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General Committees

Debated on Tuesday 26 February 2019

Delegated Legislation Committee

Draft Local Elections (Northern Ireland) (Election Expenses) Order 2019

The Committee consisted of the following Members:

Chair: Ian Paisley

† Courts, Robert (Witney) (Con)

† Coyle, Neil (Bermondsey and Old Southwark) (Lab)

Green, Kate (Stretford and Urmston) (Lab)

† Morden, Jessica (Newport East) (Lab)

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

† Phillips, Jess (Birmingham, Yardley) (Lab)

† Philp, Chris (Croydon South) (Con)

† Pursglove, Tom (Corby) (Con)

† Slaughter, Andy (Hammersmith) (Lab)

† Smyth, Karin (Bristol South) (Lab)

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

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

Thomas, Gareth (Harrow West) (Lab/Co-op)

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

† Turley, Anna (Redcar) (Lab/Co-op)

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

Whittingdale, Mr John (Maldon) (Con)

Adam Evans, Committee Clerk

† attended the Committee

Fourth Delegated Legislation Committee

Tuesday 26 February 2019

[Ian Paisley in the Chair]

Draft Local Elections (Northern Ireland) (Election Expenses) Order 2019

I beg to move,

That the Committee has considered the draft Local Elections (Northern Ireland) (Election Expenses) Order 2019.

It is good to have you in charge of us on this bright and sunny Tuesday morning, Mr Paisley. Given that you are the only person in the room who represents a Northern Ireland constituency, it is particularly fitting that you are in charge of our deliberations.

This is, I hope, a fairly straightforward measure, in that it is already in place for a great number of other elections in the United Kingdom. It is in place for parliamentary elections and Stormont Assembly elections in Northern Ireland, as well as for Scottish parliamentary elections and council elections in England.

Very simply, on the declaration of expenses that every candidate has to make, once the measure is in place those candidates will not have to count towards their election expenses control total any disability-related expenses. I hope everybody would agree that that is only fair and just. It will ensure, for example, that a candidate who has to incur extra expenses for mobility costs, or whatever it might be, is not at an electoral disadvantage as they run their campaign. [Interruption.] I see an intervention brewing.

It has brewed. I just want a quick clarification. Is there a reason why the order refers to the Disability Discrimination Act 1995 and not to the subsequent legislation that has replaced it for the rest of the UK?

As I understand it, the important thing is to take whatever is currently operative for Northern Ireland piece by piece and clause by clause. In many cases, bits of Acts have been replaced by subsequent Acts, but on occasion old sections are still in effect for specific points. I can get the hon. Gentleman a more detailed answer if he absolutely needs chapter and verse and the marshalled list, but that is what is happening in general. The important thing is that the order has to work technically, and it therefore has to take on and amend whatever piece of legislation is currently in force.

I was part way through explaining that the order means not only that candidates who have disability-related expenses will not have to count them towards their election expenses total or declare them, but that personal expenses—this applies to everybody, whether they have a disability or not—will be exempt from the overall expenses control total, although those will have to be declared. As I said, those measures are in place for a wide variety of elections in the UK.

The order has to be made here in the Westminster Parliament because this is not a devolved matter in Northern Ireland. Therefore, constitutionally, it rightly falls to us to put it through. It will bring everything into line and, crucially, it will do so in time for the local elections. We clearly need to get it in place before the start of the election expenses control period, which will begin later in March.

With that, Mr Paisley, I propose to do something unusual for a politician, which is to stop talking and lay the room open to other people’s contributions.

It is a pleasure to serve under your chairmanship, Mr Paisley. Colleagues will be pleased to hear that I will not detain the Committee too long.

It is right, of course, to bring the law in Northern Ireland in line with the rest of the United Kingdom. Obviously, we want to encourage and support all disabled candidates to stand and to represent their various constituencies.

My hon. Friend the Member for Bermondsey and Old Southwark has some expertise in this area. When we were going through the order, it was quite difficult to understand the previous legislation in this area. It would be helpful, in time, to make sure that we are all clear on exactly what we are amending, if that has not been made clear.

It is right for us to debate the order, as it is not a devolved matter. Of course, there are many devolved matters that are not being dealt with in this place that are of great importance to people in Northern Ireland. It is of the utmost importance to get the Assembly and Northern Ireland politics working, so that what happens in our constituencies is replicated across Northern Ireland. However, on this matter, we support the order.

I am delighted that there is cross-party consensus on this matter. I echo the hon. Lady in saying that there are many devolved matters that we all want to see dealt with by a properly constituted devolved Assembly in Stormont. Bring on that day! It cannot happen soon enough for all of us. That aside, since it is not directly relevant, I commend the order to the Committee.

Question put and agreed to.

Committee rose.

Draft Mobile Roaming (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: James Gray

Abrahams, Debbie (Oldham East and Saddleworth) (Lab)

† Afriyie, Adam (Windsor) (Con)

† Ali, Rushanara (Bethnal Green and Bow) (Lab)

† Bacon, Mr Richard (South Norfolk) (Con)

† Bruce, Fiona (Congleton) (Con)

† Byrne, Liam (Birmingham, Hodge Hill) (Lab)

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

† Day, Martyn (Linlithgow and East Falkirk) (SNP)

† Docherty, Leo (Aldershot) (Con)

† Eagle, Maria (Garston and Halewood) (Lab)

† Elmore, Chris (Ogmore) (Lab)

† Fellows, Marion (Motherwell and Wishaw) (SNP)

† Freer, Mike (Lord Commissioner of Her Majesty's Treasury)

† Goldsmith, Zac (Richmond Park) (Con)

† Green, Chris (Bolton West) (Con)

† James, Margot (Minister for Digital and the Creative Industries)

† Smeeth, Ruth (Stoke-on-Trent North) (Lab)

Anwen Rees, Committee Clerk

† attended the Committee

Seventh Delegated Legislation Committee

Tuesday 26 February 2019

[James Gray in the Chair]

Draft Mobile Roaming (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Mobile Roaming (EU Exit) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Gray.

I am aware of the level of interest in this statutory instrument and by laying it under the affirmative procedure, the Government welcome full scrutiny of the measures. The draft regulations were laid before the House on 4 February.

Leaving the EU with a deal remains the Government’s top priority. Nothing has changed about that. However, the Government must plan for every eventuality, including a no-deal scenario. If the UK were to leave the EU without an agreement in place, this instrument would provide legal clarity for mobile operators and their customers on the regulations for the use of mobile services when travelling in the EU.

The draft regulations were introduced under section 8 of the European Union (Withdrawal) Act 2018 to correct deficiencies in the statute book that will result from the UK exiting the European Union. They will amend EU retained law on roaming by removing obligations that will no longer be enforceable once the UK leaves the EU’s single market. They also retain important consumer protections. A technical notice was published on 13 September and has subsequently been updated. It provides clear information to mobile operators, consumers and businesses on what the UK’s exit from the EU means for mobile roaming regulations. It also outlines what this instrument aims to do.

Before outlining the details of the draft instrument, it may be helpful if I give Members some context about mobile roaming services and the European law that currently applies. Mobile roaming is a service that enables consumers to use their mobile devices to make calls, send texts and use data services outside the UK. Roaming offers are underpinned by commercial agreements between UK operators and operators in other countries, which allow customers to use their networks at an agreed price. The EU roaming regulation reinforces the EU’s single market by capping the amounts operators can charge each other when customers use their networks. Only by limiting those wholesale rates can operators guarantee surcharge-free roaming to their customers.

Once we leave the EU, the UK will not be part of the single market, and that means it will not be possible to limit the charges that European operators place on UK mobile companies. If British operators were forced to offer surcharge-free roaming regardless of how much they themselves were charged, it could have damaging consequences for UK mobile operators and consumers. The result of that one-sided regulation would be either price rises for consumers across all mobile services or the removal of roaming altogether from some packages. Neither of those outcomes is fair or in the interests of UK companies or consumers.

However, the Government want to keep consumer protections in place. There are many consumer protections that are not dependent on our membership of the EU and that can be retained, such as the requirement of a financial limit on data usage, transparency obligations and support for customers at risk of inadvertent roaming.

The Government are legislating to make sure that the requirement on mobile operators to apply a financial limit on mobile data usage while abroad is retained in UK law. The limit will be set at £45 per monthly billing period, which is the same limit that is currently in place. After reaching the limit, the customer is not able to consume more data unless they make an active choice to do so. That will apply worldwide, not just in the EU and the European economic area.

We are also legislating to ensure that customers continue to receive alerts at 80% and 100% of their data usage. Again, that will benefit customers travelling anywhere in the world.

In addition, the EU roaming regulation requires operators to take reasonable steps to protect customers from paying roaming charges for inadvertently accessing roaming services, such as when a phone used in a border region of one country picks up the mobile signal from a network based in another. We know that that affects some people in Northern Ireland, so we will keep obligations on mobile companies to protect customers from paying charges for inadvertently accessing roaming services.

Those measures mean clarity and certainty for consumers and businesses. They make sure that mobile users are able to manage their spending and data usage. They are working well for consumers at present and can work well after the UK leaves the EU. The draft instrument will therefore retain those provisions. The retained provisions will continue to be enforceable after we leave the EU by the regulator, Ofcom.

Leaving without a deal would not prevent UK mobile operators from making and honouring commercial arrangements with mobile operators in the EU and beyond to deliver their services as customers expect, including roaming arrangements. The availability and pricing of mobile roaming in the EU after a no-deal exit would be a commercial question for mobile operators. Many mobile operators, including Three, EE, O2 and Vodafone, which together cover more than 85% of mobile subscribers, have said that they have no current plans to change their approach to mobile roaming after the UK leaves the EU.

We are committed to ensuring that the law on mobile roaming continues to function after we leave the EU. The draft regulations will help that to happen by correcting deficiencies in existing legislation. I commend the draft regulations to the Committee.

It is a pleasure to serve under your chairmanship, Mr Gray.

