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General Committees

Debated on Monday 18 July 2016

Delegated Legislation Committee

Draft Criminal Justice Act 1988 (Offensive Weapons) (amendment) Order 2016

The Committee consisted of the following Members:

Chair: Phil Wilson

† Allen, Heidi (South Cambridgeshire) (Con)

† Chalk, Alex (Cheltenham) (Con)

† Djanogly, Mr Jonathan (Huntingdon) (Con)

Farrelly, Paul (Newcastle-under-Lyme) (Lab)

† Griffiths, Andrew (Lord Commissioner of Her Majesty's Treasury)

† Harris, Carolyn (Swansea East) (Lab)

† Hayman, Sue (Workington) (Lab)

† Jackson, Mr Stewart (Peterborough) (Con)

† Kennedy, Seema (South Ribble) (Con)

† Mackintosh, David (Northampton South) (Con)

Nandy, Lisa (Wigan) (Lab)

† Newton, Sarah (Parliamentary Under-Secretary of State for the Home Department)

Reeves, Rachel (Leeds West) (Lab)

† Solloway, Amanda (Derby North) (Con)

† Stuart, Ms Gisela (Birmingham, Edgbaston) (Lab)

† Whittaker, Craig (Calder Valley) (Con)

Kevin Maddison, Committee Clerk

† attended the Committee

Second Delegated Legislation Committee

Monday 18 July 2016

[Phil Wilson in the Chair]

Draft Criminal Justice Act 1988 (Offensive Weapons) (Amendment) Order 2016

I beg to move,

That the Committee has considered the draft Criminal Justice Act 1988 (Offensive Weapons) (Amendment) Order 2016.

Good afternoon. It is a pleasure to serve under your chairmanship, Mr Wilson, and I do not plan to detain the Committee too long. We seem to have musical accompaniment from outside on the Terrace, and members of the Committee might want to go and enjoy it later.

The order before the Committee adds zombie knives, zombie killer knives and zombie slayer knives to the list of offensive weapons in the Criminal Justice Act 1988 (Offensive Weapons) Order 1988, the purpose of which is to maintain public safety. Restricting the supply of weapons that may be used in violent crime or to create a fear of violence is a matter of public concern, which is why the Government are taking this action today.

Before I set out further details of the draft order and of what action the Government are taking, I will briefly explain why it is necessary to address zombie knives. We are concerned about the availability of zombie knives, which can be purchased for as little as £10—in fact, the hon. Member for Swansea East tells me that her research revealed one online for as little as £7.99. These weapons are marketed in a way that particularly appeals to young men. Tragically, in 2015 Stefan Appleton, a young man of only 17 years, was murdered with a zombie knife marketed as a “Renegade Zombie Killer Machete/Head Decapitator”.

The Government believe that although sales of such weapons are, pleasingly, relatively low, they have a disproportionate effect because their appearance both creates a fear of violence in law-abiding members of the public and glamorises violence for those to whom such knives appeal. The police strongly advise that such weapons are often used as status symbols by gangs in videos inciting violence, and they have asked us to ban them.

Unlike other types of knife, zombie knives have no legitimate purpose. They are designed for the purpose of violence and creating a fear of violence, and the way they are marketed, using names such as “headsplitter”, “decapitator”, “skullsplitter”, “chopper” or “executioner”, clearly demonstrates the purposes for which they are intended. Such knives pose a danger to the young men themselves and to wider society.

Although it is surely right that these ghastly looking knives should be banned, they look remarkably similar in some respects to gardening instruments, particularly machete-type tools. Will a distinction be made between a machete used for gardening and these offensive weapons?

My hon. Friend makes an important point. When the guidelines and the definitions within the draft order were being considered, a lot of care and consideration was given to the description, which I will shortly discuss, to make sure that there will be such a distinction. We all enjoy gardening, and quite sizeable knives are also often used appropriately in recreational angling. It is important that we act proportionately and do not ban knives that have legitimate purposes. I will be able to offer him a lot of assurance when I go through the order’s description of these weapons—that is the best way to describe them. Members should intervene further if they feel that I can offer more assurance when I get to that part of the order.

