasury grant to be paid into the national insurance fund, if required. The changes, if approved, will take effect from 6 April 2019.

I will outline the changes to employee and employer NICs, which are commonly referred to as class 1 NICs. On class 1 primary NICs for employees, the lower earnings limit will rise in line with inflation, from £116 a week to £118 a week, and the primary threshold will increase with inflation, from £162 a week to £166 a week. The upper earnings limit is aligned with the UK’s income tax higher rate threshold, which will rise from £892 a week to £962 a week in 2019-20. On class 1 secondary NICs for employers, the secondary threshold will rise with inflation from £162 a week to £166 a week. The level at which employers of people under 21 and apprentices under 25 start paying employer NICs will rise from £892 a week to £962 a week.

For the self-employed, who pay class 2 and class 4 NICs, the rate of class 2 NICs will rise in line with inflation from £2.95 a week to £3 a week. The small profits threshold will rise with inflation from £6,205 a year to £6,365 a year. On class 4 NICs, the lower profits limits will rise with inflation from £8,424 a year to £8,632 a year. The upper profits limit, which is aligned with the higher-rate threshold, will rise from £46,350 a year to £50,000 a year.

Class 3 contributions will allow people voluntarily to top up their national insurance record. The rate for class 3 will increase in line with inflation, from £14.65 a week to £15 a week. The regulations also make provision in the usual way for a Treasury grant of up to 5% of forecasted annual benefit expenditure, to be paid into the national insurance fund if needed during the period of 2019-20. There are similar provisions with respect to the national insurance fund for Northern Ireland.

I trust that that is a useful overview of the changes that we are making to bring rates of support and contributions to the Exchequer in line with inflation. As I said at the beginning of my speech, the draft regulations are a routine annual exercise and do not depart from recent practice. I therefore commend them to the Committee.

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It is a pleasure to see you in the Chair, Sir Graham. Last week, while preparing for the Committee and to set the context for the debate, I had a look at various documents, including the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019 and the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019. The House of Commons Library has published an excellent briefing on these statutory instruments. To help set the context, I went even further back to Monday 6 March 2017, which might actually have been the last appearance of the former Chief Secretary to the Treasury before the election. Looking at those documents for context is worth while and I am sure that all hon. Members have done so.

As the Minister clearly outlined, the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019 enact the annual re-rating of the various national insurance contribution rates, limits and thresholds, and allow for a Treasury grant not exceeding 5% of the estimated benefit expenditure for the coming tax year to be paid into the national insurance fund. In light of the impact of inflation on incomes in conjunction with the poor wages that we have seen over the past 10 years, we will not oppose the regulations, and we accept that they will uprate national insurance thresholds in line with the consumer prices index.

As the Minister outlined, the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019 make it possible to increase certain tax credits and other child benefits rates, as well as the guardian’s allowance, from April 2019. Although the Government are uprating some benefits, they are excluding others entirely. For the fourth year in a row, most working-age benefits are being kept at the 2015-16 cash value. That costs a couple with children in the bottom half of the income distribution £200 on average. According to analysis by the Institute for Fiscal Studies of the 2018 Budget, around £4 billion-worth of cuts to social security remain in the pipeline. The benefit and tax credit rates in 2019-20 are worth 6.1% less than if the freeze had not been introduced.

Although we will not divide the Committee, we place on record our objections to the Government’s social security strategy, which is wholly inadequate to tackle the growing inequality in our country. As Members know, over the past five years we have seen a 31% increase in the use of food banks. That is a direct result of cuts that the Government have inflicted on the country, and that were not reversed in the most recent Budget. The Government have to take responsibility for that growth fairly, squarely and unambiguously.

Although the Chancellor might insist that austerity is over, the Resolution Foundation concluded in its analysis of his most recent Budget that that will be achieved only by reversing many of the remaining social security cuts. Rather than making slight adjustments to social security through statutory instruments, the Government need to look at redesigning our social security system so that it provides the basic protection that people need. Of the benefit cuts announced in 2015, 75% remain Government policy.

The Institute for Fiscal Studies previously noted that the Government’s social security policies, including the freeze, have left many families ill-prepared for another economic slowdown. The announcement in the last day or two that growth in the coming year might be 1.2% indicates that such a slowdown is not unlikely. Putting that in the context of Brexit draws a multi-coloured tapestry, as such forecasts are particularly pertinent given the uncertain economic period that the country could be about to face. The regulations should therefore be condemned, not for what they are but for what they leave out. They offer inadequate support for struggling families across the United Kingdom.

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I welcome the Minister’s clarification of the explanatory notes. I do not necessarily believe that a whole nation being taken out of a statutory instrument can be described as a small typo, but I accept his answer that the instrument does apply to the whole of the United Kingdom.

I will touch on many of the themes that were explored by the shadow Minister. As he outlined, although some benefits are being uprated, most working-age benefits are being frozen under the current benefit freeze. That is having a very real impact. Indeed, with the impact of inflation, the cuts in the final year of the benefit freeze take £4.7 billion out of the social security system. To put that in context, that is more than the great work allowance boost that the Government recently announced. It looks as if the Government are giving with one hand and taking away with the other.

The Government have the ability to lift the benefit freeze if they want to, but they have decided not to. I therefore ask the Minister, given that the Chancellor has claimed that austerity is coming to an end, what the strategy is going forward in relation to uprating all social security benefits, and ensuring that those most in need are those who receive the money.

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I am grateful to the hon. Member for Bootle for indicating that he will not oppose the regulations. That is important for two reasons. First, they enable us to ensure that the disability element of tax credits and the rate of guardian’s allowance rise with inflation, providing the support that those individuals and families require. Secondly, they will enable us to continue to collect national insurance contributions for public services across the country.

In answer to the question on what the uprating mechanism will be when the current freeze comes to an end at the end of this financial year, the Welfare Reform and Work Act 2016 provided for a four-year freeze. That will then lapse and, subject to any further decision being approved by the House, the assumption, as we have made clear, is that we will revert to the pre-existing statutory obligations, which in most cases was a CPI uprating each year.

The hon. Gentleman raised a wider point about why we chose to adopt the policy at the beginning of the coalition Government. The reforms that we have pursued since 2010, including those legislated for in the 2016 Act, were necessary to put the public finances back on track and to protect the taxpayer following decades of unsustainable increases in welfare spending. Welfare spending rose by 65% in real terms—an increase of £84 billion—under the last Labour Government.

The benefit freeze, although undoubtedly difficult for many in our society, was an important part of a package of welfare reforms designed to incentivise work, which we know is the best route out of poverty. Since 2010, there have been record levels of individuals finding employment and near-record low levels of people who are unemployed. Those reforms have worked, and we will look to the next financial year, and the spending review that will precede it, to make decisions on how we will choose to proceed thereafter. I commend the regulations to the Committee, and I hope that all Members will support them.

Question put and agreed to.

Draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019

Resolved,

That the Committee has considered the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019.—(Robert Jenrick.)

Committee rose.