In front of the Committee is another example of how ill-prepared the Government are for a no-deal situation, which is why the Prime Minister should have moved much earlier to take no deal off the table.

The draft instrument enshrines several important proposals, such as the need for transparency to protect consumers, but it falls hopelessly short of the level of consumer protection we ought to be able to promise our constituents in the event of a no-deal Brexit. In particular, it proposes an extraordinary degree of deregulation, which will allow the protection against exorbitant roaming charges to be stripped away from our constituents in the event of a no-deal Brexit.

I do not accept the Minister’s argument that it was too difficult to broker some kind of agreement with UK mobile companies, which are big, global and highly profitable firms. I therefore do not accept that the consequences that she spelled out will come to pass if we do not pass the draft instrument. That is simply a failure of policy work and of political imagination.

The Opposition cannot support a draft instrument that will shear away protections that many of our constituents have against exorbitant charges while travelling through Europe. We will therefore oppose the draft regulations.

It is a pleasure to serve under your chairmanship, Mr Gray.

I am grateful for the Minister’s summary of the position. However, I find myself in complete agreement with the Opposition spokesperson, and I cannot support the draft instrument. It highlights the absolutely chaotic consequences of a no-deal situation. It will remove the requirement for UK mobile operators to guarantee surcharge-free roaming, and it gives some certainty to mobile operators, which are multinational conglomerates, but no certainty to our constituents.

Worryingly, it gives no certainty to our constituents who run small businesses, who have higher data use and who will be required to use their mobile phones while in Europe. It has been estimated that if the maximum costs prior to 2017—when roaming charges were scrapped —were brought in, they could be looking at additional costs of around £778 for a month in Europe. That would be catastrophic for a small business. The complication is even worse for people in Northern Ireland and the Republic of Ireland, who may regularly work across the border. I cannot support that situation. I will be voting against the statutory instrument.

We heard earlier in the month that two of the 12 major mobile firms were committed to keeping roaming free, and the Minister made reference to four companies having no current plans to change their practices. I will sum that up by saying that I have no current plans for dinner tonight, but I am definitely having one, so I am not convinced by what they say.

I thank Members for their remarks. We are supportive of the regulations because we believe, given that the country has decided to leave the European Union, that we are at least protecting consumers against bill shocks and inadvertent roaming.

The right hon. Member for Birmingham, Hodge Hill asked why we cannot impose a price control. If we were to try to do that, it would result in either the company’s entire user base having to accept higher prices or individual users who partake in roaming having to pay higher prices. For the benefit of consumers, we have put in place the monthly cap of £45, at which point they are notified that they are running towards a higher bill. They then have to exercise choice as to whether they want to use more data or use their phone further during their travels.

The Government are prepared to accept caps on energy prices, yet they are not bringing that principle to mobile phone policy. If we have energy caps, why can we not have mobile phone caps?

I recall that an argument against energy caps was that they would establish a precedent. The Competition and Markets Authority found a vast amount of consumer detriment in energy. Many things were tried to get energy companies to be fairer in their billing practices. In the end, a price cap was agreed. It is too soon to assess the outcome of that decision, and it is certainly too soon to apply it at random in other markets.

We have introduced safeguards and the Regulatory Policy Committee assessed the impact assessment and made a conclusion on whether prices may rise in the future. I appreciate the comment by the hon. Member for Linlithgow and East Falkirk that the fact that companies have no plans to introduce price rises is no guarantee, but those companies have made that statement of good intent. They do not want to raise prices for their consumers. We must not force operators so that they are not effective in the future.

I have explained why we have not introduced price controls. It is a commercial matter—this is a market. We have sought to provide as much protection as possible, but the ultimate protection against roaming charges lies with the country staying in the single market, which it has taken the decision not to do. In those circumstances, the regulations are the best possible outcome for consumers, and I commend them to the Committee.

Question put.

Committee rose.

Draft Electricity and Gas etc. (Amendment Etc.) (EU Exit) Regulations 2019 Draft Electricity network codes and guidelines (Markets and trading) (Amendment) (EU Exit) Regulations 2019 Draft Electricity and gas (Market Integrity and Transparency) (Amendment) (EU Exit) Regulations 2019 Draft Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 Draft Electricity Network Codes and Guidelines (System Operation and Connection) (Amendment Etc.) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Sir Graham Brady

† Baron, Mr John (Basildon and Billericay) (Con)

† Brown, Alan (Kilmarnock and Loudoun) (SNP)

† Cowan, Ronnie (Inverclyde) (SNP)

Efford, Clive (Eltham) (Lab)

† Grant, Mrs Helen (Maidstone and The Weald) (Con)

Grogan, John (Keighley) (Lab)

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

† Morris, Anne Marie (Newton Abbot) (Con)

† O'Brien, Neil (Harborough) (Con)

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

† Reeves, Ellie (Lewisham West and Penge) (Lab)

† Rowley, Lee (North East Derbyshire) (Con)

† Shapps, Grant (Welwyn Hatfield) (Con)

† Smith, Nick (Blaenau Gwent) (Lab)

† Tredinnick, David (Bosworth) (Con)

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

Williams, Dr Paul (Stockton South) (Lab)

Bradley Albrow, Committee Clerk

† attended the Committee

Sixth Delegated Legislation Committee

Tuesday 26 February 2019

[Sir Graham Brady in the Chair]

Draft Electricity and Gas etc. (Amendment etc.) (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Electricity and Gas etc. (Amendment etc.) (EU Exit) Regulations 2019.

With this it will be convenient to consider the draft Electricity Network Codes and Guidelines (Markets and Trading) (Amendment) (EU Exit) Regulations 2019, the draft Electricity and Gas (Market Integrity and Transparency) (Amendment) (EU Exit) Regulations 2019, the draft Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019 and the draft Electricity Network Codes and Guidelines (System Operation and Connection) (Amendment etc.) (EU Exit) Regulations 2019.

It is a real pleasure to serve under your chairmanship on this sunny day, Sir Graham.

The instruments are all made under the European Union (Withdrawal) Act 2018 and were laid before the House on 30 January. I apologise to the Committee for the fact that they have been bundled together, but I commend my parliamentary team, the drafters and the scrutiny Committees for doing a very efficient job of preparing these necessary instruments to assist in our preparation for a no-deal Brexit, in what I hope the Committee agrees was a timely and efficient manner.

I assure the Committee that my Department is working to ensure that our energy legislation continues to function effectively after exit day, regardless of whether there is a deal or what form it takes, so that consumers continue to benefit from reliable, affordable and clean electricity and gas. A significant part of the legislation that underpins our energy market takes the form of direct EU legislation. The instruments will transpose that legislation directly into domestic law after our departure as retained law under the terms of the 2018 Act, as we have done with so many pieces of EU legislation.

As in many other instruments considered by Committees like this one, we have had to make certain minor amendments to the legislation to ensure that it continues to function when transposed into UK law. Following the continuity principle that we have set out for our legislation from day one after exit day, we are maintaining continuity where appropriate but making the necessary tweaks to ensure that the legislation remains effective.

The instruments address a range of highly technical issues, from cross-border trade to the energy market objectives of regulators. In the event that we leave the EU without a deal, they will remove inoperabilities in retained EU law, such as references to the EU or EU institutions that would make no sense following EU exit. They will ensure that in the event of no deal, we will retain the regulatory functions and frameworks that we need to keep Great Britain and Northern Ireland’s electricity and gas markets working effectively, facilitating continuity. We have prepared them extensively to minimise disruption and uncertainty.

The instruments will make similar—although not always identical—amendments to legislation applying to Northern Ireland and to Great Britain. One of our aims is to ensure continuity in the retained EU legislation that applies right across the UK, while recognising the unique nature of the single electricity market on the island of Ireland, which is constituted as an integrated market north and south of the border. I want it to be absolutely clear that although the instruments will not provide insurance against all the risks that we would run in a no-deal exit that would undermine the legal basis of the single electricity market, they will facilitate the necessary steps to ensure that such a situation is not prolonged. I reassure the Committee that we have worked closely with Ofgem in England, Wales and Scotland, and with the Department for the Economy and the Utility Regulator in Northern Ireland.

As the European Statutory Instruments Committee recognises, the instruments are

“technically modest”


“the changes are necessary to prepare the statute book for the possibility of a no-deal”.

Let me focus on the most significant changes that they will deliver.

Is the Minister basically confirming that should there be no deal, we will be fully prepared—at least from the point of view of her Department’s responsibilities—for such an outcome?

I assure my hon. Friend that my Department has been at the forefront of preparation across Whitehall for the event of a no-deal Brexit. We have introduced a number of legislative instruments, some of which I have taken through the House myself, and we have done lots of work with third parties and stakeholders. The inescapable fact is that we do not have an agreement about an ongoing legal basis on which the single electricity market in the island of Ireland will operate, and that is a real concern. We can take legislative powers to mitigate the worst impacts of that, but they will not be taken before exit day because other even more urgent things are ahead of them in the queue. So to the extent of our ability, I agree that we are as prepared as we can be, quite rightly, for a no-deal Brexit.

On that no-deal preparation, can the Minister confirm that a system to replace the REMIT reporting system that regulates the workings of the markets is still to be implemented?

If I understand the hon. Gentleman correctly, he is referring to the capacity market in the UK. There are, indeed, technical challenges regarding the procedure of the capacity market, but I am not aware of any other regulatory concerns. I can assure the hon. Gentleman that one of the processes that has been working extremely well is that I and the relevant Ministers in the devolved Administrations are now speaking on an almost weekly basis to thrash through the elements of a no-deal Brexit and how they might affect us. I imagine that all would say we were well prepared.

I am reading from paragraph 2.2 of the explanatory memorandum to the Electricity and Gas (Market Integrity and Transparency) (Amendment) (EU Exit) Regulations 2019:

“the REMIT Implementing Regulation, aims to prevent market manipulation and insider trading in the gas and electricity markets.”

That is what is in place now. Paragraph 12.3 explains that a domestic replacement system will need to be established and put in place, so does that not mean that there is a risk in that period of market manipulation and insider trading within the UK or GB domestic gas and electricity market?

