Thursday 28 February 2019
Business, Energy and Industrial Strategy
Capacity Market for Electricity
Last week I informed the House that the European Commission had moved on to the next phase in their investigation of the GB capacity market. This is an important first step in restoring state aid approval for the capacity market as soon as possible.
On 19 December 2018, the Government consulted on a range of changes to the capacity market. These changes would allow for a capacity market auction to be held later this year for delivery in 2019-20. The consultation also covered how existing agreements would be managed during the current standstill period.
The Government have today published a response to that consultation. The vast majority of respondents supported the proposals to allow for an auction for capacity for winter 2019-20 to be held, with payments conditional on a positive state aid approval. They also supported the consequential changes to milestones required as a result of the auction being held later in the year than usual. There was also support for the proposed changes to the management of existing agreements to ensure that scheme obligations continue to be enforced in a pragmatic and proportionate way.
In the light of these responses I can confirm that the Government have today laid draft regulations for the approval of the House to enable these changes to be made to allow an auction to be held in summer 2019.
In our consultation, we also covered the issue of how suppliers can make provisions for suspended payments. In their response to the consultation, capacity market agreement holders identified the importance of them having confidence that they will receive their suspended payments in full after the end of the standstill period. They therefore favoured suppliers making adequate provision to make these payments. We have considered the consultation responses carefully and considered how to ensure that we can deliver this ambition in the most effective and timely way.
I can therefore confirm that the Electricity Settlements Company will establish a system to facilitate suppliers’ meeting their supplier charge liabilities during the standstill period. The inclusion of supplier charges within the price cap already means that all suppliers should be factoring this into their variable tariffs during the standstill period and making prudent provision to enable them to be paid immediately after the end of the standstill period. During the standstill period, the Electricity Settlements Company will:
issue a schedule of post-standstill supplier charges on a monthly basis setting out their liabilities apportioned according to the current formula based on suppliers’ demand in 2018-19. This will enable suppliers to manage their finances effectively;
accept payments against that schedule in an interest-bearing account.
Ofgem will continue monitoring the financial resilience of suppliers, including to understand how any suppliers that are not paying into the Electricity Settlements Company system are making suitable provision to cover their supplier charge liabilities.
Following the end of the standstill period the Electricity Settlements Company will:
invoice suppliers at the earliest opportunity for the full amount of outstanding supplier charges;
work with Ofgem to use a range of tools, including enforcement under the regulations, to ensure prompt payment of this invoice;
levy, in line with the existing regulations, interest on late payments;
pay capacity agreement holders their outstanding capacity payments in full.
We will shortly consult on regulatory changes that will be required to hold a T-3 auction in early 2020.
Environment, Food and Rural Affairs
EU Environment Council
The next EU Environment Council will take place on 5 March, in Brussels. I will be attending to represent the UK, and the Scottish Minister for Rural Affairs and Natural Environment, Mairi Gougeon MSP, will also attend.
On environment items, the main legislative focus will be a general approach on the drinking water directive. In addition, there will also be an exchange of views on greening the European semester, and a policy debate on the European Union framework on endocrine disruptors.
The primary focus for climate items will be a policy debate entitled a “Clean planet for all: Strategic long-term vision for a climate neutral economy”.
Any other business (AOB) will include information from the Commission on three items:
Better enforcement of the EU phasedown for hydroflurocarbons;
Proposal for a regulation in order to take appropriate account of the global data collection system for ship fuel oil consumption data;
Intersessional Espoo meeting of the parties, Geneva, 5 to 7 February 2019.
There are currently three member state led AOBs:
Environmental protection policies to combat depopulation in rural areas and to improve quality of life (tabled by Spain);
Tackling greenhouse gas emissions by aviation pricing (tabled by Belgium);
Preparation of the XXI conference of the parties to the Barcelona convention, for the protection of the marine environment and the coastal area of the Mediterranean, hosted by Italy in Naples from 2 to 5 December 2019 (tabled by Italy).
Exiting the European Union
EU General Affairs Council
Lord Callanan, Minister of State for Exiting the European Union, has made the following statement:
I represented the UK at the General Affairs Council (GAC) meeting on 19 February in Brussels. A provisional report of the meeting and the conclusions adopted can be found on the Council of the European Union’s website at: https://www.consilium.europa.eu/en/meetings/gac/2019/02/19/.