Draft Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Mr Nigel Evans

† Andrew, Stuart (Parliamentary Under-Secretary of State for Defence)

Campbell, Mr Ronnie (Blyth Valley) (Lab)

† David, Wayne (Caerphilly) (Lab)

† Flint, Caroline (Don Valley) (Lab)

† Goodwill, Mr Robert (Scarborough and Whitby) (Con)

† Grant, Peter (Glenrothes) (SNP)

† Hall, Luke (Thornbury and Yate) (Con)

† Harrison, Trudy (Copeland) (Con)

† Kyle, Peter (Hove) (Lab)

† Mills, Nigel (Amber Valley) (Con)

† Moore, Damien (Southport) (Con)

† Morton, Wendy (Aldridge-Brownhills) (Con)

† Scully, Paul (Sutton and Cheam) (Con)

† Smith, Owen (Pontypridd) (Lab)

† Tami, Mark (Alyn and Deeside) (Lab)

† Timms, Stephen (East Ham) (Lab)

† Tomlinson, Michael (Mid Dorset and North Poole) (Con)

Ian Bradshaw, Committee Clerk

† attended the Committee

Fifth Delegated Legislation Committee

Monday 11 February 2019

[Mr Nigel Evans in the Chair]

Draft Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2019

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I beg to move,

That the Committee has considered the draft Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Evans. A responsible Government plan for all eventualities. As part of the preparations to leave the European Union, it is essential that we ensure that our legislation governing defence and security procurement functions properly beyond exit day in a no-deal scenario. It is the first duty of a Government to keep their citizens safe and the country secure. As part of that, the Government need to be able to procure the critical equipment and capabilities they need smoothly and with confidence.

In the event of no deal, these amending regulations will provide procurers and suppliers with legal continuity and certainty, giving them the stability they need to conduct business after 29 March. Clearly, the amendments reflect the UK’s new status outside the EU in a no-deal scenario, but the framework and principles underlying the defence and security procurement regime remain otherwise unchanged. That is in accordance with the powers given to amend retained EU law in the EU (Withdrawal) Act 2018. The Act does not allow major policy changes or the introduction of new legal frameworks beyond those changes to fix deficiencies to ensure that the law continues to function properly and changes to remove any reciprocal obligations that are no longer appropriate from exit day.

Brexit will offer us real opportunities, including reform of our defence and security procurement regulations. In the near term, however, the regulations ensure that the UK’s defence and security procurements continue to function smoothly in a no-deal scenario, but with that all-important autonomy from the European Union.

To protect the UK’s essential security interests, the regulations will maintain the effect of article 346 of the treaty on the functioning of the European Union by writing its substance into the existing regulations. The regulations already make clear that they can be trumped by article 346. Article 346 enables us to disapply the defence and security procurement rules where necessary to protect essential national security interests.

Through the amendments, control over our procurement is returned to the United Kingdom. For example, the Secretary of State for Defence will take the power previously held by the European Commission to modernise, although not broaden, the 1958 list of warlike stores that falls under article 346(1)(b). All notices for defence and security procurement opportunities will in the future be published on a new UK e-notification system. Business continuity meanwhile is assured through the transitional provisions. There will be no defence procurement cliff edge.

Competition remains the cornerstone of defence procurement policy, ensuring that we equip our armed forces with the right capability at the right price. Currently, we allow bids from suppliers outside the EU, although the existing regulations provide the legal right of market access required by EU law only for suppliers based in the EU. Any restrictions on, for example, bidding on national security grounds are made clear from the outset of any procurement. The regulations provide a legal right of market access for suppliers based in the UK and Gibraltar that currently enjoy rights under the EU defence and security directive. After exit day, suppliers in the EU will lose their legal right of market access, but we will still allow them to bid on the same basis as suppliers outside the EU. That reflects the UK’s new status as a third country outside the EU.

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Much EU environmental legislation, such as for vehicle emissions, has an exemption for military use. After we Brexit, will that situation change under any of the provisions in the regulations?

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Nothing in this order, which purely transfers our procurement regulations, does that. We can look at a whole raft of matters once we have properly left. We will obviously consider the point that my right hon. Friend raises, but that would be under further consultation, and legislation would then have to come through the House.

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To take the Minister back to what he was saying about allowing companies based in the EU to have access to our defence procurement, is that a reciprocal requirement? If any part of the EU refused to allow our defence companies access to their markets, could we refuse companies in their countries access to ours?

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As it stands at the moment, these regulations would come into force should we leave without a deal. British companies would not have a legal right of access to those European competitions. Having said that, a minimal number of contracts have been won by UK companies through that legal right, compared with the number of exports that our industry secures. I have a lot of faith in the British defence industry and believe that it will be successful in terms of all the other international competitions that will take place.

Although the amending regulations mainly relate to exiting the EU in a no-deal scenario, they also make some updates and corrections to the Defence and Security Public Contracts Regulations 2011. These will come into force before exit day, regardless of whether there is no deal. Through the amending regulations, the Government will ensure that UK defence and security procurement continues to function properly and appropriately, with solid legal foundations underpinning it. This instrument would give procurers and suppliers the confidence and continuity in procurement that they would need in the case of a no-deal scenario, and I commend the regulations to the Committee.

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It is a pleasure to serve under your chairmanship, Mr Evans. This is a very worrying amendment to the regulations, because it deals with the doomsday scenario of a no-deal Brexit. We have 46 days left before we leave the European Union, and the Government are coming forward at this late stage with quite a significant piece of legislation that requires far more detailed scrutiny and far greater preparation. If the Government were serious about considering this, why on earth did they not do so months and months earlier? I am concerned about the regulations, which are indicative of the Government’s irresponsible approach to Brexit as we near the end of the process.

The explanatory memorandum explains that the central purpose of these regulations is to ensure that there is

“little or no distinction between the treatment of economic operators from the EU and other places outside the UK.”

In other words, this mechanism—as far as defence procurement regulations are concerned—provides the brick wall between Britain and the EU and the rest of the world. However, it is important to bear in mind that this issue works both ways. It would not apply simply to companies from abroad—whether outside or inside the EU—that wish to engage in commercial activities here, but would have an impact on British companies’ work in other European countries, which is an important point. The Government correctly argue that the export capacity of British industry in the military sector is significant—not just to the rest of the world, but to our partners in Europe. I am concerned that companies with long-term strategies increasingly oriented towards an export capacity will find trade more difficult if this measure is introduced.

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The hon. Gentleman is absolutely right that this uncertainty is damaging, but should he not take the advice of 57.6% of people in Caerphilly who voted to leave the European Union, and back the deal?

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It is important at this stage in the process that we do not engage in such cheap debating points. We need to look at the nature of our economy and the impact that a no-deal Brexit would have. This is too important for simple political digs or empty rhetoric. We need cool heads and a sharp analysis of what is before us. That is what I am seeking to do, and I hope, in the national interest, that the Government will do so too. We are getting perilously close to the point of no return. We have 46 days. We must take a deep breath, stand back and put the interests of our country and our constituents first.

Why have the Government adopted this approach? The impact assessment says that there are no policy changes, and therefore they do not require a detailed business impact assessment. However, I suggest that it is a policy change because it cuts across what we have been doing and saying for many years in this country. There should therefore be a fully-fledged business assessment so that we can understand the economic consequences of what we are doing. Incredibly, that is lacking. I come back to the point that I made at the start. If we had any sense, and if we were seriously considering a no-deal Brexit, this issue should have been considered in detail months ago—indeed, two years ago. Europe is a vital export market for us, and this will have a big impact.

The Government talk a great deal about competition, but it is worth bearing in mind that 40% of the Ministry of Defence budget is single-sourced. There is no competition; the MOD simply gives the money to a particular company or amalgam of companies. It is therefore important that we question the Government’s commitment to competition.

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I was thinking of the airborne warning and control system, for which there did not appear to be any procurement policy. We just opted for the American option, rather than something that would have benefited employment in this country.

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That is a very good and important example. There was at least one other strong alternative to the Boeing bid for AWACS, but the Government decided not to consider it at all. There was no publicity, openness or transparency; they just came to a cosy little arrangement with an American company, and effectively bought the equipment off the shelf from the United States, with minimal investment in the British economy.