Part of the SI relating to the market integrity and transparency amendment will enable UK regulators—Ofgem and the utility regulator—to set up and operate domestic arrangements for market integrity and transparency that will mirror the EU regime. So one of the SIs before us today does indeed mitigate the risk the hon. Gentleman rightly identifies as unacceptable.

What will the timescale for the replacement programme be? I note that there has been no formal consultation on the REMIT replacement, so what is the timescale for Ofgem implementing the new system?

I hope I will answer the hon. Gentleman’s question during the rest of my remarks. My officials are scribbling frantically so that I can give a good response.

Returning to the first instrument, its principle is to amend and make workable the retained EU electricity and gas legislation that was created to harmonise energy markets and regulation across the EU. It also revokes the guidelines for trans-European energy infrastructure that set out processes for the development of EU infrastructure, as they will be irrelevant in a four-nation setting.

The second instrument amends retained EU gas legislation, ensuring that the regulatory framework relating to gas is maintained, including the technical EU network codes that govern the cross-border gas trade. That will maintain maximum business continuity and efficiency for UK gas operators and consumers. The instrument also maintains the framework for dealing with security of supply, such as matters relating to responding to gas supply emergencies, by updating the security of gas supply regulation to remove references to EU institutions.

The third instrument addresses EU electricity legislation relating to markets and trading, ensuring that these operate as part of domestic law. In particular, the instrument amends a wider package of rules, known as the EU network codes for electricity. It revokes the guidelines on the forward capacity allocation code and on capacity allocation and congestion management, which essentially govern how cross-border trade works within the EU’s internal energy market. Of course, it is a truism that the EU has made it clear that if we left without a deal we would no longer be part of that internal energy market, and that is where the potential legal risk to the single electricity market will derive from. The codes would have little to no practical application in UK law and are, therefore, being revoked by these statutory instruments.

We are, of course, keen to maintain cross-border trade and interconnector flow, which has been helpful in balancing our energy demand and keeping prices low. We are implementing alternative arrangements for cross-border trade with GB interconnectors, similar to those that were in place prior to the European market coupling. We have fall-back arrangements in place for the inter- connectors between the SEM and GB to ensure that trading can continue to take place in a no-deal scenario.

Excitingly, another aspect of the instrument is that it will amend the inter-transmission system operator compensation mechanism regulation, which established a mechanism to compensate national transmission system operators for hosting cross-border flows. Domestic UK legislation will no longer provide for such flow, because we cannot legislate for other countries; the cross-border elements will therefore be removed, while the provisions that relate to the setting of our own domestic network charges will be retained.

Similarly, the guideline on electricity balancing will largely be retained in Great Britain, with amendments to remove provisions that relate to a European platform for the exchange of balancing energy. The guideline will be revoked in Northern Ireland, because it does not apply to islands that are not connected with the rest of the EU.

The fourth instrument deals with EU legislation on the operation of the electricity system. Two of the EU regulations that it amends—the regulation establishing a system operation guideline and that establishing the emergency and restoration network code—concern the activities of energy system operators, which balance supply and demand on the system in real time and ensure that energy flows securely to customers across the UK.

Effectively, the instrument will amend the obligation on National Grid to co-operate with other system operators: it will require National Grid to assist the System Operator for Northern Ireland, with a similar reciprocal requirement on SONI, but will remove the obligation to co-operate with other system operators. Of course, it does not preclude such co-operation, which we encourage, but we do not believe that it is right for a GB system operator to be under a legal duty or commitment to co-operate that our EU neighbours would not legally require from their own system operators.

The unique shared arrangements that underpin the single electricity market on the island of Ireland require a different approach. In a no-deal scenario, EU regulations will oblige EirGrid, Ireland’s system operator, to endeavour to conclude a co-operation agreement with SONI because of the unique shared nature of the single electricity market. For Northern Ireland only, we are therefore retaining a similar requirement for SONI to ensure co-operation with EirGrid south of the border.

In addition, the instrument will revoke the connection codes, a set of three EU instruments for electricity. The codes will apply under EU law only from a date after exit and will therefore not be incorporated via the withdrawal Act. A similar issue will arise for some provisions of the gas transmission tariffs.

The last instrument deals with measures to ensure market integrity and transparency, which the hon. Member for Kilmarnock and Loudoun raised. It will amend retained EU law to ensure that UK regulators can maintain effective market surveillance and enforcement, and that market participants can continue to publish relevant inside information. In answer to his question about the REMIT programme, there will be no reduction in the abilities of UK regulators; post exit, regulators will rely on alternative but available sources of market data. We are assured that that will not affect their ability to keep the market under surveillance. The programme could run for up to two years, until we are assured that appropriate arrangements are in place.

I am coming to the end of my speech, but perhaps the hon. Gentleman would like to make a brief speech of his own.

In conclusion, although leaving the EU without a withdrawal agreement is not what the Government want or are aiming for, it is only prudent that we make the changes necessary to ensure that electricity and gas markets continue to function as normal, including doing all that we can to ensure the continuity of the single electricity market on the island of Ireland. I commend the draft regulations to the Committee.

It is a pleasure to serve under your chairmanship, Sir Graham; I am sure that you will have an interesting time chairing this debate on the five statutory instruments before the Committee. Perhaps I ought to say that I will not necessarily discuss the statutory instruments in the same order as the Minister, because I did not have any forewarning about the order that she would discuss them in. I am not criticising; I am merely saying that it may be difficult to establish the debate effectively, but I will do my best.

Will the hon. Gentleman accept my apology for that omission? We have used the opportunity of many of our SI debates to have a very constructive conversation, so I apologise to him. I will take account of what he said, should we have the pleasure of doing this again.

I thank the Minister very much for those comments. I sincerely hope that we will not have the pleasure of doing this again in a hurry because, among other things, I had to read all five SIs to get the sense of them. I have tried to place my concerns about them in descending order of importance. Therefore, I will not necessarily talk about them in the same sequence as the Minister, but I hope what I say will be reasonably intelligible.

Before proceeding, perhaps I ought to say that I appreciate the need to undertake code revision and to deal with the transmission code arrangements in such a way that they become properly operable within the UK on the day of a no-deal Brexit, which the Minister and I are both sincere in hoping will never come about. Nevertheless, we need to ensure that that is done, so far as is possible. This afternoon, I will talk not about that process itself, because it is necessary, but about some concerns over the nature of how it is being brought about in the SIs. The Opposition do not intend to oppose any of the SIs, but we do want to place on the record—and hopefully get the Minister’s comments on the record—our concerns over how the process has been brought about through the passage of the statutory instruments.

I will start with the draft Electricity Network Codes and Guidelines (System Operation and Connection) (Amendment etc.) (EU Exit) Regulations 2019, which take the regulations that have set common standards for transmission system operations across member states and translate that arrangement into a UK arrangement—a new arrangement as far as TSOs are concerned. As the Minister alluded to, that will cover transmission system operations not only in England, Wales and Scotland, but in Northern Ireland, which has a different transmission system operations arrangement and, indeed, a different regulator. It nevertheless comes under the draft regulations for the purpose of the legislation that is required to bring all of this within a UK-wide ambit.

As the Minister said, Northern Ireland and the Republic of Ireland have separate regulatory systems, but the transmission system and the energy market are completely integrated. Indeed, the Minister referred to the System Operator for Northern Ireland—SONI. That is not one of the few Japanese companies that is retaining its investment in Great Britain, but the operator of the Northern Ireland system. That operator has to operate in very close collaboration, including code congruence, with the system operator in the Republic of Ireland. That is because, among other things, two regulators deal with one grid and there is one single market as far as wholesale is concerned. That means that it is absolutely necessary that the codes between those two system operators are as congruent as possible in order to make the operation of a single grid effective.

It is quite clear that those codes will not be congruent in the case of a hard Brexit. As the explanatory memorandum to the SI makes clear, the network codes—“connection codes”—which come from the EU regulations are in the process of being incorporated into existing national regulatory frameworks, in order to make them accessible and familiar to UK parties. The document states—glass half full:

“The process of incorporation has been largely completed”.

An alternative way of saying that is: “the process of incorporation has not been completed”.

The Department states that it is the intention that those codes not incorporated already into a system to make them coterminous,

“will be created in domestic law under the powers of the Electricity and Gas (Powers to Make Subordinate Legislation) (Amendment) (EU Exit) Regulations 2018 as soon as practicable after exit day.”

That means that legislation to make those codes congruent will not be in place by exit day, nor for quite a while afterwards, because it will be a question of getting a new piece of legislation through this House to carry out the rest of the code congruence work.

Strictly speaking, that means that the single grid will operate on convergent codes and not be legally watertight. The Minister has effectively said this afternoon that, in practice, good will between all people will ensure that electricity continues to flow and the market continues to operate. However, we need to be clear that will be done essentially on a good-will basis and not on a legal basis. Considerable risks are attached to the fact that those codes will not be congruent. If there are major issues about code compliance on both sides of the border, as far as the grid is concerned, there will be no easy way to remedy that if there is a hard Brexit. That is my strong concern about the regulations.

I turn to the draft Electricity and Gas (Market Integrity and Transparency) (Amendment) (EU Exit) Regulations 2019. As the hon. Member for Kilmarnock and Loudoun said, that covers the implementation and scope of REMIT regulations. REMIT is a very effective system. It came into UK legislation via regulation and is therefore not the subject of a separate raft of legislation. Nevertheless, it operates very effectively as far as the UK is concerned. It is a system that aims to prevent market manipulation and insider trading in energy markets. It does so through the registration of participants, the reporting of energy data and the publication of inside information that would have an impact on prices. That registration, reporting and publication is done through EU agencies. The purpose of this SI is to transfer that into UK arrangements, so that, as much as possible, UK reporting and transparency work as they did previously in the EU.

