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General Committees

Debated on Monday 12 July 2021

Delegated Legislation Committee

Draft European Union and European Atomic Energy Community (Immunities and Privileges) Order 2021

The Committee consisted of the following Members:

Chair: Stewart Hosie

† Adams, Nigel (Minister for Asia)

Caulfield, Maria (Lewes) (Con)

Duguid, David (Parliamentary Under-Secretary of State for Scotland)

Foy, Mary Kelly (City of Durham) (Lab)

† Harris, Rebecca (Lord Commissioner of Her Majestys Treasury)

Jones, Darren (Bristol North West) (Lab)

† Kinnock, Stephen (Aberavon) (Lab)

Mak, Alan (Lord Commissioner of Her Majestys Treasury)

† Mann, Scott (Lord Commissioner of Her Majestys Treasury)

† Morrissey, Joy (Beaconsfield) (Con)

Pursglove, Tom (Corby) (Con)

† Rimmer, Ms Marie (St Helens South and Whiston) (Lab)

Rutley, David (Lord Commissioner of Her Majestys Treasury)

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

Slaughter, Andy (Hammersmith) (Lab)

Thomson, Richard (Gordon) (SNP)

Throup, Maggie (Lord Commissioner of Her Majestys Treasury)

Liam Laurence Smyth, Committee Clerk

† attended the Committee

First Delegated Legislation Committee

Monday 12 July 2021

[Stewart Hosie in the Chair]

Draft European Union and European Atomic Energy Community (Immunities and Privileges) Order 2021

Before we begin, I remind Members to observe social distancing and to sit only in the places clearly marked. I also remind Members that Mr Speaker has stated that masks should still be worn in Committee, unless speaking. Hansard will be most grateful if Members could send their speaking notes by email to hansardnotes@ parliament.uk.

I beg to move,

That the Committee has considered the draft European Union and European Atomic Energy Community (Immunities and Privileges) Order 2021.

It is a pleasure to appear under your chairmanship, Mr Hosie.

The purpose of the draft order is to implement the agreement we have reached with the European Union that gives the EU delegation to the UK, and its staff, privileges and immunities. It is customary to grant such privileges and immunities to diplomatic missions and international organisations to enable them to function. The agreement is broadly in line with global practice, but includes important provisions to ensure that immunities and privileges do not impede the proper administration of justice.

Before I go through the draft order in further detail, please allow me to set out the policy context. As right hon. and hon. Members know, the United Kingdom left the EU last year on 31 January, after which the EU opened a delegation to the UK. That delegation replaced the European Commission representation and is responsible for representing the interests of the EU and co-ordinating among the 27 EU member states. This Government are clear that we want a relationship with the European Union based on friendly co-operation. The delegation plays an important role in that regard, including on the implementation of the trade and co-operation agreement.

Let me now turn to the details of the draft order. The order treats the EU delegation in broadly similar terms to those offered by other non-EU Governments globally. There are also important provisions to ensure that the immunities and privileges do not impede the proper administration of justice. The order categorises staff at the EU delegation as either “diplomatic agents” or “staff members”, and contains provisions regarding their family members.

EU staff who have been notified to the Foreign, Commonwealth and Development Office as diplomatic agents would be immune from civil, criminal and administrative jurisdiction in the United Kingdom. That includes all enforcement measures. The person of a diplomatic agent would be inviolable in respect of their official acts. That means that the diplomatic agent cannot be arrested or detained for actions carried out as part of their duties. Their residence, baggage, official papers and documents would also be inviolable.

For staff members, the draft order will accord immunity from the criminal, civil and administrative jurisdiction of the UK only in respect of their official acts. Staff members also receive inviolability of their official papers and documents, and inviolability of the person, only in respect of their official acts.

Furthermore, the draft order provides certain fiscal exemptions for the delegation and its staff. Those include exemptions from direct taxes on assets, property, income and the delegation’s operations. There is also an exemption from paying council tax.

Finally, the draft order sets out the provisions to allow the UK to request that those immunities and privileges be waived in certain circumstances. For both diplomatic agents and staff members, there is a complete carve-out from immunity and inviolability in respect of any alleged road traffic accidents and offences.