Under section 141 of the Criminal Justice Act 1988, it is an offence to manufacture, sell, hire, offer for sale or hire, expose or possess for the purposes of sale or hire a weapon specified in an order made under that section. The importation of any such weapon is also prohibited. That offence carries a maximum penalty of six months’ imprisonment. The order does not provide for the possession of these weapons to be a criminal offence, but the possession of an article with a blade or point in a public place or school premises without good reason or lawful excuse is a criminal offence under sections 139 and 139A of the Criminal Justice Act 1988, as is the possession of an offensive weapon in a public place by virtue of section 1 of the Prevention of Crime Act 1953.

The Government want to add zombie knives to those weapons prohibited by order. That will be achieved by using the order-making powers in section 141(2) of the 1988 Act to add zombie knives to the list of offensive weapons to which section 141 applies. Those weapons are defined as

“the weapon sometimes known as a ‘zombie knife’, ‘zombie killer knife’ or ‘zombie slayer knife’, being a blade with—

(i) a cutting edge;

(ii) a serrated edge; and

(iii) images or words (whether on the blade or handle) that suggest that it is to be used for the purpose of violence.”

I hope that that definition gives my hon. Friend the Member for Huntingdon the assurance he was looking for.

I hope hon. Members will agree that the order is important and will prevent these weapons from being used in violent crime or to instil a fear of violence. I commend it to the Committee.

May I say what a pleasure it is to serve under your chairmanship, Mr Wilson? I welcome the Minister to her place and look forward to working with her closely in the coming days.

The addition of zombie knives to the offensive weapons list is warmly welcomed by Labour Members. We take great pride in what we see as a victory, because the Labour police and crime commissioner for the West Midlands, David Jamieson, has campaigned for these knives to be outlawed for a considerable time. A zombie knife is characterised by the following features: a blade that is more than 3.5 inches long; no practical usage; glorification of violence; bright colours; and over-the-top, unnecessary decoration.

Zombie knives have no practical use whatsoever and are sold as a collector’s item. However, they are primarily used by street gangs. With names like “headsplitter” and “death dagger”, no reasonable person would advocate their being made available to the public, but unfortunately they are. As the mother of a teenage son, it worries me greatly that these knives are so readily available. In the past three years, just over 11,000 children have been victims of knife crime, ranging from robbery to rape, kidnap and murder. The true figure could be as high as 18,000, as 15 police forces in England and Wales failed to provide official statistics to the “Drop the Knife” campaign. The same campaign claims that a child is arrested every two hours for carrying a knife—that is utterly shocking.

As the Minister mentioned, just two months ago a 17-year-old was sentenced to life imprisonment after attacking 17-year-old Stefan Appleton with a 24-inch zombie killer knife. Stefan died in hospital following the attack, in which the serrated blade was used to stab him in the chest and legs. That is probably the most high-profile case involving a zombie knife, but I am concerned there could be more incidents if these knives are made available. There were approximately 28,000 crimes involving a knife or sharp instrument in 2015, which is 9% up on the 2014 total.

The popularity and availability of zombie knives online is extremely worrying. When I searched “zombie knives UK” on Google, I was horrified to find not only that the top two results on the first page were online shopping results, but, as the Minister has said, that most of the knives were available for as little as £7.99. It is terrifying to think that somebody’s life could be taken for just £7.99.

During the House’s consideration of the Policing and Crime Bill, Labour Members pressed the Government to accept an amendment that would have ensured that such knives were not illegally sold over the internet to under-18s. The Government rejected the amendment, claiming that they had agreed a new set of principles with major retailers, including Amazon and eBay, targeted at addressing the problem. The agreement had been reached less than a month previously, and the Government asked for more time to give it a “chance to work”. The agreement has now been in place for more than three months, so it would be welcome if the Minister could update us on how effective it has been.

We welcome this amendment to the Criminal Justice Act. It is important that we do all we can to reduce the prevalence of all types of knives on our streets, especially zombie knives. Such ferocious knives have no practical use in our society, and I am glad that they will no longer be available on the open market. However, we would be most grateful if the Minister could assure us about the policing of online sales.

I thank the hon. Member for Swansea East for her kind words. I look forward to working with her. Many of the crimes in my portfolio are way too important for any sort of party politics, and I look forward to building common cause with all Members of all parties so that we can prevent harm, particularly to the young people we are talking about today.