However, it is clear from this SI that not everything that is currently undertaken by REMIT will be incorporated into UK legislation. It is stated that the regime that is being legislated for will commence four weeks after Brexit day, but will apply only to registration, inside information and transparency data. Other forms of reporting, such as data relating to transactions in wholesale markets, will not start until the regulator has reviewed the market data requirements. It is suggested that if the regulator decides to implement full market data reporting, as currently required under REMIT, a further three months’ notice of commencement will be given.

That means that only a part of REMIT will indisputably come into UK operation on a guaranteed basis. The regulator will have the opportunity upon review to translate the rest of the REMIT regulations into UK operation, but it may decide that the further pieces of reporting and data transfer relating to transactions in the wholesale market will not be part of the UK reporting arrangements. If that happens, there seems to be nothing that we in this House can do about it. Perhaps the Minister will indicate that there is something we can do about it. Perhaps she will say that we have effective legislative control over bringing the whole of REMIT into UK concerns, and that we are not just hoping that the regulator, which presumably will have concerns about resources, procedures and various other things, will complete the transfer. It would have been a good idea to undertake the whole of the transfer in this SI. I am not sure why there is only a partial transfer. I would be grateful for the Minister’s comments and reassurances on that.

The draft Electricity and Gas etc. (Amendment etc.) (EU Exit) Regulations 2019—the titles are getting a little more ragged as we get through the process—relates to the licence conditions concerning transmission and interconnections, which arise from the Gas Act 1986, the Electricity Act 1989 and the Utilities Act 2000. Those Acts all contain substantial references to EU directives. That is fine, as far as England, Wales and Scotland go, but there is a problem, in terms of translation, with Northern Ireland. I have already said that Northern Ireland has a completely coterminous grids arrangement with southern Ireland, and that there is a single energy market.

The explanatory memorandum states that no changes have been made to the definition of a single energy market,

“due to a practical need for the definitions of the SEM in Ireland’s and Northern Ireland’s legislation to continue to align, (which they currently do).”

It continues:

“This course of action will better preserve the stability of the SEM”.

Again, practically, that will mean that, if there is a hard Brexit, there will be a different regime concerning licensing and collaboration on licensing in Northern Ireland and in the rest of the United Kingdom. For Northern Ireland, a number of references to relations with the EU concerning those licences will be left in, as will EU arbitration arrangements. As the Minister mentioned, it may well be the case that, through good will, this actually works in practice. However, we ought to be very clear that there will not be congruity between the licensing arrangements—not in this instance between Northern Ireland and southern Ireland, but between Northern Ireland and the rest of the UK. I would be interested to hear whether the Minister thinks that that may create particular issues or whether she is confident that can be overcome at an early stage.

The fourth statutory instrument, the draft Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019, provides for co-operation to safeguard security of gas supply between member states and for solidarity between groups when a member state finds itself unable to supply households or essential services. Again, that is included in existing UK legislation through an EU regulation. At present, should the UK have a problem with our gas supply, there is a solidarity arrangement that requires other member states to come to our aid. Equally, if someone gets their gas supply cut off by the Russians, we have a reciprocal obligation, where we can, to come to their aid. I appreciate that that is not perhaps a central issue—the Minister and I have had discussions on this previously. The security of UK gas supplies is not a particularly interconnector, grid-based, serious European issue. Nevertheless, this SI cuts off all those methods of collaboration and solidarity—necessarily, because we will no longer have a member state’s obligation to act in solidarity or to come to other member states’ aid. However, we need to remember that they are required to come to our aid as well. The current regulations also include regional assistance arrangements. Since we will not be in any region, we cannot be part of any regional assistance arrangements either.

Will the Minister clarify whether she thinks that that is the end of the matter and the end of co-operation and solidarity, and that by simply revoking these arrangements in this particular SI, nothing of the sort will happen in the future? One hopes, in terms of common sense and fairness between ourselves and EU member states, that some sort of gas interconnection solidarity arrangement might continue. Does the Minister have any intention to pursue by other means such an arrangement, which could be beneficial both for us and for EU member states in the future, just as this arrangement has been beneficial for us in the past?

Finally—Sir Graham, you will be delighted that I am coming to the word “finally”—the Minister mentioned the unfortunate episode concerning the capacity market. She knows that we are talking today about what would happen in the event of a no-deal Brexit and about all these arrangements that currently pertain because we are a member state. The arrangements concerning the capacity market, which arise from state aid permission by the European Union in the first instance, also arise from the fact that we are a member state. If we are not a member state on 1 April, we will not be bound by those arrangements. In the event of a no-deal Brexit, does the Minister intend to restore the operation of the capacity market in the UK immediately, given that she would not be beholden to any UK arrangements concerning the operation of the capacity market on that date? Or does she intend to review the operation of the UK capacity market on the basis of what was decided in the European courts, regardless of whether we are bound by the state aid arrangements that pertained previously within the EU? I would be interested in hearing from the Minister whether she has any plans in that direction, and if so what they are.

It is a pleasure to serve under your chairmanship, Sir Graham. I will make some general comments before addressing some of the individual statutory instruments. It seems to me that we have a UK Government energy policy that, in terms of new and nuclear energy, is in absolute tatters. It has completely fallen apart. UK Government policy will not allow onshore wind in Scotland. The Minister might have heard these comments once or twice before. Yet here we have no-deal preparation that undermines the collaborative approach of the EU internal energy market. That is a massive contradiction.

We have five statutory instruments before us. For each of those, no consultation has been undertaken, no impact assessment has been carried out, and we have only glib assessments of costs; most of the SIs say that the costs are less than £100,000. Is this lack of consultation and absence of impact assessments due to timescales and an actual lack of no-deal preparation undertaken by the Government, despite the fact that we have been pretending to prepare for this for the last two years? Is this why the Minister is one of the Cabinet Ministers who have been reported as demanding that the Prime Minister take no-deal off the table because it is so disastrous?

Turning to individual statutory instruments, I will start with the draft Electricity and Gas etc. (Amendment etc.) (EU Exit) Regulations 2019. Paragraph 2.3 of the draft explanatory memorandum states that if these amendments are not implemented, there may be “increased wholesale prices” for electricity. However, paragraph 12.3 confirms that there is no impact assessment. How do we know that not implementing this means that wholesale energy prices could increase?

The draft Electricity Network Codes and Guidelines (Markets and Trading) (Amendment) (EU Exit) Regulations 2019 confirms that Great Britain will be removed from the balancing guidelines. The explanatory memorandum states:

“CACM and FCA regulations are revoked”

as they provide for cross-border processes for trading in electricity via electricity interconnectors. What is the actual impact of the UK being taken away from these cross-border arrangements?

Paragraph 7.7 of the explanatory notes states that “alternative trading arrangements” can be put in place. What is the timescale for those alternative trading arrangements? What discussions have been had with the EU to allow cross-border trading to continue if there is no deal and we crash out on 29 March?

I have already touched on the draft Electricity and Gas (Market Integrity and Transparency) (Amendment) (EU Exit) Regulations 2019 in an intervention about REMIT, which prevents market manipulation and insider trading. The Minister argued that alternative domestic data interrogation will actually be used by the regulator for up to two years, allowing the regulator to ensure that there is no insider trading.

Paragraph 7.2 of the draft explanatory memorandum states:

“Replacement systems for secure transfer of sensitive market data will not be available at exit”,

and that

“registration and market data reporting requirements will not be commenced until additional implementation work is completed.”

That seems to be contradictory. How can we have absolute surety that systems will be in place to ensure the regulation and monitoring needed to avoid insider trading?

Paragraph 12.3 estimates that it will cost Ofgem £1.9 million, as well as annual running costs of £500,000, to set up a replacement system. What is the timeframe for setting up the new system? Who will actually pay for it? Will there be a direct Government grant to Ofgem, or will the cost be added to energy bills? What work has been done to date on the replacement system?

Paragraph 2.2 of the draft explanatory memorandum to the draft Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations tells us that the draft regulations will facilitate “‘solidarity’ (gas sharing)” and will create a duty to

“collaboratively assess the risks to EU security of gas supply”,

and to create mitigation plans on an EU-wide basis. However, paragraph 2.3 suggests that not implementing the draft regulations would somehow

“threaten the continued secure and efficient operation of energy markets across the UK.”

Paragraphs 7.7 and 7.8 confirm that a no-deal scenario would revoke the solidarity of gas sharing and the collaborative risk assessment of gas supply to the EU. Why is walking away from that seen as acceptable to the UK Government?

In summary, no impact assessment has been provided for the potential withdrawal from the energy balancing markets for gas and electricity, there are no definitive proposals for how Ireland’s single market will work if there is a no-deal Brexit and there will be no consultation. That flags up the real risk of crashing out of the EU with no deal. That is why I agree with the Minister—that the Prime Minister should take a no-deal Brexit off the table as soon as possible. I look forward to her response.

I thank hon. Members for an extensive delve into what are a series of deeply technical and quite complicated SIs. As always in this process, we have learned a lot. I will try to answer some of the specific questions raised.

The first, from the hon. Member for Southampton, Test, was on the risks and timing of the legal underpinning for the connections code. It is our intention to make further regulations, under the Electricity and Gas (Powers to Make Subordinate Legislation) (Amendment) (EU Exit) Regulations 2018, to incorporate those connection codes into domestic law. We absolutely appreciate the need for certainty, and we are therefore looking for a way to take forward the necessary provisions in a timely manner.

I can tell from the hon. Gentleman’s face that he does not think that that is acceptable. As I think he already knows, the process of triaging preparation for no deal has been very focused on the things we absolutely must do so as not to face a massive threat on day one, while there are other things that, although they might pose a legal question that might have to be addressed later, we can safely assume can be done.

The hon. Gentleman referenced good will, and in the absence of a legislative branch of Government in Northern Ireland, I pay tribute to the Northern Ireland Office and its civil servants, and indeed to the devolved Administrations, which have been incredibly helpful in working on this good-will basis. It is in nobody’s interests for a well-functioning single energy market or internal energy market to suddenly fail, and I think everyone is appraised of those risks.