Multiannual financial framework 2021-27
The presidency presented Ministers with an updated work programme on the multiannual financial framework (MFF) for 2021-27. Ministers discussed the latest version of the negotiating box on the MFF. The negotiating box brings together the large number of decisions within the MFF negotiations, and facilitates discussion on options and solutions on individual issues. Ministers agreed that the negotiating box should be simplified at future GAC discussions, in preparation for leaders to discuss at the June European Council. The intention is to reach an agreement on the negotiations in autumn 2019.
Preparation of the European Council 21 and 22 March 2019: annotated draft agenda
The Council discussed an annotated draft agenda for the March European Council. Leaders are expected to discuss jobs, growth and competitiveness; climate change, external relations, tackling disinformation and protecting the democratic integrity of the European and national elections across the EU. The Commission confirmed that industrial policy, single market, capital markets union, and European digital policy should be discussed under the first agenda item. Ministers welcomed the EU-China summit on the agenda, and highlighted the importance of a strong relationship with China for future economic and trade opportunities.
I intervened to welcome the inclusion of the tackling of disinformation and restated the Prime Minister’s comments at the December European Council that disinformation remained a threat to our democratic processes. I welcomed the Commission’s recent action plan on disinformation and called for clearly defined and measurable objectives for its follow up. I stated that to tackle disinformation effectively we needed to take a comprehensive approach that included addressing the actors behind disinformation.
Towards a sustainable Europe 2030
Ministers discussed the Commission’s reflection paper “Towards a Sustainable Europe by 2030, on the follow-up to the UN Sustainable Development Goals, including on the Paris Agreement on Climate Change”. The reflection paper was published in January and served as a basis for the Council’s discussion on what needed to be done to ensure a sustainable Europe by 2030. Ministers underlined the importance of ensuring sustainable development is supported through domestic, regional and global action, in order to achieve the implementation of the UN 2030 agenda for sustainable development at EU level. This discussion will contribute to the preparation of the March Council conclusions on the Commission’s reflection paper, and sessions of the high-level policy forum on sustainable development in July and September 2019.
Values of the Union—Hungary / article 7(1) TEU reasoned proposal
The presidency updated Ministers on its meeting with the European Parliament regarding the article 7(1) procedure in relation to Hungary. The Commission set out its ongoing infraction proceedings against Hungary’s treatment of asylum seekers, attacks on media plurality and academic freedom.
Rule of law in Poland / article 7 (1) TEU reasoned proposal
The Commission provided Ministers with an update on the rule of law proceedings in Poland. Ministers considered that recent legislative changes concerning the Supreme Court law were a positive development, and encouraged the Polish authorities to address the remaining issues raised by the Commission.
Foreign and Commonwealth Office
EU Foreign Affairs Council
My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs, attended the Foreign Affairs Council (FAC) on 18 February. It was chaired by the High Representative of the European Union (EU) for Foreign Affairs and Security Policy (HRVP), Federica Mogherini. The meeting was held in Brussels.
Foreign Ministers welcomed the entry into force of the Prespa agreement which allows for the change of name of North Macedonia. They briefly discussed the situation in the Democratic Republic of Congo.
Horn of Africa
The High Representative informed Ministers about her visit to the region the previous week. Foreign Ministers welcomed the historic Ethiopia-Eritrea peace agreement. They discussed how the EU can support this unprecedented opportunity to accelerate reconciliation and economic integration in the horn of Africa. They reaffirmed the EU’s engagement in the region, which still faces important challenges, not least the security situation in Somalia. They also highlighted the need to keep a strong focus on the respect for human rights, as well as on the situation of migrants who embark on perilous journeys, sometimes at a very young age.
The Council had a comprehensive discussion on Ukraine, covering the reform process as well as the security and humanitarian situation, in particular in eastern Ukraine and the sea of Azov. The Council reiterated its full support for Ukraine’s independence, territorial integrity and sovereignty and continued condemnation of the illegal annexation of Crimea and Sevastopol by Russia. Foreign Ministers acknowledged the important progress Ukraine has accomplished in key areas over the past five years and highlighted the need to maintain reform momentum.
The Council also expressed the importance of ensuring that the elections in Ukraine are well conducted. They highlighted the importance of ensuring that the OSCE election observation mission can conduct its work and can observe the elections in full accordance with its usual practice. Ministers exchanged views on how the EU can help, following the developments in the Azov sea and Kerch strait region, particularly through strengthened support in the affected areas, including in sectors such as railway and road connections, training, and support for SMEs. They reiterated the EU’s call for all detained Ukrainian seamen to be released immediately as well as for the return of the seized vessels and free passage of all ships through the Kerch straits.