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Would the hon. Gentleman agree that sometimes there can be great benefits to the UK from that? For example, General Dynamics is building a new light tank for the British Army in Merthyr Tydfil, employing 950 people.

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Yes, indeed. I commend the work that General Dynamics is doing, but let us not forget that that company lost out because of the lack of competition for the mechanised infantry vehicle. Again, the Government put competition to one side and came to a cosy little deal with a German-led consortium for the Boxer vehicle, and General Dynamics lost out. It quite rightly said, as Saab and others said about the Wedgetail, that it does not mind losing a bid, but it at least should have the chance to bid openly for it. The Government should be giving contracts to the best companies at the best price to have the best impact on this country’s economy. Sadly, that is not what they are doing.

The draft regulations will transpose into British legislation article 346 of the treaty on the functioning of the European Union—an important article that allows exceptions to competition rules where national security issues arise. However, fleet solid support ships remain an issue: despite representations from Labour, from other Opposition parties and from trade unions, the Government have decided not to issue the contract to a British company. Instead, they are putting it out to international tender, saying, “It’s these terrible European rules that are making us do this—we’re tied into the straitjacket of European competition rules.” But which EU rule are they referring to? Article 346! If their rhetoric is true, why are the Government taking that article en bloc and transposing it into British legislation? For the life of me, I cannot understand it, if they are sincere in their comments about the invidiousness of article 346.

I would very much like to hear the Minister explain how he can square that circle and face both ways at the same time. If the Government were serious about a no-deal Brexit, surely it would have been sensible to take the opportunity to ditch article 346 and have decisions taken in this country, in the interests of British industry and British jobs, rather than putting contracts out to competition. However, I fear that the Minister’s response will confirm that the Government are not concerned about that. They want to ensure as smooth a rhetorical transition as possible, but they have not gone into the depths of detail that are required.

I come back to the point that this Committee and all such Committees are going through a façade, because the Government are not really contemplating a no-deal Brexit; this is all part of blackmailing Parliament to ensure that the Government get their own way. I have raised a couple of points that I would like the Minister to respond to, but I particularly ask him to do his best to refute my last point about the Government’s strategy.

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I call the Minister. [Interruption.] If hon. Members wish to catch my eye, will they at least look at me?

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I apologise, Mr Evans; I might have thought that somebody on the Conservative Benches would want to say something about the draft regulations, but there we go. It is a pleasure to serve under your chairmanship.

I echo the concerns raised by the hon. Member for Caerphilly about how we got into this position. We are now counting down in days rather than weeks and months to Brexit day, yet we still do not have a legislative framework in place to make it work, and we still do not know whether there will be a deal. As the hon. Gentleman said, a lot of this is clearly Government scaremongering to get Members through the right Lobby, at a date yet to be decided, because the prospect of no deal is just so terrifying.

The same comments could apply to a lot of the legislation that is being considered by Delegated Legislation Committees just now. Next week’s recess has had to be cancelled, not because major legislation needs to be debated on the Floor of the House, but because the Government have run down the clock without allowing enough time to lay secondary legislation before Parliament —an indication that their competence in government is disastrously lacking.

It was interesting to hear the Minister speaking about control over procurement reverting to the United Kingdom. Brexit was not supposed to be about bringing control back to the United Kingdom; it was supposed to be about bringing it back to the United Kingdom Parliament. I see no role at all for the UK Parliament among the significant powers that will now be vested in the Secretary of State. Those powers are currently vested in the European Commission, which is held to account in a way in which individual Secretaries of State in this place are not. Perhaps the Government are trying to make it look as if the European Commission’s powers will instead, in a like-for-like swap, be exercised by a Secretary of State. However, an individual Secretary of State is subject to less transparency and parliamentary democratic oversight than the European Commission.

That is particularly the case with defence contracts. The two big excuses that are always given to keep the contents of a contract completely hushed up—at the time and sometimes for years or decades afterwards—are commercial confidentiality and national security. When we get contracts of millions or even billions of pounds where commercial confidentiality and national security can both be played, it is very easy to shut down transparency. It should be no surprise, therefore, that defence contracts form a large proportion of those that should never have gone down the road we took. I hope that the measure is not laying of foundations for yet more scandals, whereby a contractor is not competent and a very expensive buy-out is required in order to get somebody who is fit for purpose and able to do the job.

I welcome the Minister’s admission—if I copied his words down correctly—that the Government currently allow bids from suppliers from outside the European Union. That will come as news to people in Scotland, because five years ago they were telling us that they would not even accept bids from Scotland if we were not part of the United Kingdom. I am pleased that that has been laid to rest, at last.

That is how it should be, because we are purchasing essential equipment for our armed forces and they deserve the best that we can provide. It should not necessarily be about who can provide it at the cheapest price; it should be about who can provide, within the required time, the best equipment and that it will be reliable in intense, testing conditions. Soldiers have died in Iraq because their equipment was not up to standard. We cannot allow that to happen again.

To the extent that the draft regulations fill a gap that the Government have chosen to create in our domestic legislation, I certainly do not oppose them. I am concerned, however, that they simply concentrate further powers among individual Secretaries of State, who historically this Parliament has found extremely difficult to hold to account. I wonder whether in 10 or 15 years’ time we will be looking at a lot more, and even worse, examples than recent ones. Defence procurement decisions have clearly not been made purely in the interest of the defence of these islands and our citizens, but for some other reason that had to be kept under lock and key for the next 20 years.

As I have said, I do not oppose the draft regulations, but the fact that it is necessary to bring them to Committee so close to Brexit day is an admission of incompetence—and nothing less—by the Government.

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I will not detain the Committee for long. Following on from the point made by the hon. Member for Glenrothes, this is not about getting the cheapest equipment, but about getting the best equipment. Although much of the equipment built in the UK is state of the art, the global market may supply particular specialists, such as drones. In the Nimrod contract more than 20 years ago, a political decision to revamp the old Nimrod airframes ended in disaster. Lockheed Martin had a perfectly good alternative that would have meant jobs in the UK for companies like Hunting Aviation at East Midlands airport.

It was mentioned that the Boxer vehicle had been given to a German company. To be fair, it should be made clear that 60% of the value of that project will go to British companies, including BAE Systems, TALIS UK and Pearson Engineering. When we place an order abroad, there is often collaboration. Indeed, the frames for the tank being built in Merthyr Tydfil are being built in Spain. Part of our negotiating strategy is to ensure UK involvement in such projects. I hope that the Committee will understand that the Boxer is not a purely German-built vehicle, but a vehicle with a high degree of UK content. Indeed, if further contracts are awarded around the world for Boxer, we could hope and expect to get a share of that.

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The right hon. Gentleman makes an important point, but it is also significant that recently Rheinmetall has taken over a part of BAE Systems. That is an issue of concern.

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Exactly. The hon. Gentleman is absolutely right, although, in the spirit of collaboration, the new turret for the Warrior, which I think has gone to Lockheed Martin, will involve a gun from Rheinmetall. Germany has a long record of building very good guns, as we have found out to our cost at times, but it is important that we look at that collaborative approach. Indeed, many UK companies, such as BAE Systems, have interests in other factories around the European Union. That should not change following Brexit.

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I am grateful to all hon. Members who have spoken. As they will be acutely aware, delivering the deal we have negotiated with the EU remains the Government’s top priority. However, these amending regulations will provide for continuity and legal certainty in this important area in the event of no deal. It is prudent to plan to ensure that we have some certainty. The hon. Members for Caerphilly and for Glenrothes said this was bad planning. The whole point of the draft regulations is to ensure that we are prepared for every eventuality. I question whether they are massively significant, given that we have tried to replicate as much of the current regulations as possible so the industry knows where it stands and can have confidence that not too much has been changed.