The hon. Gentleman’s second point was on REMIT and why we are essentially having only a partial transfer. That is because Ofgem and the other utility regulators are confident that that is what they need to ensure appropriate scrutiny and appropriate levels of market information, and that there will not be a decrease in effectiveness on day one or during the period in which they will bring forward alternative arrangements.

The hon. Gentleman also raised the definition of the SEM. That will still refer to EU obligations due to a practical need for the definitions of the SEM to continue to align; as I mentioned, that is one of the few derogations, if you like. Our intention is to use the powers of the European Union (Withdrawal) Act to amend the definition of the SEM, in parallel with Ireland, once a new definition is agreed with Ireland in due course. As I have made clear, this is a contingent problem; it will not mean that energy will not flow in Northern Ireland on day one, but it may lead to legal uncertainty about the functioning of the market and concerns about future capacity market auctions. We are all keen to avoid that.

The hon. Members for Southampton, Test and for Kilmarnock and Loudoun raised the question of the removal of solidarity of supply. We have almost never had to rely on the solidarity regulation, at least in my reading of energy history, because we have one of the most globally developed gas markets in the world to provide security of supply through supply diversity. We are in an extremely fortunate position, not only because we can generate our own sovereign gas offshore and potentially onshore, but because in the past few years we have relied heavily on imports of liquefied natural gas, generally from diversified sources including Qatar, the US and our pipeline with Norway, which is not in the EU and is not subject to the solidarity regulation.

The hon. Member for Southampton, Test makes an extremely valuable point, however. It is absolutely our intention to work collaboratively with our closest neighbours, whether on energy policy or on climate change mitigation, and ensure that none of us faces a threat to security of supply—particularly from state agents that do not have Europe’s interest at heart. Even though we are removing the solidarity provision, which I believe has never been used, it is right to assume that we will continue to be good neighbours to Europe.

A question was asked about the capacity market. Of course, we have said that even in a no-deal Brexit we will still abide by state aid rules. We were instrumental in putting those rules into legislation; we believe in competition and not unfair subsidies of particular industries. Ofgem assures us that the current challenge is based not on the operation of the market but on procedure. We will keep working to ensure that the market is fully restored and continues to successfully deliver low-cost and low-carbon energy to the UK markets.

The hon. Gentleman also raised the differences in licensing between Northern Ireland and the Republic of Ireland. The Northern Ireland regulator is identifying the gaps in the licensing regime. We will consider amendments in due course, but since these are not “life and limb” regulations, it was considered acceptable to allow a short period of delay. However, we continue to work closely with the Northern Ireland civil service on these points.

The hon. Member for Kilmarnock and Loudoun raised impact assessments. He is right that the assessed costs of the draft regulations do not trigger a full impact assessment. The long-term economic analysis published last November and the document that we published today about the economic impact of a no-deal Brexit encapsulate his broader points about the possible impact of a disorderly Brexit on energy costs, among other things. It is perfectly right that we have not done an impact assessment for the draft regulations.

The hon. Gentleman also asked about the timescales for the alternative arrangements for cross-border trading. The Great Britain interconnectors to the continent are agreeing access rules with the regulators. Proposals went out for consultation earlier this year, and we have nothing to indicate that anybody wants to stop the free and fair trading of energy via those interconnectors, since all parties benefit from the arrangements.

I accept what the Minister says about ongoing consultation with the regulators, but if there is a no-deal Brexit, what will be the expected timeframe for getting the trading arrangements in place? Obviously that will affect not only the existing interconnectors, but any business cases being proposed for new interconnectors. Everybody needs to know what the trading arrangements will be.

The hon. Gentleman states very succinctly why there are

many uncertainties associated with a disorderly Brexit, only some of which the Government can mitigate with legislation such as that before the Committee. That is the reason for my strong view that the best way to avoid such consequences is to avoid a no-deal Brexit. I have said before and will say again that it is therefore incumbent on us all to vote for the deal before us, so that we can leave with a deal on 29 March, as we promised to those we represent. That offer remains on the table.

The Minister talks of a disorderly Brexit if there is no deal, but she has been part of a Government who for two years have made the promise that preparations for no deal are ongoing and will be met on time. Is she now saying that there is a problem with that, and that the assurances we have received at the Dispatch Box have been false?

I am happy to assure my hon. Friend that the Government’s policy has always been to leave with a deal on 29 March, and that the Government, and indeed the civil service, have busted every sinew to ensure that dozens of pieces of legislation have been brought forward, and dozens of contingency planning meetings have happened. However, he will know that the unpicking of 40 years of legislation and co-operative economic relationships after the triggering of article 50, with a two-year ticking clock, would test the resolve of any Government. It is extremely unfair of him to suggest that no-deal preparation has not been done effectively. What has been done effectively is mitigation against the worst impact of a disorderly Brexit.

No, I will not give way. I encourage my hon. Friend to read what has been published today in response to a request from the House of Commons about the economic impacts of a no-deal Brexit, to see how very damaging a disorderly Brexit would be. Of course, as I say to him and all Members, the way to avoid a no-deal Brexit is to vote for the deal and deliver the Brexit that so many people voted for—as it has been Government policy to honour the referendum—so we can leave with a deal on 29 March.

I am sure that the Minister did not mean to, but she inadvertently put words into my mouth. I was not suggesting that efforts had not been put into making sure we did not leave in a disorderly way. I just referred her to the fact that Minister upon Minister—and indeed the Prime Minister—assured us that we had two years of no-deal preparation and would be prepared on 29 March for no deal, should that be the logical conclusion of triggering article 50. I hope that the Minister is not going against the Prime Minister and suggesting that we will not now be ready.

I fear that we are splitting hairs about definitions of readiness. Of course what we are doing today, as we have done on many other occasions, is ensuring that we have the necessary regulations and preparations in place to mitigate the worst impacts of a no-deal Brexit. Unfortunately there are some aspects of a no-deal Brexit that we simply cannot resolve, despite the efforts of the Government, or efforts in this House. I refer my hon. Friend again to my comment that the best way to avoid having to face any of the impacts of a disorderly no-deal Brexit, prepared or not, is to vote for the deal. I am assured by many colleagues that sensible people like him understand that prospect, and that we face a disorderly Brexit or no deal, which would be an absolute derogation of our parliamentary duty. I look forward to voting on the deal with him in due course.

With that, I feel, if you will forgive me, Sir Graham, that we are well outside the boundaries of the debate, and on that basis I shall conclude.

On a point of order, Sir Graham. I have to put it on record that the Minister suggested that I would support the withdrawal agreement with her in the Lobby, and that I will support it as she suggested, provided that we sort the backstop out, as has been my position and that of many of my hon. Friends for some time—with your help, of course.

That is not a point of order.

Question put and agreed to.


That the Committee has considered the draft Electricity and Gas etc. (Amendment etc.) (EU Exit) Regulations 2019.

Draft Electricity Network Codes and Guidelines (Markets and Trading) (Amendment) (EU Exit) Regulations 2019


That the Committee has considered the draft Electricity Network Codes and Guidelines (Markets and Trading) (Amendment) (EU Exit) Regulations 2019.—(Claire Perry.)

Draft Electricity and Gas (Market Integrity and Transparency) (Amendment) (EU Exit) Regulations 2019

Motion made, and Question put,

That the Committee has considered the draft Electricity and Gas (Market Integrity and Transparency) (Amendment) (EU Exit) Regulations 2019.—(Claire Perry.)

Draft Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019

Motion made, and Question put,

That the Committee has considered the draft Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019.—(Claire Perry.)

Draft Electricity Network Codes and Guidelines (System Operation and Connection) (Amendment etc.) (EU Exit) Regulations 2019


That the Committee has considered the draft Electricity Network Codes and Guidelines (System Operation and Connection) (Amendment etc.) (EU Exit) Regulations 2019.—(Claire Perry.)

Committee rose.

Draft Air Quality (Taxis and Private Hire Vehicles Database) (England and Wales) Regulations 2019

The Committee consisted of the following Members:

Chair: Albert Owen

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

† Coffey, Dr Thérèse (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)

† Davies, Chris (Brecon and Radnorshire) (Con)

† Debbonaire, Thangam (Bristol West) (Lab)

† Drew, Dr David (Stroud) (Lab/Co-op)

† Hughes, Eddie (Walsall North) (Con)

† Johnson, Diana (Kingston upon Hull North) (Lab)

† Keegan, Gillian (Chichester) (Con)

† Lamont, John (Berwickshire, Roxburgh and Selkirk) (Con)

† Mercer, Johnny (Plymouth, Moor View) (Con)

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

† Pearce, Teresa (Erith and Thamesmead) (Lab)

† Powell, Lucy (Manchester Central) (Lab/Co-op)

† Seely, Mr Bob (Isle of Wight) (Con)

† Snell, Gareth (Stoke-on-Trent Central) (Lab/Co-op)

† West, Catherine (Hornsey and Wood Green) (Lab)

† Williamson, Chris (Derby North) (Lab)

Dominic Stockbridge, Committee Clerk

† attended the Committee

Fifth Delegated Legislation Committee

Tuesday 26 February 2019

[Albert Owen in the Chair]

Draft Air Quality (Taxis and Private Hire Vehicles Database) (England and Wales) Regulations 2019

I beg to move,

That the Committee has considered the draft Air Quality (Taxis and Private Hire Vehicles Database) (England and Wales) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Owen.

We are at a rare point at this moment in history because the statutory instrument has nothing to do with leaving the European Union. It is business as usual. The SI has been scheduled because of its importance in helping councils tackle air quality by taking advantage of being able to recognise which vehicles go in and out of their areas.

Air pollution has reduced significantly since 2010, but more still needs to be done to improve the quality of the air we breathe. The most immediate air quality challenge is that of nitrogen dioxide concentrations around roads, which is the only statutory air quality limit that the UK currently fails to meet. The July 2017 UK plan for tackling roadside nitrogen dioxide identified that clean air zones that included a requirement for vehicle owners to pay a charge to enter, or move within, the zone if the vehicle did not meet the standard for its type was the measure that would achieve compliance with statutory nitrogen dioxide levels in the shortest possible time. The plan requires English local authorities with exceedances to explore whether they can find quicker alternatives. Several local authorities have already consulted on proposals for solutions. For some, this includes the introduction of a charging clean air zone, and Leeds City Council will start to operate a class B clean air zone from early next year.