I also pay tribute to the work of the police and crime commissioner for the West Midlands and his campaign to prohibit zombie knives. A number of Members of Parliament wrote to my predecessor, my right hon. Friend the Member for Staffordshire Moorlands (Karen Bradley), and many members of the public have also contacted the Department, so there has been a groundswell of revulsion and disgust at how easy it is to access such weapons. I pay warm tribute to the police and crime commissioner.

As the hon. Member for Swansea East said, knife crime among children is truly shocking. I am sure that the order will play its part, but it is not a silver bullet. I reassure the Committee that the Government take knife crime extremely seriously, and we have introduced a series of measures and are working closely with the police to ensure that they have the tools they need to address knife crime. There is always more we can do, but we have a comprehensive strategy that is kept under continual review.

As the hon. Lady said, one area of work is considering what more we can do to prevent young people under the age of 18 from acquiring any sort of knife online. I am happy to report that work undertaken with the British Retail Consortium and major retailers is bearing fruit. Large online vendors such as Amazon have already introduced measures to ensure that no young people under the age of 18 can be sold a knife online. High street retailers are actively taking steps to educate their staff in carrying out age checks and identity checks before people are able to buy knives. Of course that needs to be kept under constant review and, after three months, it is early days, but I assure her and members of the Committee that I will be keeping a close eye on it to ensure that that education happens.

If necessary, we will introduce further measures, because one life lost is one life too many. Horrendous, life-changing injuries can be caused by such weapons being used by gangs or others. Our primary aim is public safety, and restricting the supply of weapons in order to prevent violence and intimidation is an important contributor to that aim. Other types of blade are used in crime. However, zombie knives have no legitimate purpose, as everyone has agreed today. Unlike other knives, their combination of cutting and serrated edges and the way they are clearly marketed for violent purposes makes such weapons particularly dangerous and appealing to some young people. I hope the Committee will agree that this is a proportionate and sensible measure.

Question put and agreed to.

Committee rose.

Draft Pubs Code (Fees, Costs and Financial Penalties) Regulations 2016

The Committee consisted of the following Members:

Chair: Joan Ryan

† Barclay, Stephen (North East Cambridgeshire) (Con)

Bradshaw, Mr Ben (Exeter) (Lab)

Burns, Sir Simon (Chelmsford) (Con)

† Caulfield, Maria (Lewes) (Con)

Coaker, Vernon (Gedling) (Lab)

† Esterson, Bill (Sefton Central) (Lab)

† James, Margot (Stourbridge) (Con)

† Lord, Jonathan (Woking) (Con)

† Lucas, Ian C. (Wrexham) (Lab)

† McCartney, Jason (Colne Valley) (Con)

Miller, Mrs Maria (Basingstoke) (Con)

† Morden, Jessica (Newport East) (Lab)

† Pawsey, Mark (Rugby) (Con)

† Rees, Christina (Neath) (Lab/Co-op)

† Shapps, Grant (Welwyn Hatfield) (Con)

† Smith, Henry (Crawley) (Con)

David Weir, Committee Clerk

† attended the Committee

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

Drummond, Mrs Flick (Portsmouth South) (Con)

First Delegated Legislation Committee

Monday 18 July 2016

[Joan Ryan in the Chair]

Draft Pubs Code (Fees, Costs and Financial Penalties) Regulations 2016

I beg to move,

That the Committee has considered the draft Pubs Code (Fees, Costs and Financial Penalties) Regulations 2016.

It is a pleasure to serve under your chairmanship, Ms Ryan. The regulations, like the Pubs Code etc. Regulations 2016, which were debated last week, are made in exercise of powers under part 4 of the Small Business, Enterprise and Employment Act 2015, which regulates the dealings between pub-owning businesses and their tied tenants in England and Wales. The regulations are much shorter and less complex than last week’s regulations, and I will deal with them as briefly as possible. They have two purposes: to set fees and cost limits for arbitrations and market rent only disputes referred to the adjudicator; and to set a maximum penalty that the adjudicator may impose for a code breach following an investigation. I will take each area in turn.

On fees, the regulations set out the applicable fees payable by a tenant for referrals of pubs code breaches to the Pubs Code Adjudicator for arbitration, and by a tenant or pub-owning business for referrals of market rent-only disputes. They also make provision about the maximum amount that a tenant may be required to pay a pub-owning business following arbitration by the Pubs Code Adjudicator. Finally, the regulations regulate payments to be made by large pub-owning businesses—defined in the 2015 Act as those owning 500 or more tied pubs—and their tied pub tenants by way of fees and costs in relation to market rent only disputes and arbitrations of pubs code disputes.