The hon. Member for Caerphilly mentioned concern about the effect of UK businesses not having a legal right to bid when other EU member states procure. I am sure the Committee will be interested to know that between 2011 and 2015, UK defence exports totalled £40.2 billion and contracts from the EU to British companies under the current EU directive were €168 million. That is a significant difference, but regardless of the changes made by the draft regulations, British businesses will still be able to bid. Given the world-class industry and technology we have in this country, I am sure that many of those businesses will be successful.

The hon. Gentleman also mentioned single-source procurement. That is often done either because we need the equipment quickly or because we need the proven capability that is on offer. AWACS was mentioned. I have said on a number of occasions that the capability that is being offered works and is proven. The Australians are using it. Some of our armed forces personnel are out there at the moment learning about the equipment. The hon. Gentleman mentioned the Airbus and Saab alternative, but they have not even put it on the plane yet. We know from experience that when it comes to this sort of equipment, we can spend years and years trying to prove a capability that does not work and ends up costing us billions.

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Does the Minister accept that the American alternative is not currently being sold? They will have to restart the production lines to produce our order.

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Those planes are ready at the moment. Some of them are ready for us at the moment. They are on the production line. That will not be an issue at all. As I said, we are still going through a lot of the assessments, but the point is that the Airbus alternative has not even been proven. This is a capability that we need. I agree completely with the hon. Member for Glenrothes that we need to give our armed forces equipment that they can rely on and depend on. This is a classic example of why we have do that.

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I hear what the Minister is saying, and he may have a case, but would it not have been far better simply to have an open procurement competition under which every competitor could set out what it had to offer and everybody could see which was best?

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It would have taken them some time to prove the capability. The point is that we do not have the time. The E-3 system is not really up to standard, and we need to replace it. That is why, as I say, we look at these situations very carefully.

I am glad that my right hon. Friend the Member for Scarborough and Whitby talked about the Boxer. It is a proven capability, and he is absolutely right that we negotiated for 60% of the supply chain to come from this country. The hon. Member for Caerphilly said that BAE Systems had been taken over by Rheinmetall. This is a joint venture; it is something we should be really pleased about.

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It is the majority shareholder.

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We are seeing investment in this country, and I am surprised that the hon. Gentleman is not welcoming the fact that jobs will be sustained in Telford, and more jobs will be created, because of this joint venture. It is disappointing that Labour Front Benchers are not welcoming this investment in the British defence industry and the jobs it will secure.

Regarding article 346, the whole point is that we have transferred the wording, because in this instance we want that continuity to take place. It also allows us to exempt the need to go into international competition, should there be a national reason why we have to keep that capability within this country. The hon. Gentleman said that we have not gone into the changes in depth, but, as I said in my opening comments, those are for future discussion. Once we have left, we want to have a look at the opportunities available to reform our defence procurement systems.

Finally, the hon. Member for Glenrothes said that the 1958 list will be transferred to the Secretary of State. It is not fair to say that the Secretary of State will not be held to account. There will be many opportunities to hold him to account, including questions in the House and Select Committee hearings, but the most important point is that any changes that the Secretary of State might suggest to the 1958 list would have to go through this House as an SI, and would therefore need the approval of both Houses. It is not fair to say that he can make such changes on a whim. I hope I have answered all of the specific questions, and clarified the implications of the amended legislation.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Defence and Security Public Contracts (Amendment) (EU Exit) Regulations 2019.

Committee rose.

Draft Representation of the People (Election Expenses Exclusion) (Amendment) Order 2019 Draft Combined Authorities (Mayoral Elections) (Amendment) Order 2019 Draft Local Authorities (Mayoral Elections) (England and Wales) (Amendment) (England) Regulations 2019

The Committee consisted of the following Members:

Chair: Mr Adrian Bailey

† Churchill, Jo (Bury St Edmunds) (Con)

† Cunningham, Alex (Stockton North) (Lab)

† Dent Coad, Emma (Kensington) (Lab)

† Dhesi, Mr Tanmanjeet Singh (Slough) (Lab)

† Double, Steve (St Austell and Newquay) (Con)

† Fletcher, Colleen (Coventry North East) (Lab)

† Ford, Vicky (Chelmsford) (Con)

† Graham, Luke (Ochil and South Perthshire) (Con)

† Hands, Greg (Chelsea and Fulham) (Con)

† Hayes, Helen (Dulwich and West Norwood) (Lab)

† Hollinrake, Kevin (Thirsk and Malton) (Con)

† Jones, Mr Marcus (Nuneaton) (Con)

† Lewer, Andrew (Northampton South) (Con)

Monaghan, Carol (Glasgow North West) (SNP)

† Smith, Cat (Lancaster and Fleetwood) (Lab)

† Smith, Chloe (Parliamentary Secretary, Cabinet Office)

† Twist, Liz (Blaydon) (Lab)

Mike Winter, Committee Clerk

† attended the Committee

Seventh Delegated Legislation Committee

Monday 11 February 2019

[Mr Adrian Bailey in the Chair]

Draft Representation of the People (Election Expenses Exclusion) (Amendment) Order 2019

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I beg to move,

That the Committee has considered the draft Representation of the People (Election Expenses Exclusion) (Amendment) Order 2019.

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With this it will be convenient to consider the draft Combined Authorities (Mayoral Elections) (Amendment) Order 2019 and the draft Local Authorities (Mayoral Elections) (England And Wales) (Amendment) (England) Regulations 2019.

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It is a pleasure to serve under your chairmanship, Mr Bailey. The statutory instruments seek to make significant improvements to the electoral framework. Where I can, I will address and explain each of them in order.

The draft Representation of the People (Election Expenses Exclusion) (Amendment) Order 2019 proposes that expenses that are reasonably attributable to a candidate’s disability and that are reasonably incurred are excluded from a candidate’s electoral spending limits. For example, such expenses include, but would not be limited to, British Sign Language interpretation for hearing-impaired candidates or the transcription of campaign material into braille for a visually-impaired candidate. The order will also exclude from electoral spending limits expenses funded from grants provided through the Government’s interim EnAble fund for elected office. That interim fund of £250,000 will support disabled candidates and help to cover disability-related expenses that people might face when seeking elected office.

The Government are absolutely committed to ensuring that the diversity of the UK is sufficiently represented in public office. Although around one in five of the UK population has a disability, disabled people remain insufficiently represented in our Parliaments, Assemblies and councils. The proposed changes will help to create a level playing field between candidates with and those without disabilities, which will enhance equality of opportunity.

The draft Combined Authorities (Mayoral Elections) (Amendment) Order 2019 and the draft Local Authorities (Mayoral Elections) (England And Wales) (Amendment) (England) Regulations 2019 make changes to the rule governing the conduct of elections of combined authority mayors and of local mayors. The instruments remove the existing requirement that each candidate’s home address must be published during the election process and included on the ballot paper at elections of combined authority mayors and local mayors.

These changes are designed to enhance the security of candidates standing at those polls and to deliver commitments made by the Government in response to recommendations made by the Committee on Standards in Public Life. These are two of four instruments on that issue. In December 2018, we introduced two statutory instruments that implemented another recommendation from the Committee on Standards in Public Life in relation to candidates in local government and parish council elections. Since 2010, candidates in UK parliamentary elections have been able to choose for their home address not to be made public at such polls. The changes that we are making across all four instruments—for local and parish council elections and, with these SIs, for combined authority and local mayoral elections—will bring the procedure at those polls into line with what already applies to parliamentary elections.