The Council discussed the situation in Syria. Foreign Ministers reiterated the EU’s full and continued support for UN special envoy Geir Pedersen’s efforts and the Geneva UN-led peace process for Syria, which remains key to the implementation of UN Security Council Resolution 2254, citing a credible political transition in Syria as the only sustainable long-term solution to the conflict. Ministers reiterated that the EU will be ready to assist in the reconstruction of Syria only when a comprehensive, genuine and inclusive political transition is firmly under way.
Ministers discussed preparations for the “Brussels III” conference “Supporting the future of Syria and the region”, which will take place on 12 to 14 March, and remains key to continue mobilising the international community behind humanitarian and resilience efforts for the Syrian people and host communities. The High Representative highlighted that the conference would have an even greater focus on the role of civil society and women, and that the issues of accountability and the fight against immunity will feature prominently.
Over lunch, Foreign Ministers discussed the situation in Venezuela, following the first meeting of the international contact group in Montevideo on 7 February and ahead of the technical mission to Caracas led by the EU and Uruguay. The mission will work on assessing the support that can be provided to facilitate a democratic and peaceful outcome to the crisis, and, in particular, the holding of early presidential elections. Foreign ministers also stressed that humanitarian aid should be delivered to the people in need.
The Council agreed a number of measures without discussion:
The Council adopted conclusions on Yemen.
The Council adopted conclusions on climate diplomacy.
The Council adopted conclusions on EU priorities in UN human rights fora in 2019.
The Council renewed for one year the restrictive measures against Zimbabwe. The sanctions consist of an arms embargo as well as a travel ban and an asset freeze to listed individuals and entities.
The Council added one person to the list of persons and entities targeted by the EU restrictive measures against ISIL (Daesh) and al-Qaeda and persons, groups, undertakings and entities associated with them, bringing the total number of persons currently on the list to three.
The Council transposed UN-adopted law amendments, related to two individuals subject to restrictive measures, into EU law, in view of the situation in Afghanistan.
The Council approved and authorised the signing of an agreement on a framework for the participation of Jordan in EU crisis management operations.
The Council adopted the updated the EU’s common military list in line with the provisions of common position 2008/944/CFSP on arms exports.
The Council approved a joint civil-military concept of operations on regionalisation of CSDP action in the Sahel. The process of regionalisation will now enter its second phase.
The Council authorised the Commission to intervene on behalf of the EU before US courts regarding the recognition and enforcement of intra-EU investment arbitration awards.
The Council endorsed a framework for a comprehensive dialogue between the EU and Iran on migration and refugee issues (5983/19).
The Council adopted a decision on the UK opt-out from the recast of the regulation on the creation of an immigration liaison officers network (5979/19).
The Council approved an information note containing recommended EU positions for the ICAO Council meeting on 18 February to 15 March 2019, so that the information note can be used as the basis for the interventions of the representatives of the ICAO Council EU members.
The Council adopted a decision on the position to be taken on behalf of the EU in the ICAO Council, in respect of the adoption of amendment 17 to annex 13.
The Government are committed to giving the police the tools they need to do their job effectively and ensuring that officers’ access to specialist equipment such as conducted energy devices (CEDs), commonly known as Tasers, can remain aligned with police assessments of threat and risk. CEDs are an important tactical option for specially trained officers, particularly in potentially violent situations where other tactics have been considered or failed.
My right hon. Friend the Home Secretary has today given his approval for chief officers of police forces in England and Wales to train selected student officers to carry CEDs where they have identified an operational need to do so. It is for chief officers to determine the number of CED devices and specially trained officers they require, based on their force’s strategic threat and risk assessment. This change allows chief officers to consider student officers for CED training and deployment, provided they have met certain selection criteria, to help ensure frontline officers can protect themselves and the public.
I would like to assure the House that the existing high standards around CED training and operational deployment, for which the UK is renowned, will be maintained. It will remain voluntary whether an individual student officer applies for special CED training, and the CED training itself will remain the same—with the same standards needing to be met for a student officer to pass the assessment.