There are four classes of charging clean air zone in England, all of which charge pre-Euro 6 diesel and pre-Euro 4 petrol taxis and public hire vehicles. Only class D clean air zones will charge personal cars. Local authorities considering class A to C clean air zones have identified the need to differentiate taxis and private hire vehicles and private cars, and have asked the Government to create a database to help achieve that.

Local authorities hold information only on taxis and private hire vehicles licensed in their area. They cannot identify those licensed by another authority. Hence there is a need for all licensing authorities to provide information to a central database, which will form part of the wider infrastructure that the Government are developing to support charging clean air zones.

At a given time, taxi drivers may drive for personal use a taxi vehicle that would be registered on the database as a private hire vehicle. Have the Government considered how they might make a distinction in the database between when a vehicle is working and when it is being driven for personal use?

It will not be for the Government to make that judgment call. It will be for the local authority, because that concerns the charge it intends to impose. The database simply gives local councils the information about which vehicles are private hire vehicles and which are not. When the time comes, if ever, when Stoke-on-Trent City Council has a clean air zone, the hon. Gentleman may wish to take that issue up with it directly.

The purpose of the regulations is to require licensing authorities in England and Wales to supply to a central database certain information relating to taxis and private hire vehicles that have been licensed in their area. The instrument is made using powers under the Environment Act 1995. The database may then be used by local authorities for the purposes of enforcing locally introduced clean air zones that will apply charges in respect of taxis and private hire vehicles. The database will ensure that taxis and private hire vehicles can be differentiated from other vehicles when entering a charging clean air zone.

Regulation 3 will place a duty on all taxi and private hire vehicle licensing authorities in England and Wales to supply certain information at least once a week. That information will include the vehicle registration number, the start and expiry dates of the vehicle licence, whether a vehicle is a taxi or a private hire vehicle, and the name of the licensing authority. Additional information required and the means of providing it will be set out in supporting guidance, which will be published before the regulations come into force.

The regulations extend to England and Wales and apply to all 315 taxi and private hire vehicle licensing authorities, including Transport for London. Given the geographical location of charging clean air zones, it is important that all taxis and private hire vehicles registered in England and Wales are recorded on the database.

The creation and maintenance of the database itself will not have a significant impact on businesses. A regulatory triage assessment has been prepared to assess the impacts on licensing authorities. The database will be designed and hosted in a way that complements existing processes wherever possible, in order to minimise the burden on licensing authorities. Licensing authorities will be funded for this additional work in line with the new burdens principle.

The draft regulations are necessary to support local authorities in introducing charging clean air zones where these have been demonstrated to be the quickest way to reduce roadside nitrogen dioxide concentrations to legal limits. We cannot rely on a voluntary approach for the submission of information covered by the draft regulations, given that there are 315 licensing authorities in England and Wales. Without a centralised database, local authorities will be able to charge only those vehicles that they have licensed in their own area.

The draft regulations and the database are necessary to ensure that measures to charge taxis and private hire vehicles will be effective. Without such a database, the level of reduced emissions from these vehicles will be less certain, which may result in the need to introduce charging for additional vehicles, possibly including private cars. As such, the creation of the database is an important step in supporting our air quality ambitions and those of local councils. For those reasons, I commend the draft regulations to the Committee.

It is a pleasure to serve under your chairmanship, Mr Owen. I make two apologies. First, my voice is terrible, so please bear with me. Secondly, the shadow Minister would normally lead on air quality, but she is otherwise engaged, so she has passed the mantle to me.

May I say at the start what a pleasure it is that we are not talking about our EU withdrawal? Three times last week we did that, so I thought that this Committee must have something to do with Europe. However, it appears that this is very little to do with Europe for once, although European standards are something I presume we should wish to concur with, as EU standards are as high as ours, although we have a long way to go.

Sadly, on air quality, the Government have a long way to go, and have been in the courts on numerous occasions. In April 2015, the Supreme Court ordered the Government to draw up an air pollution plan, owing to breaches of the law. In November 2016, the High Court ruled the Government’s plans unlawful and imposed a deadline for drawing up a new plan. In April 2017, the High Court ordered the Government to publish that plan, after they tried to delay doing so. Last year, the High Court once again ruled the Government’s plans unlawful.

It will be interesting to know whether the Government have a lawful plan that is unchallengeable by those who take this issue very seriously, as we all do. We all have seared on our minds the death of Ella Kissi-Debrah from asthma in 2013, which is an ongoing case.

Does my hon. Friend agree that the increase in deaths, particularly of children and very old folk with respiratory illnesses, is alarming? Does he also agree that the Mayor of London is being brave and bold and—with very little resource—is acting, through his policies, in the interests of the lungs of Londoners?

I do. To my mind, this is climate change here and now. We sometimes think of climate change as 12 years away and something we can do something about. Sadly, many of our constituents already experience the degradation of the climate because they live in areas that regularly fail decent air quality tests. We should be careful that we do not ignore that and fail to do something about it.

My starting point is that the database, useful as it may be, is a database. It will not actually deal with the problem of how to bear down on some of the issues of poor air quality. We need a much more ambitious transport strategy that deals not only with taxis and private hire vehicles but vehicles in general. I will ask the Government several questions on that.

It is vital that these statutory instruments are not a matter of paying lip service to this issue but are a means by which we can do something fundamental. The Government will say that it is up to local authorities, but if the local authorities do not have the means, they cannot do anything about air quality. It is beginning to disturb our constituents. People ask me, “What are you going to do about the air quality?” This is in Stroud, which is supposedly a rural area, but in parts of it the air quality regularly fails a decency standard. We ought to do something and be seen to be doing something.

Two non-governmental organisations are most concerned about air quality. Friends of the Earth has made countless reports on local air quality monitoring objectives, to check which local authorities are doing something about that and which are not. It is good to hear about the Mayor of London but, sadly, too many local authorities do not have the facility to get on top of this issue. It is astonishing the number of places with an air pollution problem. It does not affect just some people some of the time, but an awful lot of people all the time.

ClientEarth, which has taken the Government to court on a number of occasions because of their lack of an effective plan, welcomes this statutory instrument and sees the database as necessary, but there is not as much detail as it would like. We have the database, but what do we do with it? It is all right having this information, but someone has to compute it and ensure that someone is acting on it. Will the Government impose standards on those local authorities that fail to do what they should do as a result of the database? The statutory instrument allows the Secretary of State to set up the database, but there is no duty to pursue it.

I have some questions for the Minister. First, where does this statutory instrument fit in the Government’s overall strategy of moving towards non-polluting cars? That was the aim by 2040. Are the Government on track to meet that target? In some ways, it is an incredibly ambitious target, but in others it is disappointing, given the scale of the problem.

Dealing with air quality makes long-term economic sense. Some global estimates talk about a cost of £20 billion —I suspect that is a gross underestimate. It will be interesting to know what resources central Government intend to give to local authorities so that they begin to track what is happening—admittedly, with a small number of vehicles, but if it can be done with taxis and private hire vehicles it can begin to be done with private cars. I hear what my hon. Friend the Member for Stoke-on-Trent Central said; at what stage does a vehicle become a public vehicle rather than a private vehicle?

Do the Government really intend to crack down on illegal air pollution? There have been numerous reports from the Environment, Food and Rural Affairs Committee and the Environmental Audit Committee on the means to do something about this. We sometimes use exaggerated terms, but here we do not—it is a public health emergency for those whose lives will be cut short. That requires us to do something drastic.

On Highways England, what are the Government doing with their road strategy to ensure that where there are areas of very high pollution, there are means by which we can control vehicles? I do not know if hon. Members saw what happened in Addis Ababa a few weeks ago; the Government banned vehicles for a Sunday. If anyone has been to that city they will know how polluted it is. They felt that that at least made the point that people can find ways of living their lives without the petrol or diesel engine, that makes their lives that much worse.

What is the target date for the database being up and running? How does that deal with what local authorities are involved with in their own clean air zones in the interim? It would be useful to know where the joined-upness of the overall strategy is.

The original SI was introduced on 8 January 2019 but was then mysteriously removed, which is not unusual with SIs at the moment. This one, however, has nothing to do with Europe, yet it was removed and a slightly different version was retabled. It would be interesting to know why that happened and why we have a different SI before us.

I ask my usual question about Plymouth—it is good to have one of the Plymouth Members here, the hon. Member for Plymouth, Moor View. I am always intrigued when Plymouth appears in such regulations. Regulation 2(c) mentions

“section 5 of the Plymouth City Council Act 1975”.

Why does that one local authority always get mentioned? I have been in Committees before where Plymouth is mentioned. Either it is more advanced than any other part of the country or it operates under a very different legal framework from other local authorities. I understand there are different terms regarding the City of London, but I never quite understand why Plymouth features.

I hope the Minister can answer my questions, or will write to me. DEFRA should pay a lot more attention to this subject. Air quality is a deciding factor in people’s quality of life. For me, it is the start of climate change and we ought to pay much more attention to it. That is why I welcome the small step of the database. I hope it will not just sit on a shelf somewhere; I hope it is a measure through which local authorities, working with central Government, can really begin to make sure that polluting vehicles are dealt with.

It is a pleasure to respond to the hon. Gentleman’s questions. I would say first that air quality has been my top priority since becoming Environment Minister. There will be Members on this Committee whom I have met in the last two and a half years to discuss the air quality challenges in their areas. There are several Members here whose constituencies are in areas where local authorities are proactively considering the introduction of charging clean air zones. I remind Members that it is their local authorities that have said that the database is necessary.