The instruments before the Committee have quite a wide remit, so let me cover application. The election expenses exclusion order will apply UK-wide to all UK parliamentary elections, including by-elections. In England, the order will also apply to local government elections, Mayor of London elections and London Assembly elections, and to mayoral elections and combined authority mayoral elections. In Northern Ireland, it will apply to Northern Ireland Assembly elections. I plan to lay a second statutory instrument before the House this year to widen the application of that provision to police and crime commissioner elections across England and Wales. The two draft instruments concerning mayoral elections make provision for combined authority and local mayoral elections in England.

For hon. Members who have not already had enough, let me turn to the detail of the proposed changes. The election expenses exclusion order excludes expenses that are reasonably attributable to a candidate’s disability and are reasonably incurred, by substituting a new paragraph 7A in part 2 of schedule 4A to the Representation of the People Act 1983. Part 2 of schedule 4A to the 1983 Act sets out a list of matters that are excluded from being election expenses and that are therefore not taken into account when calculating a candidate’s electoral spending limits. The change ensures parity with electoral spending limits for non-party campaigners. Schedule 8A to the Political Parties, Elections and Referendums Act 2000 excludes reasonably incurred expenses that are reasonably attributable to an individual’s disability from the electoral spending limits of non-party campaigners.

Let me allay any concerns, should the Committee have them, about whether the change will require candidates to disclose any disabilities. It will not, and there will be no legal obligation for candidates to report their disability-related expenses, although they can if they wish.

I also seek to allay concerns that the exclusion could be misused by individuals who want to manipulate their electoral spending limits. The provisions are quite clear that the exclusion can be used only for expenses that are reasonably incurred and reasonably attributable, as I have set out, and there is a robust process around candidates’ spending returns to make sure of that. Any breach of those spending rules can be referred to the police and prosecutors for investigation. In sum, the order will not give candidates with disabilities an advantage, but create a level playing field so that candidates with disabilities are not disadvantaged from standing for election.

On the mayoral elections statutory instruments, currently, candidates standing at those two types of elections are required to give their home address, which appears on certain election documents and the ballot paper. The only current exception to those requirements is someone standing at combined authority mayoral elections, where the mayor would also have police and crime commissioner functions, because such candidates may require their home address not to be made public. Under the proposed changes, candidates at either type of election will not be required to provide their home address on their nomination form or consent to nomination form. Instead, they will be asked to include it on a home address form, which will not be made public.

We recognise that we need to strike a balance between the transparency of the electoral process and the safety of candidates running for public office. It is important for electors to know whether a candidate lives locally and whether they have a link to the area in which they are standing for election. For that reason, if a candidate chooses not to make their home address public, they must state the name of the local authority area in which they live. That will then appear on the ballot paper, the statement of persons nominated and the notice of poll for the election, instead of the candidate’s home address. We are providing that home address forms be available for inspection by certain authorised people, including other candidates standing in the poll.

Let me briefly inform the Committee of the consultations on the orders. On the election expenses order, we consulted with the Electoral Commission, the Welsh Government, the Scottish Government and the Northern Ireland Office. There was also plenty of cross-Government collaboration between the Cabinet Office and the Government Equalities Office. All have been supportive.

On the two mayoral instruments, we have consulted with the Electoral Commission, the Association of Electoral Administrators and the Society of Local Authority Chief Executives. Again, I confirm that there is broad support for the proposed changes. We have also kept political parties informed of the changes through the parliamentary parties panel.

I highlight that it is important that the changes are in place as soon as possible, so that they can apply at the local government elections in May. The instruments come into force on the day after the day on which they are made. I commend them to the Committee.

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I am sure the Committee welcomes the fact that the last general election returned the most diverse House of Commons ever, with more women MPs, more ethnic minority MPs and more MPs who are LGBT. The Minister is right to point out, however, that we still have a long way to go to achieve parity in the number of disabled candidates standing for election and being elected to this place and to councils up and down the country.

The Opposition welcome the instruments before us. We recognise that disabled candidates incur costs because of their disability and that they should not be penalised at election time. The Minister and I have spoken about addresses on ballot papers many times, so that is also a positive change. We recognise that it could help more women and candidates from ethnic minority backgrounds to come forward, because there is a climate of intimidation and threat in our politics.

The Opposition therefore welcome these instruments. I want to speak briefly about both sets of instruments, because it is important that we acknowledge that intimidation, including death threats, criminal damage, sexism, racism, homophobia and antisemitism, has no place in our democracy. I think we are all too aware that candidates are often targeted because of their gender, sexuality or ethnicity. That represents a wider context of discrimination that targets individuals on the basis of their different identities. We should be particularly concerned about the scale of abuse experienced by women MPs, the resurgence of far-right and racist parties across Europe, as well as the worrying emergence of an organised far-right presence on the streets of British cities and towns.

The current legislative requirement for local candidates to disclose their home address on ballot papers has made local candidates and their families vulnerable to abusive activity and in some cases has deterred talented individuals from standing for elected office. The proposed changes should help to reduce that risk and bring the rules for local elections in England in line with those already in place for UK parliamentary elections, as the Minister mentioned. I and the Labour party have called for that on many occasions, so we very much welcome the statutory instruments before us today.

In addition to these measures, we also believe that there should be greater flexibility for electoral agents, to ensure that they do not have to disclose their home address either. The law currently requires election agents to have an office that appears on election imprints. That is often a local political party office or an office set up specifically for an election. However, agents who do not have such facilities are often forced to disclose their home address. It would therefore be welcome if the Minister outlined any steps that she or the Department are taking with regard to electoral agents.

With regard to the access to elected office fund, there are huge financial barriers in place that penalise disabled candidates, which we should acknowledge. The Government’s decision to close the fund will be a lasting stain on their legacy, because their own evaluation, published last year, highlighted the fund’s positive impact on disabled candidates, enabling them to stand for election. That evaluation noted that, in February 2015, the Geneva-based Zero Project, initiated by the Essl Foundation, selected the access to elected office fund as one of the top global innovative policies to support and encourage political participation by people with a disability. Over the past three years, the Government have rightly been under continued pressure to reintroduce that fund.

In September 2015, in a submission to an inquiry by the UN special rapporteur on disabilities, the Equalities and Human Rights Commission said:

“The UK Government should reopen the Access to Elected Office Fund in England, and work with the Scottish and Welsh Governments to explore options for making the scheme, or similar funds, available across Great Britain.”

Civil society groups, such as Disability Rights UK and More United, have also played a vital role by campaigning on this issue. I therefore ask the Minister again: will she restore the access to elected office fund as a matter of urgency?

The exclusion created by the order before us will capture disability-related expenses funded from grants provided by the EnAble fund for electoral office for disabled candidates. This interim fund of £250,000 will provide grants to support disabled candidates and will primarily cover English local government elections in May. Although we welcome the additional funds, the Minister would probably agree that the EnAble fund is not in itself a long-term solution to the substantial under-representation of disabled people in public life. The EnAble fund for elected office runs until May 2020 and is primarily intended to support disabled people seeking election in the May 2019 local elections and the May 2020 police and crime commissioner elections. Therefore, it is not intended to cover those seeking to stand for parliamentary elections. However, paragraph 4.2 of the explanatory memorandum states:

“The territorial application of this instrument is UK-wide. The instrument will apply to candidates standing for Parliamentary elections across the UK”.

Some might argue that there is an increased likelihood of an election before the one scheduled in 2022, so will the Minister provide clarification on those issues?