To conclude, the draft order implements the agreement that the UK has reached with the EU regarding its delegation in London, in line with global practice. It enables the delegation to conduct its activities in the UK, while ensuring and upholding protections for the effective administration of justice. The European Union delegation plays an important role in the UK-EU relationship, supporting a partnership based on friendly co-operation. I welcome the opportunity to hear Members’ views on the order and I commend it to the Committee.

It is a pleasure to serve under your chairship, Mr Hosie. I appreciate the Minister’s introduction of this statutory instrument, which we are happy to support. Like him, I believe that outside the EU, we need to use opportunities to build a better relationship between the UK and other countries. Of course, the European Union is very much included in that consideration. We need to foster strong ties with our allies and partners across the channel, and we hope that the instrument will make a contribution to rebuilding some of the bridges that have, unfortunately, been burned over the last few years.

The legislation will give immunity to certain representatives and staff from the European Union and the European Atomic Energy Community in the UK following the recent co-operation agreement within that framework. It is a welcome step forward that that has been agreed and is being put in place, but the Government’s approach to the issue has been slow and reckless to the point of unnecessarily souring that relationship.

We recall reports at the beginning of this year that the Government were not rapidly expediting the process of granting diplomatic status to the European Union, and I think it is rather shameful that they took so long to ensure that our relationship with the EU was put back on a proper and formal footing. In the end, it came across as petty political point scoring, which soured a relationship that was already going through a very challenging process of negotiation. I do not think that helped to move our rapprochement with the European Union in the right direction. What is done is done—that is water under the bridge—and there are lessons to be learned for the future on trying to build a positive and constructive relationship.

I have some technical questions. First, the instrument was laid before the House on 17 May, and the commencement article states that it will come into force

“on the day after the day on which it is made, or the day on which the Agreement enters into force for the United Kingdom, whichever is the later.”

I assume that the agreement is in force, and therefore that the powers in the statutory instrument will commence forthwith, but will the Minister clarify the precise date on which the immunities will be brought in as a result of this secondary legislation?

Secondly, the explanatory memorandum states that Scotland will pass its own legislation owing to devolved competence, but when will the Scottish piece of this jigsaw puzzle be put in place?

Finally, the Government have confirmed that, as part of the agreement, information on the EU will be provided regularly. What sort of information will it be? How will that be shared and what will be contained within in? It would be useful to hear that from the Minister. The bottom line is that we welcome the statutory instrument and the Minister’s introduction of it.

I am grateful to the hon. Gentleman for his support for the order. It is absolutely appropriate that we crack on and put it in place. As I set out in my opening speech, the EU delegation plays an important role in the relationship between the UK and the European Union. We are committed to relationships with the EU based on friendly co-operation, and that is exactly how we intend to proceed.

The order confers on the EU delegation the immunities and privileges that are necessary for the delegation to function effectively and conduct its activities in the UK. As I said in my opening remarks, that is in line with global practice and, importantly, the order ensures and upholds protections for the effective administration of justice. We expect those who enjoy immunities and privileges in the UK to comply with our laws, however, and we take a firm line with those who do not. The obligation to respect UK law is set out in the establishment agreement and is binding as a matter of international law. Staff members do not have immunity beyond official acts, other than those persons notified to us as diplomatic agents.

The hon. Gentleman raised a question about Scotland. We understand that the Scottish Government intend to lay their order in August, with the expectation that it will be sent to the Privy Council in October. We have notified the European Union of that.

The hon. Gentleman also wanted to know when the order would come into force. The agreement will be signed by both the United Kingdom and the European Union on 21 July, and will come into force on the day after, so he was right in his assumptions.

The hon. Gentleman mentioned the delay in reaching the agreement. We have always been clear that the EU delegation and its staff would receive the immunities and privileges that they need to carry out their roles effectively. The negotiations involve a range of complex issues that take time. I am pleased that we have reached an agreement with the EU that gives the delegation its privileges and immunities, which, I reiterate, are in line with global practice. I also make it clear to the Committee that the order includes important provisions to ensure that immunities and privileges do not impede the proper administration of justice.