The fees and costs provisions largely mirror the arbitration or mediation arrangements in the existing industry voluntary code and have therefore not generated much comment. The financial penalties are not an aspect of that voluntary code and may be imposed by the adjudicator only after an investigation. Financial penalties are just one form of enforcement available to the adjudicator following an investigation. Under the Act, he may make recommendations about what a pub-owning business should do to comply with the pubs code and the time by which it should do that. He may also require the business to publish information relating to the investigation.

Where the adjudicator imposes a financial penalty, the regulations specify what the maximum penalty should be. The adjudicator has complete discretion as to whether he imposes a financial penalty and in what amount, up to the maximum stipulated. The nature and effect of the breaches will inform the exercise of that discretion. Accordingly, we expect the maximum penalty to be applied only in extreme cases, for very serious breaches of the code. Where the maximum penalty is awarded, its purpose is clearly to have a marked and serious effect on the pub-owning business. It is therefore entirely appropriate that the maximum should be 1% of the UK turnover of the whole group to which the pub-owning business belongs, not just the turnover of the part of the group that owns tied pubs.

In summary, the regulations make provisions in respect of fees, costs and financial penalties that are fair and proportionate to the intended purpose. I commend them to the Committee.

May I compliment the hon. Lady on her presentation, congratulate her on her appointment and wish her all the best in Victoria Street? That is an excellent place for a Minister to be—I was there once. There is even someone behind her, supporting her, who was there when I was too.

I thank the hon. Gentleman for his kind words, and know that I have a number of sources of advice if I require any, as I am sure I will over the coming months.

It is a pleasure to serve under your chairmanship, Ms Ryan. I join my hon. Friend the Member for Wrexham in welcoming the Minister to her post. She follows in some illustrious shoes. I have enjoyed debating with the right hon. Member for Broxtowe (Anna Soubry) over the past nine months or so, especially on the topic of the pubs code and the adjudicator, and on creating a level playing field and a fair arrangement between tied pub tenants and pub-owning companies. I welcome the Minister to that debate and to our attempt to create a fair market for pubs. Indeed, we debated the previous statutory instrument as recently as last Wednesday.

I am sure that the Minister, new though she is to the topic, will understand that it is important to get the measures right. It is quite right that we support community pubs not just because of all that they bring to the community, but so that we support small local business including the increasing number of micro-brewers such as Red Star Brewery from Formby, whose beer was in Strangers Bar not long ago. All hon. Members are able to get the beers of their favourite local brewers into Strangers if they apply.

The regulations need not detain us for too long, but I have a couple of questions for the Minister. I hope she can clarify what I have understood. She mentioned the adjudicator’s role in resolving disputes. I believe she said that the adjudicator sets the level of the fees and decides the nature, size and scale of any penalties that might be implemented in the case of complaints or breaches. Will she confirm that?

The Minister mentioned that the legislation includes a threshold of pub companies owning 500 or more pubs. We debated that topic in Committee for the 2015 Act. There are concerns about pub-owning companies possibly being split into smaller companies that own fewer than 500 pubs. Thereby, the pub-owning company would not be covered by the adjudicator. Will she keep an eye on that particular concern and challenge that has been raised in Committee and outside this place?

My final question is about enforcement. Will the Minister keep in mind concerns about the level of resources that the adjudicator will have, and about his ability to enforce penalties that he might wish to impose? How does the Minister envisage enforcement being carried out, and what is her view, at this early stage in her role, on ensuring that the adjudicator’s office is sufficiently well resourced to achieve what everybody wants, which is the proper balance between tied pub tenants and pub-owning companies? With that, I happily await the Minister’s response.

I thank the hon. Gentleman for his kind comments. He asked whether the level of fees is set by the adjudicator. It is, in fact, set by the regulations, and the adjudicator has discretion within the regulated amount set out in the regulations.

The hon. Gentleman asked me to keep in mind the potential for pub-owning companies to fragment their business such that large sections fall just beneath the threshold of 500 or more tied pubs as set out in the regulations. In that respect, we will certainly keep the operation of the code under review. The adjudicator must report on cases of avoidance if he thinks that unfair practices are going on. There will be some protection by the fact that the level of fines—the 1% of group turnover—applies to the entire group, no matter how many small subdivisions the pub-owning company might establish.