Concerns have also been raised with me regarding the administration of the EnAble fund and the timing of these draft instruments. The Electoral Commission itself recommends that any changes to election rules should be clear six months before anyone is required to deliver or comply with those rules, so that those in question can be informed and respond accordingly. In these cases, that would have been the September just gone, so will the Minister explain why it has taken so long for these draft instruments to be prepared?

Government delay meant that the fund was launched on 3 December, just five months ahead of the local elections this May. I hope that I will be proved wrong, but my fear is that the current timeframe is too short to support disabled candidates who are not already elected and looking to stand again. We know from the experience in Scotland that the longer the lead-in time, the more successful the scheme will be. The Scottish Government spent a year on promotion and a broader access to politics scheme ahead of the 2017 Scottish local government elections. What steps are the Government taking to promote the new fund and to ensure that aspiring candidates are aware of their rights?

The Local Government Association issued a seriously flawed bidding document that included a requirement that any contractor must support the Government’s vision of shifting the prime responsibility for supporting disabled candidates to political parties. I have been told that that attracted zero bids, which forced the LGA to rewrite the document and start again, deleting that particular requirement. Will the Minister confirm whether that was the case? The revised contract has now been awarded to Disability Rights UK, and the EnAble fund is open for applications. We welcome the fact that the fund is now managed by a deaf and disabled people’s organisation that has an understanding of the barriers that disabled people face.

However, the issue of responsibility is extremely important. Political parties should play a role in supporting disabled candidates. Not only do they have a legal obligation to make reasonable adjustments for disabled members and candidates under the Equality Act 2010, it is also, frankly, the right thing to do. That is why the Labour party established a bursary scheme to support disabled members standing for Parliament following the Government’s decision to freeze the access to elected office fund.

Opposition Front-Bench Members are extremely concerned by the Minister’s shifting the prime responsibility for supporting disabled candidates from central Government to political parties. While all political parties can do more to reduce barriers faced by disabled candidates, the extra campaign costs that disabled candidates incur because of their disability should be met by the Government. The Government’s own evaluation of the access to elected office fund stated that there was a potential risk

“that the parties may do less regarding ‘reasonable adjustments’…with reduced Government funding actually leading to fewer disabled candidates being adopted”.

That will particularly be the case for smaller parties, which will have less money to spend on election expenses, and the same can be said for independent candidates, who will not have access to political party bursary schemes.

It is clear that the draft instruments are needed to make our democracy more representative and to tackle rising security concerns. The Opposition welcome the additional funds that the Minister’s Department is providing through the EnAble fund, but we disagree with the political direction that the Government are taking. I urge the Minister to restore the access to elected office fund immediately, in order to find a long-term solution to this incredibly important issue.

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I will try my best briefly to answer the questions that have been put to me. I welcome the Opposition’s support for the draft statutory instruments. I did not clearly hear the hon. Lady’s third question, and I wonder if she might repeat it for me, so that I can be sure to answer all her questions. I think I got the other six.

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Which one was the third?

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Perhaps if I answer the first and second questions, the hon. Lady will be able to think of the third. I shall return to the others.

The hon. Lady asked how we might protect the home addresses of agents as well as candidates. I have considered that, but I should make the Committee aware that doing so would require primary legislation, rather than secondary legislation, because of where in law agents are legislated for. I assure the Committee that that is being considered, although it is not possible to do inside tonight’s SI.

I will move on to the questions on the draft expenses exclusion order. Secondly, the hon. Lady believes that the predecessor fund—the access to elected office fund—should be reinstated. The Government are committed to the relevant issues, and they are using the interim EnAble fund for elected office to enable them to look at long-term solutions, as it is right to do. I refer to the fund as an interim fund because we want to use it to help people in the 2019 elections, while also allowing for a programme of work with disability organisations, to help political parties to work on improving their ability to support disabled candidates. From that we hope to have political parties offering and advertising support, as well as solutions to help independent candidates. I think that the last of the hon. Lady’s questions was about independent candidates.

The hon. Lady argued that supporting disabled candidates should not be a matter for parties, and that it was for the Government to do the job instead. I suggest that as a point of principle we expect employers and service providers to make reasonable adjustments—a phrase that she rightly used in her question. Given that we expect such action of employers in all other walks of life, I think it is reasonable that we expect political parties to step up and take it for candidates. I stand on a point of principle there, rather than accepting that there is a deficiency in the statutory instrument.

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Just to clarify, political parties absolutely have a role to play, and they should step up, where they are able to. My concern was primarily about smaller political parties, whose election funds are obviously much more constrained than those of the large parties that the Minister and I represent, which have more resources available.

As to the question that was not very clear, it was about the EnAble fund for elected office running until May 2020. Paragraph 4.2 of the explanatory memorandum states that the order is meant to be a UK-wide instrument applying to candidates for parliamentary elections; however, a parliamentary election is not scheduled until after May 2020. I was seeking clarification as to whether the Minister expected the fund to be used at the next general election. Perhaps it was a slightly cheeky question.

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Forgive me, Mr Bailey. I was concentrating so diligently on the hon. Lady’s previous question that I did not catch the detail she was asking for. I think perhaps it is simplest if I write to her on that point, to make sure that the Committee receives a reasonable answer. It comes back to the answer I just gave, which is that we are trying, through the EnAble fund, to create an interim way to support disabled candidates while putting long-term solutions in place. I think that is the right way to go about it.

I hope that what I have told the Committee will provide reassurance about our desire for action to happen during a range of elections. I hope that that will mean we have a good testing ground, so that we can look at solutions across different types of elections. Finally, although it has been noted that the arrangement is to run until 2020, actually it is to run until 2020 or until its total of £250,000 is exhausted. That may assist the Committee’s consideration.

The hon. Lady raised the question of a Local Government Association document, on which I am afraid I cannot give the Committee an answer tonight. I am not aware of it, but I will ask my colleagues in the Government Equalities Office to answer questions on the fund more broadly. The fund itself is not my responsibility, although the election expenses order is, so the hon. Lady may want to direct her question to ministerial colleagues in that Department.

Finally, the hon. Lady asked whether the order had been introduced on the right timeframe, ahead of the May 2019 elections. Although it is always desirable to have matters in hand six months before elections—that is certainly the aspiration that I work to and that the Electoral Commission has highlighted—I think that the order is in place in sufficient time. I hope that the answers I have given to the Committee about how we are using the fund and the order to encourage the development of longer-term solutions give confidence that we are looking at how to promote the fund, advertise the fund and ensure people are aware of how to use the fund. Ultimately, I think that the measures are in place at the right time for the elections, and I hope that the measures will be successful. I commend all three statutory instruments to the Committee, and I hope that what I have said has been helpful.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Representation of the People (Election Expenses Exclusion) (Amendment) Order 2019.

Draft combined authorities (Mayoral elections) (Amendment) Order 2019

Resolved,

That the Committee has considered the draft Combined Authorities (Mayoral Elections) (Amendment) Order 2019.—(Chloe Smith.)

draft local authorities (mayoral elections) (england and wales) (amendment) (england) regulations 2019

Resolved,

That the Committee has considered the draft Local Authorities (Mayoral Elections) (England and Wales) (Amendment) (England) Regulations 2019.—(Chloe Smith.)

Committee rose.