In terms of our work on non-polluting cars, the hon. Member for Stroud will be aware of our policy to see the end of the sale of conventionally fuelled cars by 2040. On illegal air pollution, he is absolutely right to say that roadside nitrogen dioxide is a challenge. We are working on that and we believe that the database will help councils to tackle some of the more polluting cars that are driving around, particularly in urban centres.

The database is in beta testing at the moment. It will be ready by the second half of this year. Leeds City Council is expected to be the first council to start using it in earnest, with charging coming into effect on 6 Jan 2020.

We want to ensure that Highways England and the strategic road network are very much connected with the air quality challenge that we face. The chief executive of Highways England chairs a fortnightly meeting with his team to go through the different issues of air quality on the road networks, as well as the new innovations they are taking forward and considering on how to improve air quality. The hon. Gentleman will be aware that a lot of the issue is down to traffic flow. I am conscious of the challenges of air quality, and I am sure he will welcome the clean air strategy that we published just last month. It has been welcomed by the World Health Organisation as world leading, and it is something for other countries to follow.

One particular element of the road strategy does need to be carefully considered, and we will carry out an assessment of the effectiveness of speed limits, based on the Welsh Government’s work on the speed limits that they introduced on part of the M4. Certain councils, such as Basingstoke and Deane for a particular stretch of the A339 that has a speed limit of 70 mph, are considering reducing limits to see if that will help with traffic flows and lower vehicle emissions. As I say, in every part of the country where we have funded councils to do studies and localised modelling, and to undertake local action, they come up with solutions that by and large they think fit best to help their local communities to improve air quality and effectiveness.

Based on the evidence being set out by the Minister, will she consider giving more money to councils so that they can do more such research for their own local solutions?

More than £3.5 billion has been set aside to tackle air quality—TfL was given money for that as part of its last settlement—and more money has gone to the Mayor of London and many other councils to make the changes necessary, such as retrofitting buses.

I am conscious that the Mayor of London would like more money, and the Secretary of State has agreed to support a spending review bid to tackle air quality in London. For example, the ultra-low emission zone charge, which will come into effect in a couple of months, is a significant step. The policy was initiated by my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson), but the current Mayor has taken it through. I also encourage TfL to think about its rules for taxis and how they can more quickly be made air-quality-friendly. TfL has made a good start; I am sure that it could go further.

The hon. Member for Stroud asked specifically about Plymouth. That question has come up once before, in an SI on air quality last year, but I am afraid that my officials and I cannot remember the answer precisely, so I hope that he will forgive me if I write to him and the Committee on that specific point. Nevertheless, I am sure that the Committee will consider the draft regulations important in giving local authorities the database that they believe necessary to tackle air quality in their local areas.

Does the Minister wish to take an intervention in the spirit that we are in this morning?

I thank the Minister very much. I shall be quick. I gather that she is meeting the Mayor of Bristol later today, which is interesting and my Whip will no doubt know about that. Is that common when a local authority or a Mayor has failed an air quality arrangement? I am just praising her—does she say to local authority leaders and Mayors, “You’ve got to do better”, “This is how you can do better”, and, “Here’s some money to help you”? Is that what she does?

I am delighted, Mr Owen, that you persuaded me to take that intervention, because I have visited many areas around this country and I spoke to the Mayor of Bristol yesterday. Unfortunately, of all councils, only Stoke-on-Trent City Council is on track with the timeline for delivering the first part of its air quality plan; sadly, other councils have fallen behind. I have to keep emphasising and pushing the matter, which is why we have included ministerial directions. On directions, the High Court said that we should use further legal instruments with all councils, to ensure that they get on with improving air quality.

I am disappointed, because there has been funding and we need to crack on with this, so yes, I have regularly have done what the hon. Member for Stroud suggests. I have been to Nottingham and Birmingham, and I have met people from Leeds. I have been around the country regularly, although I have yet to visit many places. I am pleased to say that I have been to Derby, too, to meet councillors. Yes, I am looking forward to having a face-to-face with the Mayor of Bristol, although yesterday he assured me on the phone that he will present his plan by the end of March, which is welcome news for the citizens of Bristol.

Question put and agreed to.

Committee rose.

Draft Ozone-Depleting Substances and Fluorinated Greenhouse Gases (Amendments etc.) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Mr Virendra Sharma

† Bradley, Ben (Mansfield) (Con)

† Burns, Conor (Bournemouth West) (Con)

† Charalambous, Bambos (Enfield, Southgate) (Lab)

† Coffey, Dr Thérèse (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)

† Cunningham, Alex (Stockton North) (Lab)

† Cunningham, Mr Jim (Coventry South) (Lab)

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

† Gaffney, Hugh (Coatbridge, Chryston and Bellshill) (Lab)

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

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

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

† McGinn, Conor (St Helens North) (Lab)

† Mc Nally, John (Falkirk) (SNP)

McGovern, Alison (Wirral South) (Lab)

† Martin, Sandy (Ipswich) (Lab)

† Seely, Mr Bob (Isle of Wight) (Con)

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

Sarah Rees, Committee Clerk

† attended the Committee

Eighth Delegated Legislation Committee

Tuesday 26 February 2019

[Mr Virendra Sharma in the Chair]

Draft Ozone-Depleting Substances and Fluorinated Greenhouse Gases (Amendment etc.) (EU Exit) Regulations 2019

I beg to move,

That the Committee has considered the draft Ozone-Depleting Substances and Fluorinated Greenhouse Gases (Amendment etc.) (EU Exit) Regulations 2019.

It is a pleasure to serve under your chairmanship, Mr Sharma. The purpose of the instrument is to correct deficiencies in retained EU law so that the United Kingdom can continue controlling the use of ozone-depleting substances and fluorinated greenhouse gases once we leave the European Union. It is one of a number of affirmative statutory instruments to be considered as the UK leaves the EU, as provided for by the result of the 2016 referendum and subsequently agreed by Parliament.

In line with the European Union (Withdrawal) Act 2018, the regulations simply make technical, legal amendments to maintain the effectiveness and continuity of UK legislation that would otherwise be left partially inoperable, so that, following our exit from the EU, the law will continue to function as it does today. I can assure the Committee that these amendments do not represent a change of policy, and nor will they have a significant impact on businesses or the public. We have worked with the devolved Administrations on this instrument, and where its application extends to them, they have given their consent.

The regulations may be somewhat technical but, a bit like a well-known chemical, they do exactly what it says on the tin: they bring over the regulations that are required to ensure that things operate just as they did the day before—no more and no less. If they did any more, I would have broken the ministerial code in signing the transparency statement. So there is no change in policy, and the regulations are simply technical.

Ozone-depleting substances, such as chlorofluorocarbons —often known as CFCs—damage the earth’s ozone layer, increasing the risk of skin cancer and damaging the wider environment. Almost all uses of these chemicals have been phased out under the UN Montreal protocol. EU legislation implements that agreement by restricting ozone-depleting chemicals to certain limited uses where there are no viable alternatives, such as in fire extinguishers on aircraft. It also requires all imports and exports to be licensed to help monitor global compliance.

Fluorinated gases have replaced ozone-depleting substances for many uses, including in refrigerants, aerosol propellants and other industrial processes. They are still powerful greenhouse gases, and, through legislation that we have agreed, we require their use to be phased down. It was only a couple of years ago that the Kigali amendment to the Montreal protocol was agreed and subsequently ratified, with the United Kingdom being the first European Union nation to ratify.

The 2018 Act will retain the EU legislation in UK law after exit day, and most of the provisions will operate without amendment, including requirements to minimise leakages and for technicians handling these substances to be properly trained and certified. However, without changes, some crucial elements would not function. Most importantly, the restriction on the amount of gas that can be sold is currently achieved through quota limits placed on importers and producers. The European Commission directly allocates the quotas to individual producing and importing businesses. The regulations therefore transfer those quota allocation powers to the Secretary of State and the devolved Administrations, establishing a separate UK quota system. Instead of an importer or a producer getting a single quota from the Commission, limiting how much they sell in the EU28 market, they would get two quotas, one from the European Commission for sales on the EU27 market, and one from the Secretary of State for sales on the UK market.

My Department contacted all companies currently supplying the UK to ask how much they placed on the UK market, to determine as accurately as possible the correct quota allocations. That data was cross-referenced with other market information to ensure that the UK supply remains as close as possible to current levels. The UK consumption of hydrofluorocarbons calculated through that process is 11.2%, which closely aligns with the percentage of our population relative to that of the EU, which is 12%. My Department has also recently completed the IT systems needed to operate the UK system, and well over half the businesses currently supplying the UK have already registered on the system to ensure that they can continue operating in the UK.

On the specific changes the instrument makes, regulation 2 omits a redundant reference from the EU legislation in the existing UK enforcement regulations. Regulations 4, 5 and 25 in part 2 and regulations 37, 38 and 56 in part 3 facilitate the transfer of functions to the Secretary of State and the Environment Agency with respect to England and to the devolved authorities with respect to Wales, Scotland and Northern Ireland. A number of the regulations throughout the instrument transfer powers from the Commission to the appropriate UK authorities by amending references to the Commission and the Union. A number of other regulations update cross-references to other legislation that have changed since the EU regulations were drafted.

Regulations 7 and 9 reduce the maximum limit values for the use of certain ozone-depleting substances to reflect the lower usage in the UK relative to the rest of the EU. That is done pro rata, based on the population of the UK relative to that of the EU. Regulations 11 and 20 delete redundant provisions, while regulations 15 and 48 amend dates to reflect the operation of the provisions from the point at which we leave the European Union. Regulation 43 enables training certificates issued in EU member states to continue to be recognised in the UK, to ensure that technicians trained in the EU can continue to work in the UK.

Regulation 48 requires the authorities in one part of the United Kingdom to consult the authorities in other parts before establishing their own F-gas quota system. Regulation 50 enables companies holding EU quota authorisations that are needed to import equipment containing HFCs to exchange those authorisations for a UK version so that they can continue to use them to import to the UK. Regulation 59 allows for the adjustment of HFC quotas should it become clear that, as a result of splitting from the EU quota system, UK supply is below the level it would have been had we not left the European Union.