Question put and agreed to.

Committee rose.

Draft Electricity Capacity (Amendment) Regulations 2021

The Committee consisted of the following Members:

Chair: Graham Stringer

Burgon, Richard (Leeds East) (Lab)

† Caulfield, Maria (Lewes) (Con)

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

Davies, Geraint (Swansea West) (Lab/Co-op)

Duguid, David (Parliamentary Under-Secretary of State for Scotland)

Eagle, Dame Angela (Wallasey) (Lab)

† Gideon, Jo (Stoke-on-Trent Central) (Con)

Harris, Rebecca (Lord Commissioner of Her Majestys Treasury)

† Mak, Alan (Lord Commissioner of Her Majestys Treasury)

Mann, Scott (Lord Commissioner of Her Majestys Treasury)

Pursglove, Tom (Corby) (Con)

Rutley, David (Lord Commissioner of Her Majestys Treasury)

Thomson, Richard (Gordon) (SNP)

Throup, Maggie (Lord Commissioner of Her Majestys Treasury)

† Trevelyan, Anne-Marie (Minister for Business, Energy and Clean Growth)

† Twist, Liz (Blaydon) (Lab)

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

Seb Newman, George James, Committee Clerks

† attended the Committee

Second Delegated Legislation Committee

Monday 12 July 2021

[Graham Stringer in the Chair]

Draft Electricity Capacity (Amendment) Regulations 2021

We have moved to 1 metre-plus social distancing in General Committees. Members should still sit only in places that are clearly marked. Mr Speaker has stated that, unless Members are exempt, they should wear masks in Committee, except when speaking.

I beg to move,

That the Committee has considered the draft Electricity Capacity (Amendment) Regulations 2021.

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

The draft regulations were laid before the House on 21 June. Before I outline their provisions, I will briefly provide some context. The capacity market is at the heart of the Government’s strategy for maintaining security of electricity supplies in Great Britain. It secures the capacity needed to meet future peak electricity demand under a range of scenarios through competitive, technology-neutral auctions, normally held four years and one year ahead of the relevant delivery year. Those who win capacity agreements, known as capacity providers, commit to providing capacity during period of system stress in exchange for capacity payments. Capacity payments are funded by electricity suppliers, who recover the cost from electricity consumers. Since its introduction in 2014, the capacity market has succeeded in ensuring secure electricity supplies at a low cost to consumers.

To ensure that the capacity market continues to function effectively, we regularly make adjustments to legislation, based on our experience of managing the market’s annual cycle. This instrument makes three technical improvements that will address issues that we encountered over the past year. A number of capacity providers had agreements terminated last year but were unable to transfer their obligations to other providers through the secondary market due to legislative barriers. The instrument aims to remove those barriers, and so improve the flexibility of the secondary trading regime, making it easier to replace capacity that closes prematurely and at short notice, and reducing risk to security of supply.

In the past year, there were a large number of appeals by prospective capacity providers whose applications to participate in the capacity market had been rejected. This was often for minor administrative errors. The instrument aims to make it clearer that the capacity market delivery body, the organisation that administers the capacity market, can accept information that corrects such errors when determining these appeals. This will reduce the risk of applicants being rejected for minor administrative errors, and prevent a detrimental impact on competition in the auctions.

Finally, we recently introduced new requirements on capacity providers that, if not met, could result in reductions to their agreement lengths. Given that such a reduction could have a significant impact on the viability of capacity providers’ projects, it is right that those in that situation have the right to appeal. The draft instrument will therefore allow capacity providers who have had the duration of their agreement reduced as a sanction for non-compliance with certain requirements the option of appealing the decision to the Secretary of State.

Alongside this instrument, we have put forward an amendment to the capacity market rules; it was laid before the House on 5 July. The amendment makes necessary changes that complement this draft instrument and a number of other technical improvements; most notably, it updates carbon emissions limits and extends some coronavirus easements, both of which were introduced last year.

In conclusion, this instrument introduces a number of technical provisions that are intended to address issues identified through the annual delivery cycle of the capacity market, and that are therefore necessary to enable its continued efficient operation. I commend it to the Committee.