Draft Ecodesign for Energy-Related Products and Energy Information (Amendment) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Ian Paisley

† Beresford, Sir Paul (Mole Valley) (Con)

† Blunt, Crispin (Reigate) (Con)

† Cowan, Ronnie (Inverclyde) (SNP)

† Glindon, Mary (North Tyneside) (Lab)

† Harris, Rebecca (Lord Commissioner of Her Majesty's Treasury)

† Jones, Mr David (Clwyd West) (Con)

Jones, Graham P. (Hyndburn) (Lab)

† Latham, Mrs Pauline (Mid Derbyshire) (Con)

Mahmood, Shabana (Birmingham, Ladywood) (Lab)

† O'Brien, Neil (Harborough) (Con)

† Perry, Claire (Minister for Energy and Clean Growth)

† Shapps, Grant (Welwyn Hatfield) (Con)

† Smith, Nick (Blaenau Gwent) (Lab)

† Stevens, Jo (Cardiff Central) (Lab)

† Swayne, Sir Desmond (New Forest West) (Con)

† Whitehead, Dr Alan (Southampton, Test) (Lab)

† Yasin, Mohammad (Bedford) (Lab)

Kenneth Fox, Committee Clerk

† attended the Committee

Sixth Delegated Legislation Committee

Monday 11 February 2019

[Ian Paisley in the Chair]

Draft Ecodesign for Energy-Related Products and Energy Information (Amendment) (EU Exit) Regulations 2019

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I beg to move,

That the Committee has considered the draft Ecodesign for Energy-Related Products and Energy Information (Amendment) (EU Exit) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Paisley. The draft regulations were laid before the House on 19 December last year. I will set out the framework for why we are here, and then plunge into the detail of what we want to introduce.

Obviously, there is a strong belief across the House that a deal with the EU is in our mutual interest, but it has always been the case that a responsible Government must plan for all eventualities, including a very unwelcome no-deal outcome. The draft regulations will ensure that in such a scenario our eco-design and energy labelling legislation will continue to function effectively.

Committee members will be aware that in recent years the EU has introduced, through the eco-design directive and energy labelling regulation frameworks, a suite of product-specific regulations that have been of enormous benefit to consumers and businesses alike. They have worked to minimise the costs and environmental impacts of products used both in the home and in businesses by setting minimum performance requirements. They also help consumers, as anyone who has gone to buy a new appliance will know, to make informed purchasing decisions through universal energy labelling.

The suite of regulations is one of the reasons that bills have gone down since 2012, and will save household consumers about £100 on their annual energy bills by 2020. It will also lead us to save about 8 million tonnes of carbon dioxide in 2020. The policy has therefore been one of the most cost-effective ways of meeting our carbon budgets.

The policy has also served a very strong purpose for industry. It has allowed companies to set minimum performance requirements that have helped them to drive innovation and increase competitiveness, and to export to the world’s largest and most successful single market. It is therefore imperative that we can continue to deliver those benefits in the unwelcome event of a no-deal Brexit.

Using the power in the European Union (Withdrawal) Act 2018, the draft regulations will amend EU-retained law and ensure that eco-design and energy labelling requirements will be the same as they are now in any outcome. That will give businesses and consumers the certainty that they need.

There is a suite of amendments. The first is on a technical labelling term, and replaces “Union market” with “UK market”. Without that tiny amendment, less efficient and more polluting products could be put on the UK market, meaning that consumers who thought they were buying something energy efficient were not. That would be an unwelcome outcome.

The second amendment transfers powers held by the Commission to the Secretary of State—repatriating sovereignty—to introduce eco-design and energy labelling product-specific regulations for the UK market after exit. The Secretary of State would use that power in the event of no deal to lay before Parliament new energy labelling and eco-design product-specific regulations that the UK voted for and helped to shape as a member state. Because they will enter into force and apply after exit day, those regulations have not been saved in the UK statute book by the withdrawal Act. That is part of the reason for introducing today’s legislation.

One of the questions I have received is whether Brexit—whether orderly or disorderly—will mean the UK rowing back in any way on its climate change commitments, including commitments to transparent labelling and design. The answer is absolutely not. Not only will our existing eco-design and labelling requirements stay the same in the eventuality of our having to use the provisions in the draft regulations, but we have been very clear that we wish to be more ambitious than the EU in our climate change commitments, as we have been, and as we will continue to be regardless of the shape of our relationship after exit day.

The third aspect of the draft regulations is the EU product database. Suppliers placing products on the UK market have to enter product information into the EU product database—an online portal, which went live in January of this year, where all the market surveillance authorities can view product information uploaded by suppliers. If we have a no-deal Brexit, it will be replaced by a UK market surveillance authority that will request technical product information directly from the suppliers, as the authorities have historically done.

The next three amendments relate to changes that the Government are making to the trading of goods subject to EU-wide product-specific rules. They are not specific to this SI. The fourth amendment is the UK regime for third-party assessment. One of the changes pertains to the conformity assessment of goods to ensure they meet relevant requirements. After a no-deal exit we would have a UK-only system for conformity assessment. Products needing to be assessed by a third party in order to show compliance with UK legal requirements would be assessed by UK testing bodies called “approved bodies”. However, to minimise disruption and any burdensome red tape, businesses would be able to continue to use EU testing bodies when selling their goods to the EU after exit. That is intended to apply only for a time-limited period.

The fifth amendment is a new UK conformity-marking procedure. After exit, if we had no deal, a new UK marking would need to be affixed to products to indicate conformity with UK requirements. This would replace the CE marking that members of the Committee might be familiar with, which indicates conformity with EU requirements. Again, to ensure continuity and that manufacturers do not face a huge and unwelcome burden of regulation should we have no deal, in opposition to what they were promised, most manufacturers will be able to use the CE marking for the UK market, again for a time-limited period. The sixth amendment is a new UK regime of product testing standards. This SI carries across the current list of EU harmonised standards used for the verification of compliance of products with EU legal requirements, but renames them UK designated standards.

Finally—I am sure this will come as a welcome relief to the Committee—the regulations make tiny, minor changes to update our domestic energy labelling regulations to ensure market surveillance can carry out its enforcement activities on the labelling of household lamps and electric ovens. They are routine changes not related to Brexit. We felt it was a good use of the Committee’s time to debate that change along with the others.

These regulations are an appropriate and necessary use of the powers in the withdrawal Act and will maximise continuity in eco-design and energy labelling regulations should we have the unwelcome outcome of a no-deal Brexit. I commend them to the House.

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It is a pleasure to serve under your chairmanship, Mr Paisley. I note that you can get from one end of the Committee corridor to the other far more quickly than I can. That is something to bear in mind for future meetings.

I find this evening’s discussion quite complex, and not only because of the complexity of what is before us. By the way, I think I will be saying this fairly regularly in Delegated Legislation Committees: this matter should not be before us in the shape of an SI. We are increasingly getting to the position where we cannot properly scrutinise these matters. This is one example of that. I find the subject quite complex not because of the complexity of the stuff before us, important though that is—I thank the Minister for providing a rapid guide to it in its complexity—but because of what might happen in terms of eco-design, energy labelling, and, as the Minister mentioned, the CE label mark in the event of a no-deal Brexit. What will happen in terms of the operation of those different marks and their acceptability? The Minister mentioned that the CE labelling would be acceptable in the UK for a limited period, but we have had no clarification of what the regime for energy labelling, for example, is likely to be.

The legal position immediately after a no-deal Brexit is that, even though the standards will be the same, those EU labels will not be acceptable in the UK, and vice versa. Third parties, certainly after a short period, will have to undertake two separate regimes of labelling, even though the standards may be identical. As far as I understand it, there has been no discussion of how those labelling arrangements might be acceptable on an interchangeable basis, provided that the regime is the same.