Additional safeguards have been put into place for the extension of CED use to student officers. Only student officers who have been assessed by supervisors to be sufficiently competent and experienced in dealing with incidents involving conflict will be able to apply for CED training. The College of Policing has developed a robust application framework for student constables which sets this out, including a post-use process to support continued officer development. Details of this proposal were submitted for independent medical review by the scientific advisory committee on the medical implications of less-lethal weapons (SACMILL).
The Home Secretary’s decision to approve this measure follows stringent consideration of a number of factors including: the request for approval from the National Police Chiefs’ Council (NPCC), the College of Policing’s application and post-use development framework and the views of SACMILL.
We are also clear that any use of force by police officers must be lawful, proportionate and reasonable in the circumstances. The Government are committed to improving transparency and accountability around use of force. This is why we initiated reforms to the way in which use of force data is recorded and published. On 13 December 2018, the Home Office published national “police use of force” statistics on gov.uk for the first time—providing unprecedented transparency and accountability. In addition, I expect any police forces who decide to extend CED use to student officers to monitor the impact of this change, including local consideration of injury data.
Children in Custodial Institutions
Today the Independent Inquiry into Child Sexual Abuse has published its latest strand report, which can be found at www.iicsa.org.uk.
This report relates to its investigation into the extent of any institutional failures to protect children from sexual abuse and exploitation while in custodial institutions. I am grateful for the strength and courage of the victims and survivors who have shared their experiences to ensure the inquiry can deliver its vital work.
The Government will review this report and consider how to respond to its content in due course.
I would like to thank Professor Jay and her panel for their continued work to uncover the truth, expose what went wrong in the past and to learn the lessons for the future.
EU Exit: Free Trade Agreements
Today, I am laying a Command Paper—“Processes for making free trade agreements after the United Kingdom has left the European Union” (CM 63) before Parliament.
The Government are committed to ensuring that Parliament can conduct the right level of scrutiny of our future trade agreements. We have considered carefully the views expressed by parliamentarians in reaching the proposals set out in the Command Paper. This includes the recommendations made by the International Trade Committee in their report “UK trade policy, transparency and public scrutiny”, which was published on 28 December 2018.
The Government’s response to that report will be published shortly.
I will be laying this report in both Houses today and it will be available on DIT’s website at https://www.gov.uk/government/publications/processes-for-making-free-trade-agreements-once-the-uk-has-left-the-eu.
Government Procurement Agreement
I wish to update the House on the progress made in securing the UK’s continued participation in the WTO agreement on Government procurement (GPA) as we leave the EU. Yesterday in Geneva, the 19 parties to the GPA formally adopted the decision relating to the UK’s accession to the agreement as a party in its own right. The GPA committee decision on the UK’s accession refers to both the scenario where the UK and EU reach a deal on the terms of the UK’s withdrawal, and one in which the UK is to leave the EU with no deal. If the UK leaves the EU without a deal, the UK will ratify the agreement as soon as possible, once the process set out in section 20 of the Constitutional Reform and Governance (CRaG) Act 2010 completes. This will ensure that our membership of the GPA—an agreement worth £1.3 trillion annually—continues, as now, in a no deal scenario. Should the withdrawal agreement be agreed between the EU and UK, a further decision of the GPA committee would be required to allow for UK accession at the end of the implementation period, but the GPA would continue to apply to the UK as if it were a member state of the EU during that implementation period. Leaving the EU with a deal remains the Government’s top priority. This has not changed.
Yesterday’s decision is a significant milestone for the UK, and it will ensure UK suppliers can continue to bid for Government contracts overseas on substantially the same terms as currently provided to the UK as an EU member state. It will also ensure that the UK continues to benefit from increased choice and value for money in areas where the UK’s procurement opportunities are open to international competition, whilst importantly continuing to protect vital public services such as our NHS.
The Government have already begun the process set out in section 20 of the CRaG Act 2010 for Parliamentary scrutiny of the agreement. The agreement was laid before both Houses of Parliament on 18 February. This includes text of the agreement, the UK’s market access schedules—consistent with our current offer as an EU member state—and the market access schedules of all parties, alongside accompanying explanatory memoranda. In a no deal Brexit scenario, the Government are anticipating a short gap between the UK leaving the EU and its accession to the GPA becoming effective. This is to allow for the completion of the necessary processes that allow for a new GPA accession to become legally effective. The gap is expected to be very short and, as a result, the Government are expecting the impact on UK businesses to be minimal.