Finally, we have taken a power through the Environment (Amendment Etc.) (EU Exit) Regulations 2019, which have already been approved, for regulators to charge businesses a fee to cover the cost of operating a UK system. That will cover the estimated £500,000 per annum administrative costs faced by the Environment Agency and is in line with the long-established principle that the polluter, rather than the taxpayer, should pick up the cost of regulating.

Most aspects of the EU regulations fall within devolved competence, so most functions are being transferred to the Secretary of State and Environment Agency with respect to England and to the devolved authorities with respect to Wales, Scotland and Northern Ireland. However, the Devolved Administrations have agreed that, for our exit day preparations, they will remain part of a single, UK-wide system, particularly for the purpose of allocating quotas. That means that, immediately after exit, the Environment Agency will allocate quotas for the whole UK market.

The devolved Administrations have all agreed to this instrument, and discussions are under way on the governance arrangements for the operation of the system and the joint decision-making process. Should any Administration wish to diverge from a UK-wide approach in future, they will need to consult the other Administrations to ensure that preparations on both sides can be made.

As we leave the EU, we are ensuring that we have the necessary regulations in place. That is particularly important in relation to ozone-depleting substances, especially as the regulations currently in law, which we must ensure we fully transpose, will be responsible for delivering one third of the Paris agreement.

It is a pleasure to serve under your chairmanship, Mr Sharma. The Opposition understand the importance of this ozone-depleting substances and F-gas regulation statutory instrument, which seeks to ensure that the relevant legislation continues to operate effectively at the point at which the UK leaves the EU. However, we will be abstaining today, due to our concern about the limited timeframe in which the Government are scheduling this secondary legislation and the limited means of scrutiny that that offers us.

The last-minute nature of many of these SIs has made it extremely difficult for us to examine in depth the real implications they will have or to involve other organisations in that examination. In particular, the explanatory memorandum that came with this SI was clearly written at some stage during the middle of last autumn and therefore leaves all sorts of questions unanswered. The Minister attempted to answer some of them just now, but it would have been extremely helpful to have those answers in writing. If I ask her any questions that she has already answered, I hope she forgives me for not having been able to twig exactly which questions she was answering.

If the Government allow the United Kingdom to leave the EU without a deal, it is critical that regulations are in place to prevent the dangerous emission of unregulated ozone-depleting gases and F-gases. If the UK regulatory framework turns out not to be as effective as it could have been, that will be one more extremely good reason for us not to leave without a deal.

Only a few decades ago, we were close to destroying our planet by emitting ozone-depleting substances, creating holes in the ozone layer and allowing harmful ultraviolet light to pass through the earth’s atmosphere, damaging animals, plants and, of course, human beings. We are still seeing a huge increase in the number of skin cancers around the world as a result. However, the Montreal protocol in 1987 was spectacularly successful. It is a very good example of how international agreements can make a real difference to the way people behave, and the ozone layer is now showing signs of gradual recovery.

As the UK continues to phase out the use of ozone-depleting substances, we cannot allow the success of the Montreal protocol and our international commitments to be put at risk. Will the Minister therefore give me an absolute assurance that the regulatory regime will not fail to keep the use of ozone-depleting substances to an absolute minimum, and that the UK will continue to abide by its international treaty obligations, as stated in the 1987 Montreal protocol?

The maximum limit values for the use and emission of certain ODSs have been set at 12.4% of EU values, on the basis that when the EU regulation was made in 2009, the population of the UK was 12.4% of the population of the EU. What scientific advice has the Minister received about whether that figure is justifiable? It strikes me as an arbitrary figure that is based on populations 10 years ago. I suggest that changes in population, in industrial practices or in other regulatory regimes may mean that the use and emission of ODSs is higher in Britain than in other European Union countries. Surely, Britain is more advanced in many ways than an awful lot of other European Union countries. The Minister said—again, forgive me if I misinterpreted her—that her Department’s examination of companies using F-gases in Britain showed that 11.2% would be a more sensible limit. What is the basis of the 12.4% limit? Is it purely arbitrary and based on population?

Man-made fluorinated gases are less harmful to the ozone layer but very harmful in respect of climate change, so it is really important that we restrict their use. Given that we have fewer than 12 years to act to limit the catastrophe of climate change, we really need to ensure that emissions of those very powerful greenhouse gases are kept to an absolute minimum.

The Committee on Climate Change stated recently that policies had failed to produce the expected reduction in emissions. The 27% reduction in F-gases we should have achieved actually turned out to be a 3% rise. Does the Minister agree that that is not a particularly good marker for the ability of the UK regulatory regime to reduce F-gases in the future? What more does she believe the Government need to do to ensure that emissions of F-gases do not continue to increase?

Leaving the European Union without a deal would leave an enormous governance gap in climate change laws after our exit. Although the Committee on Climate Change monitors, reports and advises, it will not be given the power to enforce those laws, and it is not clear what will happen in the gap before the proposed new office for environmental protection is set up. I would be most obliged if the Minister told us what will happen in that gap.

The explanatory memorandum says the Secretary of State will publish details of the mechanism for allocating quotas and the format for companies to report on the use of ODSs and F-gases through an IT system that will be “completed in early 2019.” How early in 2019 will that be? Is it ready now? Will it be ready by 29 March? Will it overrun, as IT systems have in the past?

The explanatory memorandum states:

“The Secretary of State will have a power to increase each company’s HFC quota”

in the event that it becomes apparent that we should have a higher quota. I am not sure whether the Minister has adequately addressed that point. It occurs to me that allowing for such an increase could lead to companies that would benefit financially from a slightly higher quota claiming the maximum possible level of quota. How do the Government intend to prevent that?

The explanatory memorandum suggests the Government still do not know how much HFC is being used in the United Kingdom. I am not quite clear why they do not know and why, given that this was likely to be a problem, it has not already been worked out. How can we be sure that the regulations will only allow the power to use HFCs to be used within the limits as set down?

We are told that F-gas training certificates that have been issued in the European Union will be valid in Britain, but will certificates issued in the United Kingdom be valid in the EU? Are any certificates issued in the United Kingdom? Do we train any of these technicians ourselves? Do we have any intention of training any such technicians, or will we continue to rely on the EU for all our training and all our technicians?

It is clear that the explanatory memorandum was written in the autumn of last year. It would be much easier to examine the SI and hold the Government to account if we knew the up-to-date answers to the questions that were asked in the autumn of last year, when the explanatory memorandum was written.

The Environment Agency is being used to deal with charges to businesses, but we do not know when those charges will be ready to proceed. Has the guidance been published? Will the charges be ready to be put in place on 29 March? How will the system be financed during the period before the charges come into operation, if they are not ready to come into operation on 29 March?

There are so many unknowns with these regulations, and I believe that a lot of that is due to this Government being ill-prepared for a no-deal Brexit. It is another example of how leaving the European Union will create more, not fewer, regulatory problems for the United Kingdom. Some of the regulatory problems will be visited on the businesses that are trying to operate under this scheme. Legislation is being rushed through without substantial time for scrutiny. I am deeply appalled by the difficulty of holding the Government to account on these draft regulations, the provisions of which, if they were to go wrong, could prove a real danger to the health and happiness of the people of this country.

I am pleased that the hon. Gentleman praises the Montreal protocol. Of course, it was under Margaret Thatcher that the United Kingdom joined it; she was one of the great leaders who recognised the climate change challenge at that time. The hon. Gentleman is right to say that the protocol has been successful. Apart from perhaps the UN convention on desertification, it has been the most successful of all the binding international environmental laws.

I am conscious that, right across the House, we continue to seek more action on this issue. It is important to get the regulations right. The hon. Gentleman is accurate to say that the explanatory memorandum was written in the autumn—technically the winter. The draft statutory instrument was initially laid in December 2018, alongside the explanatory memorandum. There was a drafting exchange with the Joint Committee on Statutory Instruments, and the draft instrument was withdrawn and relaid, but there was no need in my view to update the explanatory memorandum.

The hon. Gentleman asked a series of questions about the 12.4%. It is important that he understands that quotas are not allocated to countries, which is why we do not have definitive knowledge of exactly how much CFCs or HFCs are being used in this country. Quotas are allocated, in effect, to producers, which then sell them to companies here in the UK, or a UK company could sell them to somewhere in, for example, Spain. It will vary based on where it is needed and where the production of different materials may be.

That is why we have done the work we have, and why the European Commission also contacted companies. The Commission has not shared its information with us, but we believe that ours is largely accurate. That is why we have given ourselves, to some extent, an element of flexibility to review the situation. It is not that we wish to have an unduly uneven playing field in the ongoing operability of the functions.

We recognise that the 12.4% is, to some extent, arbitrary. It was decided by the EU at the time, based on usage in the UK. That data is aggregated at EU28 level, so populations and, therefore, the consumption of goods are a reasonably good way for these things to be allocated. That is in line with the regulation that brought all this into effect.

The IT system is ready and open, and businesses are accessing it. It has been financed through Government funding. Future charges will be for the overall regulation system. I do not believe that the guidance will be ready on 1 April, but it will be ready fairly soon, and the Environment Agency will have the budget it needs to do the work it does. It is a case of how we then reclaim those costs.

I do not agree with the hon. Gentleman that we are not prepared for leaving the European Union. He will be aware that the Government’s position is that we want to leave with a deal, and we are still working on that. I do not have the political declaration to hand, but from recollection I do not believe it specifically refers to continuing to have a shared EU quota for F-gases. What we propose, working with the Governments of Scotland, Wales and Northern Ireland, is the right way forward to make sure we have a quota system that works for us.

We are still full members of the Montreal protocol—we never gave up our seat—and we will continue to pay into the Montreal protocol assistance fund to help developing nations around the world accelerate moves towards using less harmful gases in their everyday manufacturing and in things such as air conditioning, refrigeration and so on. On that note, I believe the draft regulations are fit for purpose, and I commend them to the Committee.

Question put and agreed to.

Committee rose.