I welcome the fact that the Minister assured the Committee that, as we adopt these new requirements in the event of a no-deal Brexit, the various regulations that comprise the eco-design and eco-labelling specifications will not be in any way amended as a result of the draft regulations—that is to say, the arrangements will be identical in substance, as far as having the same regime is concerned. If we are to have anything that is usable immediately post a no-deal Brexit, it will be very important that it is absolutely clear that EU and UK arrangements are identical. If the Minister can shed a little light on that, I would be very grateful.

Let us assume that the arrangements will be identical. In that case, we have the following position: there is a body of regulations and arrangements that makes the design of energy-related products fit for sale and use within the EU. Obviously, under such circumstances as we are discussing, the eco-design arrangements regarding items fit for sale and use would hopefully be grafted wholly on to the UK position.

Then we have the eco-labelling information, which arises from the eco-design. It is the sticker that we see on fridges, freezers and other items that gives us the energy rating and other things. As the Minister said, that will be subject to a redesign by the EU shortly after we will have left in the event of a no-deal Brexit. When that happens, that will presumably also have to be incorporated into UK regulations in order to keep that UK-EU equivalence going.

The third pillar of this, although it is not exactly what the draft regulations are about, is the CE labelling, which sits over all the other things. The eco-design is what makes the product saleable. The eco-labelling is the information that should be provided to the public as a result of the design. The CE label is what makes anything, including energy-related products, saleable and useable throughout the EU. Anything that will be sold in the EU has to have that CE label on it.

In the explanatory memorandum there is a passing reference to the fact that all that will be subject to the CE marking framework. It indicates that the UK marking that will replace the CE marking will be introduced by the draft Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019. My understanding is that until that statutory instrument is introduced and replaces the CE marking with a UK marking, the rest of this falls down because they are all subject to that arrangement. Although that SI has been published, I understand that it has not been laid or discussed in Committee.

It is rather important that we receive some kind of assurance that that statutory instrument will go through before the possible occurrence of a disorderly Brexit. If it does not, the set will be incomplete. What we are discussing will have no substance because there will not be a regime to enable the CE marking that oversees the whole process to be replaced with a UK marking. The Minister says the UK has indicated that there will be a time-limited period—I do not know whether that is unilateral or negotiated and whether it will be months, years or weeks. It would be helpful for the Minister to give an indication of how that might work.

There is likely to be a pretty chaotic arrangement to determine who will have what standards affixed to their products for sale in the UK from Europe. A European piece of electrical goods sold in the UK will have to have a European energy standard attached to it and, presumably, on the other side, an identical UK thing stuck on. I hope the eco-design will be the same, although there are indications in this SI that the Secretary of State will have powers to alter those arrangements if necessary. I would have thought that the Secretary of State would do such a thing at his or her peril, inasmuch as that would throw out the possibility of any alignment of standards for future reference out the window.

That emphasises the need to keep the arrangements aligned, because I anticipate that there will have to be discussions and arrangements for how those things work in the long term. These regulations provide no solution to that. All they do is provide a regime that allows standards to be maintained in the UK; they give no indication of how the trading arrangements will work from the EU to the UK, the UK to the EU and third parties to both the UK and the EU in future. That is a particularly dangerous area for us to go into.

Although I understand that these regulations are necessary to align with what exists in the EU, they lack clarity about how the regime will work in the longer term. Does the Minister have any intention to make further clarifications, or will further statutory instruments come our way to give us further definitions? One has to be in the pipeline very shortly in order to sort out the CE regulations, but there may be others to sort out those trading regulations. I am interested to hear from the Minister whether it is the Government’s intention to clarify any of those positions about what is acceptable for trading purposes in different parts of the UK.

My reading is that it is not about whether arrangements themselves are parallel and equal in their effect but about whether, if a label is placed on a sale item in the UK or the EU and that label is not valid, even if the background is, the product can be sold. Unless there are good arrangements at least for the time-limited period the Minister mentions, or better oversight arrangements for that trading, even with the regulations in place we are potentially in for a period of complete chaos. Potentially, goods will be prevented from going into a country or an area as a result of people not having the right bit of labelling on them, even if the regulations are, as the Minister indicates, good and sound regarding the environmental and energy consequences of the sale items.

Although the Opposition do not intend to oppose the regulations, we think that a lot remains to be done to clarify how the arrangements will work. I look forward to hearing from the Minister whether that work will be done in time for the Brexit we all hope will not occur on 29 March—a disorderly Brexit that causes these problems to arise in the first place.

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I do not see anyone else energetically bobbing to catch my eye, so I call the Minister.

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I wonder why, Mr Paisley. I thank the hon. Gentleman for his usual thoughtful and in-depth analysis and scrutiny. I will try to answer some of his questions and then explain why I cannot answer them all.

He asked a question that comes up reasonably frequently in these Committees: why are the Government using this form of legislation and not primary legislation? The response in this case, as in many of the others, is that the European Union (Withdrawal) Act is a wide-ranging Act that effectively allows us to transpose EU legislation, with tweaks, into UK statute. In this case, we are making technical fixes to retained law to ensure that the functioning statute book would work if we were to have a no-deal exit.

The hon. Gentleman raises valid points about the intent of policy and its design. There is no change in policy intent. If we were to go down that route and create a conforming or, in some cases, diverging, group of regulations, that would be subject to further primary legislation. However, I want to reassure the Committee that the instrument has been subjected to the usual detailed scrutiny provided by the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee. Members of both those Committees deserve our thanks for what can be a thankless task. They are scrutinising well and passing things with, if you like, a bill of health. We are where we are with introducing legislation.

The hon. Gentleman asked an important question about time-limiting periods and about what happens immediately. We have always said that in the event of a no deal we will have a continuity principle, with no divergence on exit day between UK and EU requirements. That is in the best interests of business, and we are anxious to avoid any increase in red tape or any consumer confusion arising from the decision. There would be a continuity principle on day one and, as we set out in our technical notice on 13 September 2018, we would then allow a grace period in which products assessed by EU testing bodies, those bearing the CE mark and those meeting EU requirements could continue to circulate in the UK. If we were then to change that or to set a time-limited closure for those allowances, we would go through the usual process of consulting businesses heavily.

As I think the hon. Gentleman alluded to in his closing remarks, this matter has material consequences for other members of the EU, as well as for the UK. A disorderly, no-deal Brexit is not in the interests of any member of the EU, because the millions and millions of consumer goods items that are manufactured and imported into the UK would be subject to confusion and a loss of consumer confidence. That is why, when we talk about no deal, we must get the message out very clearly that it is a real problem for anyone hoping to export to one of the continent’s largest markets.

The hon. Gentleman rightly alluded to a related SI, the draft Product Safety and Metrology etc. (Amendment etc.) (EU Exit) Regulations 2019, which are part of this suite of regulations. I can assure him that that SI was laid last week on 7 February, and I am sure he looks forward to debating it very shortly—I cannot wait. Essentially, if we were going down this route of being able to diverge, we would potentially have the opportunity to review our own testing and marking limits.

I believe in theory there is nothing to stop us adopting the CE mark through negotiation, if it was a trusted mark, assuming that we had agreement on what that meant in terms of testing standards, but those will be decisions that we will take in the interests of the UK, based on what works for our businesses and our public consumers. We would work to minimise disruption to ensure that those changes could be usefully made.

I thank the hon. Gentleman for allowing us to proceed with the regulations, which are an important part of our no-deal preparation. Of course, that brings home once again just what myriad tasks are involved in unpicking 40 years of close conformity; it is my strong belief that this would be a most undesirable outcome for the continent and for the UK, but any responsible Government must prepare for all eventualities. On that basis, I commend the regulations to the Committee.

Question put and agreed to.

Committee rose.