It is a pleasure to serve under your chairmanship, Mr Stringer, although I fear that there will not be much chairmanship of today’s proceedings required. I say that because the instrument is pretty much wholly non-contentious. It makes a number of sensible revisions to how the capacity market works, particularly in respect of those aggrieved would-be capacity market entrants who have been excluded from participating in capacity markets, often not for terribly sensible reasons—it will ease that problem considerably.

The instrument does not make any major changes to the operation of the capacity market. It essentially does a number of things that will undoubtedly make the operation of a capacity market a little more straightforward.

We need to draw a distinction between this SI, which makes, shall we say, some lubrication easements for the capacity market, and the principle of the capacity market itself. That is where we start to get into areas of controversy: the Minister mentioned just how important and central the capacity market is to the Government in their management of the energy market as a whole. I would say that, on the contrary, the capacity market at the moment is mainly an arrangement to provide free money for a number of providers who probably would provide anyway. They get money for being around to guarantee that they will provide. I might also note that that is not actually to provide any energy for anybody—it is to guarantee that they will be there, should the need arise for capacity to be provided.

We have seen in the capacity market, which is now about seven years old, a number of instances in which some quite perverse outcomes have occurred in the market provision. For example, one is the inclusion of nuclear power in the capacity market auction process when, as most people will know, it is actually very difficult to switch a nuclear power station off so that it does not provide. A nuclear power station bidding into the capacity market arrangements, and saying that it will provide, is the most egregious example of free money for doing what it would have done anyway.

The original purpose of the capacity market was largely to ensure that the price under capacity restraints would not go to such a high slot outside the major hour-by-hour provisions. Investors might fear that the Government would intervene if energy prices got high enough to have an effect on capacity, when there were tight capacity margins. That has not materialised. There are no tight margins these days, generally speaking. Indeed, as the market progresses with further provision of capacity and interconnection, that will be even less of an issue. The low price of capacity market auctions indicates, among many other things, that capacity margins—

Order. We have plenty of time, and while I do not wish to test my skills in the Chair too much, and the hon. Gentleman is making some very interesting points, I remind him that the debate should be limited to discussion of the instrument in question.

Thank you, Mr Stringer. I intend to bring my remarks to a close shortly. Subject to your guidance, I think that my remarks are generally in line with the statutory instrument, because these are considerations for the better running of a capacity market that has problems ahead. The wider and the narrower issues are related for that reason.

The Minister has heard me speak about the capacity market before. It is due for a second five-year review shortly. The last review, in 2019, when it had been operating for five years, was, I thought, a pretty complacent document. It did not address a number of the issues that I have started to explore this evening. Although the changes that we are talking about today are pretty non-contentious and straightforward, and have the support of the Opposition, I hope that the Minister will accept that there remain wider controversies about the capacity market, and that she will take them as seriously as possible, particularly in that second review. I hope that she will consider whether the market is the best mechanism for ensuring a reliable capacity supply in future; she will know that various alternatives, such as a strategic reserve, were mooted when the capacity market originally came in. I hope she will look at that very seriously when the wider issue comes up for debate at a not-too-distant time. Meanwhile, I look forward to a number of other non-contentious debates as we secure marginally better working of the present system, pending arrangements for a future system that is fit for purpose.

I thank the hon. Gentleman for his remarks, which were careful and considered, as ever, and for his support for the statutory instrument. The Government continue to believe that the capacity market is the right mechanism at the moment for delivering security of supply at low cost to consumers, but we will of course continue to review it and ensure its ongoing efficient and effective operation in the years ahead. I absolutely note his point that the next review will be an opportunity for consideration as our energy mix continues to change to include more renewables and cleaner energy sources. It will be an opportunity to think about whether the capacity market continues to be the right tool.

The draft regulations respond to three specific technical issues that we have encountered in the past year in operating the capacity market. They introduce increased flexibility for market participants and the capacity market delivery body, so that the market continues to deliver its objective of guaranteeing secure electricity supplies at the lowest cost to consumers. I therefore commend them to the Committee.

Question put and agreed to.

Committee rose.