Finally, the hon Gentleman mentioned the issue of resources for the adjudicator. I agree that there is no point having an adjudicator if he is not sufficiently resourced to tackle the many cases that might come before him. We think that the resources established will meet the likely demand, but that will be kept under review. I hope I have answered all the hon. Gentleman’s questions. If I have left one out, perhaps he would like to intervene.

Committee rose.

Draft Carbon Budget Order 2016

The Committee consisted of the following Members:

Chair: Ms Karen Buck

† Afriyie, Adam (Windsor) (Con)

† Boswell, Philip (Coatbridge, Chryston and Bellshill) (SNP)

† Cleverly, James (Braintree) (Con)

† Gardiner, Barry (Brent North) (Lab)

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

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

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

† Loughton, Tim (East Worthing and Shoreham) (Con)

† Lynch, Holly (Halifax) (Lab)

† McCaig, Callum (Aberdeen South) (SNP)

† Mak, Mr Alan (Havant) (Con)

† Merriman, Huw (Bexhill and Battle) (Con)

† Murray, Mrs Sheryll (South East Cornwall) (Con)

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

Perkins, Toby (Chesterfield) (Lab)

† Pincher, Christopher (Tamworth) (Con)

† Tolhurst, Kelly (Rochester and Strood) (Con)

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

Katya Cassidy, Committee Clerk

† attended the Committee

Third Delegated Legislation Committee

Monday 18 July 2016

[Ms Karen Buck in the Chair]

Draft Carbon Budget Order 2016

I beg to move,

That the Committee has considered the draft Carbon Budget Order 2016.

It is a pleasure to serve under your chairmanship, Ms Buck, particularly in this new capacity. I would like to say a few words by way of background. Those present will be aware that not only am I not an expert on this topic, even by the formidably inexpert standards of the House of Commons, but I have been but a few hours in the job, so I certainly would not describe myself as being in a position to give absolute satisfaction on any questions that may be asked. There is no joy like the joy of watching a new Minister fall on his face and I will attempt not to give satisfaction in that regard.

Having said that, I am very pleased to open the debate on the draft Carbon Budget Order 2016. The order fulfils the requirement under the Climate Change Act 2008 for the Government to set five-year carbon budgets on the path to the 2050 target of an 80% reduction in emissions. It sets the level for the fifth carbon budget, covering the period 2028 to 2032.

Before discussing the order, I will reflect briefly on the Climate Change Act and what it means at the present time. Leaving the EU will bring challenges and opportunities to the United Kingdom. However, it does not change the fact that climate change remains one of the most serious long-term risks to our economic and national security. The Act was a groundbreaking piece of domestic legislation, passed with nearly unanimous cross-party support. Its success has inspired countries across the world including Denmark, Finland and France and, at its heart, the system of five-year cycles inspired a core part of the historic Paris climate agreement.

The certainty given by the Act underpins the remarkable investment, totalling about £40 billion, that we have seen in the low-carbon economy since 2010. The fifth carbon budget level set by this order continues the certainty into the 2030s. The order will set the fifth carbon budget at a 57% emission reduction on the levels of 1990, meaning that UK emissions will be capped at the equivalent of 1,725 million tonnes of carbon dioxide. That budget level is in line with the recommendations of our independent advisers, the Committee on Climate Change, as well as the views of the devolved Administrations.

As required by the Act, the Government considered a wide range of factors in proposing that level. Key to those considerations was proposing a carbon budget that balances how to keep on track to the 2050 goal with how to cut emissions as cheaply as possible. The Committee on Climate Change and the Government agree that that budget level will put us on a cost-effective path to that legally binding 2050 target.

One should be perfectly clear that the Government do not expect the budget level to jeopardise their commitment to keeping our energy supplies secure and bills as low as possible. It is not simply Governments and experts who agree; it is clearly in line with the views of business. The Confederation of British Industry, EEF and others have all welcomed the certainty that the budget level gives in the country’s journey to a low-carbon economy. I am also pleased to see that, in line with the Act, the budget level has been welcomed across the political spectrum. The shadow Secretary of State for Energy and Climate Change, the cross-party Select Committee on Energy and Climate Change and the Scottish National party have all expressed their support.