Northern Ireland Finances
During the course of the past two years the UK Government have continued to work towards the restoration of a devolved Government. I remain fully committed to seeing this happen as my belief in the Belfast agreement and devolution is resolute as is my commitment to protecting the best interests of the people of Northern Ireland.
A fundamental part of this is to protect the delivery of public services and ensure good governance in the absence of an Executive. I am, therefore, providing clarity and certainty on Northern Ireland finances for the 2019-20 financial year. This would enable Northern Ireland Departments to plan and prepare for the year ahead.
2019-20 Budget allocations
I set out below the resource and capital allocations which I consider to be the most balanced and appropriate settlement for Northern Ireland Departments. It would be open to a restored Executive, of course, to consider and revise the position I have set out.
In deciding on these allocations I have engaged intensively with the Northern Ireland civil service (NICS) to understand the needs of Departments as they continue to manage public services in the absence of an Executive. I have reflected too on the various views on budget priorities submitted to me over the course of the past year and discussed the budget situation with the main political parties in Northern Ireland.
As we work towards restoring devolved government, this Government will respect the devolution settlement and only intervene in Northern Ireland when it is absolutely necessary to do so. In the absence of local Ministers, and given the proximity of the next financial year, it would not be appropriate for the UK Government to seek to take fundamental decisions about service delivery and transformation. Those are strategic decisions that should be taken by locally elected and accountable Ministers in a new devolved Government. Yet we must act to secure public services and enable Northern Ireland Departments to meet urgent pressures in health and education and protect spending for other Departments with core frontline public services. That is what this budget settlement will do, by protecting and preserving public services within challenging fiscal constraints.
On the resource side, it delivers real-terms increases for health, education, infrastructure and justice. It also delivers cash increases to the Departments for the Economy and of Agriculture, Environment and Rural Affairs. Elsewhere Departments would either be cash-flat, with notable reductions only for the two central Departments (Finance and the Executive Office). For capital, it provides a strong basis for investment and enables the York Street interchange to progress as well as key flagship projects including the Mother and Children’s Hospital and the A6 road scheme.
UK Government support
The budget position is based on the assumption that the 2019-20 funding allocation set out in the financial annex to the confidence and supply agreement will be released, subject to Parliament’s approval at main estimates.
Furthermore, in recognition of the lack of opportunity for more fundamental service reconfiguration over the last 12 months, this budget includes £140 million of new funding and some financial flexibilities to deliver this draft budget. These flexibilities include using £130 million of existing 2019-20 capital funding to address public services resource pressures and additional carry forward of up to £85 million resource and £8 million capital from 2018-19 into 2019-20.
As I set out last year, transformation is needed in a number of areas to make services sustainable in the long term. Northern Ireland Departments are limited in what strategic decisions can be taken without Northern Ireland Ministers but work to prepare for this must proceed. To that end, the budget includes a £4 million fund to prepare the ground for transformation.
As part of setting a budget, it is essential that the UK Government provide clarity on the regional rate. This budget position has been constructed on the basis of a 3% (plus inflation) increase on the domestic regional rate, and 0% plus inflation on business rates. I consider that this is a necessary and important step to continue to support public services, particularly in health and education. I can also confirm that this budget settlement would provide the basis for the small business rate relief to continue.
Securing a deal with the EU which Parliament can support remains this Government’s focus and priority. As a responsible Government, we are preparing for EU exit in all scenarios and so have allocated £2 billion in 2019-20 to support Departments and devolved Administrations in either a deal or no-deal scenario. For Northern Ireland Departments this includes £20.4 million of general EU exit funding that is allocated in this budget and a further £16.5 million for the Police Service of Northern Ireland (included in the Department of Justice’s allocation) to reflect the specific and unique circumstances in Northern Ireland.
Implementing decisions within the overall allocations
This statement outlines overall allocations, based on my assessment of the options currently available to the Northern Ireland Departments and the funding available. To the extent possible, the consequent prioritisation of resources within Northern Ireland Departments will need to be undertaken by permanent secretaries, as has been the case during the past two years. It is anticipated that further funding will become available through the usual in-year monitoring process and this should enable Departments to address any remaining pressures. Permanent secretaries cannot, of course, take the full range of decisions that would be available to Ministers. In that context, the UK Government shall continue to support the Northern Ireland Administration, and to do whatever is necessary to meet our responsibilities to the people of Northern Ireland.
Attachments can be viewed online at: https://www. parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2019-02-28/HCWS1370/.