The Paris agreement sends a strong signal to business and investors that the world is committed to long-term decarbonisation. The proposed budget level will ensure that the UK economy is best placed to realise the opportunities that that transition presents. Of course, the target is of value only if we accept the challenge of meeting it. Our emission reductions to date put us in a good starting position to do that. The UK met the first carbon budget and is on track to meet the second and third budgets. Provisional figures show that UK emissions in 2015 could be 38% lower than in 1990, and more than 3% below those in 2014. The last two years have seen the greatest annual emission reductions, against a backdrop of a growing economy, but it is clear that we need to do more to address the gap of approximately 10% currently faced in the fourth carbon budget.

The Climate Change Act requires the Government to set out their policies and proposals

“As soon as is reasonably practicable”

after setting a budget level. It is too early to give specifics of what will be included, but the Government’s new low-carbon infrastructure plan will provide policy direction and pathways for the transition over both the fourth and the fifth carbon budgets. It will set out what this Government are doing to build an energy infrastructure that is fit for the 21st century. The Government have already begun to talk positively with businesses, consumers and civil society on the development of our policies and proposals, and will continue to do so in the coming months.

In conclusion, the draft order sets the right budget level. It is in line with the views of the Government’s independent advisers, continues the UK’s leadership on climate change and has the support of politicians and businesses alike. It will provide the certainty needed for future investment in our continued transition to a stronger, low-carbon economy. I therefore commend the order to the Committee.

It is, as always, a great pleasure to serve under your chairmanship, Ms Buck. On this occasion, I am very pleased to welcome the Minister to his new post. It appears that the new Secretary of State has surrounded himself with a posse of very thoughtful Ministers in both the Commons and in the Lords, and I welcome that.

I want to pick up on a number of the points the Minister made. I appreciate what he said about this being his first day in the job and about having to deal with a statutory instrument of this nature, so if there are questions that he does not feel able to respond to immediately and he is prepared to write to me and perhaps also to the Committee, that would provide helpful clarification for everyone.

I think that the Minister must accept that it was a poor signal to remove the words “Climate Change” from the name of the Department. Many of the concerned parties were deeply antagonised by the fact that the Department of Energy and Climate Change had been taken away, lock, stock and barrel; then to drop the words “Climate Change” from the name was, I think, a tactical error. However, the Minister has reassured the Committee today that there is to be no slackening of effort, and that of course is to be welcomed.

The Minister talked of investor confidence, which is indeed critical. He will know that the analysis not only of the financial industries and the investment banks but of the Select Committee was clear that the Government had damaged investor confidence across the whole of the clean energy sector, putting energy security and the costs of decarbonising under great pressure. They in fact said that after reversing their own manifesto commitment to develop CCS, removing all support for the cheapest form of clean energy and failing to provide any visibility on clean energy investment beyond 2021, the UK is facing an investment hiatus. I hope that the Minister and his colleagues in the new Department will put a particular focus on that, because if we lose investor confidence, the £100 billion of investment that this country needs in its energy infrastructure before 2020 will be extremely difficult to deliver.

The Minister also mentioned the European Union, and I think he understands that that situation has exacerbated the uncertainty around investment in our energy future. The Government have insisted that they remain committed to delivering the secure, affordable, clean energy that families and business need. Of course, the Minister is right that I welcomed the proposal to set the fifth carbon budget at the level of an average 57% reduction in emissions. That is the most cost-effective pathway to our long-term 2050 goal, and for that reason we will not oppose the order; but he will appreciate that the Government are not judged on words alone. One thing that he and the new Department will have to explain is why the previous Ministers in the former Department failed to comply with their statutory obligation to set the fifth carbon budget by the deadline set out in section 4 of the Climate Change Act.

Under section 8 of the Act, tabling the draft order containing the intended budget does not suffice to set that budget. The Act required that the order be set by Parliament following the affirmative procedure by 30 June 2016. It is now 18 July, so the statutory duty rests on the Secretary of State to explain why the order was not set in conformity with the 2008 Act. More than that, we need an explanation of the legal implications of having failed to set the order by affirmative resolution by the date contained in the Act because it could mean that the order, even though we set it today, is open to legal challenge at a future date.

It would be helpful if the Minister—if not now, at least in writing—set out clearly what he understands the legal implications of that failure to be. Clearly, the date was set in law for a purpose. If that purpose is not met, we need to know the effect if there were a legal challenge to the budget that we are setting. I would be grateful if the Minister made available the legal advice obtained by his Department, establishing its view of the possible ramifications and whether it believes that any such legal challenge would be successful.

The Government should also explain why they did not follow the Committee on Climate Change’s recommendations to include shipping emissions in the fifth carbon budget. In 2012, the Government deferred a decision to include international aviation and shipping emissions in the net carbon account, but said:

“we will revisit the issue... when we come to set the fifth carbon budget”.

That is what the Government said, on the record, but the fifth carbon budget contains no provision for shipping emissions. The talks at the International Maritime Organisation earlier this year were perhaps less than satisfactory, but the Minister must tackle the issue urgently. The UK and the EU should take a much stronger line in insisting that those emissions are accounted for.

Certainty over the UK’s continued participation in the EU emissions trading scheme would also be helpful. The EU ETS has sectoral caps that are far too lax, but the scheme itself is designed to ensure that emissions reductions occur at the least cost. The downside is that, even if the ETS had more stringent caps, it could give a falsely optimistic reading of the success of our actual emissions reductions. Clarity is paramount. Will the Minister take this opportunity to end the unnecessary inclusion of ETS credits in our net carbon account beyond 2027? That would give more confidence to the power sector and industry in the UK’s commitment to decarbonisation. I believe that was a missed opportunity in the Energy Act 2016.

When asked whether climate change had been downgraded, the Prime Minister’s spokesperson said,

“The Government will be continuing to meet our international commitments.”

The Government must now press forward with the former Secretary of State’s promise to ratify the Paris agreement early, taking all necessary steps to do so this year.

We are of course focused on domestic commitments here. The Government have consistently acknowledged that they do not have the policies to meet the fourth carbon budget—as the Minister said, they are 10% off target at the moment. Not only do DECC projections show that the UK will miss that target, but the CCC reported in June that the gap grows, in the fifth carbon budget, to a staggering 47% shortfall in the effort required. The Minister says it is too early to produce the long-awaited carbon plan, which has been promised for the end of the year. That may be a fair assessment, and he quoted the Act that says the Secretary of State must produce a plan showing how he intends to achieve the fifth carbon budget

“as soon as is reasonably practicable”,

but the fourth carbon budget was set in 2011 and we have been waiting for more than five years. That does not seem to me to be as soon as is reasonably practicable. I believe that the Minister and the Department should now bring forward that carbon plan from the end of the year to as early a date as possible, precisely to encourage the investment in our energy infrastructure that the Minister spoke of.

It is a pleasure to serve under your chairmanship, Ms Buck. I too welcome the Minister to his position and offer my commiserations on so quickly having to speak on a hugely important and quite technical issue.

I associate myself with almost everything that the hon. Member for Brent North said and will not repeat much of it—

Would that be the lack of repetition or the agreement, or a combination of the two? We welcome the Government’s proposed 57% reduction. The clarity around how that is delivered cannot come soon enough. I understand that it requires detailed analysis, but it is clear what will and will not be required.

The Minister said that the draft order provides the certainty that is required. It does to a degree but far more certainty is required. Essential reading for the Minister, new in post, is the Energy and Climate Change Committee report on investor confidence. The sector, which is key to delivering what this legislation proposes to do today, has been damaged by the uncertainty. That requires amends across a number of different energy aspects; I cannot stress how important that is.

What is also fundamental is the potential. This is not just something that we have to do; it is a massive opportunity. The Minister’s predecessors talked about the opportunities for offshore wind. The UK has done well and continues to do well in that and in other areas. There is tremendous economic opportunity in being at the cutting edge when it comes to tackling climate change.

I can understand why we might not get clarity today on the emissions trading scheme, but we need to know what is happening with it. We also need clarity on the EU’s internal energy market and whether, as part of the negotiations for Brexit, it will be proposed that we maintain membership of that developing body. My view is that that would absolutely be the correct thing to do; I urge the Minister to pursue that course.

Finally, I reiterate the comments of the hon. Member for Brent North pressing for the ratification of the Paris agreement as soon as possible. That cannot come soon enough.

I am grateful to the shadow Minister and to the hon. Member for Aberdeen South for their comments. I shall pick up on each of them in order but try to address them collectively.

The hon. Member for Brent North asked why “Climate Change” was removed from the name of the Department. There is a very positive way of seeing that, which is that it is recognised that tackling climate change is a vital part of government: it is understood that it is a central challenge for the next 50, if not 100 or more years, and in a sense it has become part of the furniture of the discussion. The point of this consolidation of Ministries is in part to allow that understanding to spread across our whole industrial strategy. That seems to me a thoroughly important thing.

The seriousness of the Government’s position can be easily gauged by the fact that we have not demurred from the testing targets set by the Committee on Climate Change. That is the overall framework that sets the context for investor decisions, so that is a clear indication of the deep seriousness with which the Government take this.

On investor confidence, that framework is important, but a couple of other things are worth mentioning. First, investor confidence does not appear to be that muted. Siemens has reiterated its investment in the blade plant in Hull, and there are many other indicators that investor confidence remains remarkably high, as the Department and the Government wish it to be: the UK has been the fourth-highest investor in clean energy globally for the last five years; more than half of the total investment in the EU last year occurred in this country; and we continue to increase investment at a rapid rate, especially by international standards. There is no reason why one should feel concerned about investor confidence.

The Minister may be aware of the Ernst & Young report on the index of the best countries in the world for renewable energy investment. We never used to be out of the top 10, but in the past two years we have fallen from eighth to 11th to 13th, so there is an independent scale showing that we are going in the wrong direction. He may also be aware that Vattenfall said that in the light of Brexit it was reviewing all its renewable energy investments in the UK, including its £5.5 billion array off the east coast of England. I am not accusing the Minister of complacency, but he must take this seriously.

I was confining myself to issues specifically relating to climate change, but there are reasons to be confident about the overall position. We have seen enormous further investment in the Nissan Leaf plant in Sunderland and there are other examples of recognition of the progress that this country continues to make.

The question was raised of the impact of Brexit on the EU emissions trading system. Of course, it is far too early to say whether the UK will remain part of the ETS, but the Government take the matter extremely seriously. Even were we to end up leaving the institutions around the ETS, the effect of that would be our having increased flexibility to set our climate change targets as we saw fit. Those targets could be more testing, less testing or exactly at the level required by the ETS itself, so there need not necessarily be anything particularly problematic about it.

On why the submission for the fifth carbon budget was not on time, the truth is that it was important to get the decision right. It will be understood that by 30 June the Government had quite a lot on their plate for other reasons arising over the previous three or four months. I have inquired into whether there is a question about the legality of the budget as a result, and the legal advice has been that it remains intact. There is no reason to think that the legal status of the budget has been affected by the delayed filing. It is also worth saying that we are talking about a period some distance in the future; therefore, we are not talking about something that begins tomorrow.

I am grateful for that clarification. Will the Minister agree to provide a summary of the legal advice, or indeed the legal advice itself, so that we can see it and have the confidence he has that there could be no positive legal challenge?

Legal advice between an attorney and a client is privileged information, so it is not the Government’s practice to publish legal advice that is given, or generally even to publish summaries of legal advice, but I am happy to take the point up and consider it, as the hon. Gentleman has raised it.

On shipping emissions, the International Maritime Organisation has talks under way at the moment. This is an international issue and not something where one can simply make decisions based on simplistic calculations of port of origin or arrival. It is entirely appropriate that the Government continue that process of participating in those negotiations with the IMO. The point is important: shipping emissions, like aviation emissions, should in the fullness of time, if proper methods of calculating an agreement can be reached, be included in the scheme because obviously there are economic impacts and, potentially, perverse incentives that occur from not doing so. The wider point is well taken.

The point about ETS credits reverts to that which I made earlier. In general there is some benefit to having credits because they confer additional flexibility on Government. It would not send a useful signal to investors to have to make changes in policy just because of marginal differences in performance, which credits could address. The position is sensible, but again the point is taken.

Finally, on the 10% gap, I would simply say that we are some way away from the policy development stage. One naturally expects—in particular in an area such as climate change and emissions control—there to be a dynamic response from the economy as these budget constraints start to get set and embed themselves. We are already seeing some of that economic behaviour and one might easily expect to see more of that to come.

In respect of the gap that the Minister spoke of, will he perhaps look at making ground on the transport and the heating sectors, where much more can be done?

I have no doubt that the Government will continue to look, as part of the infrastructure planning process over the rest of this year, closely at that sector, as they will at other key contributors to carbon emissions.

Question put and agreed to.

Committee rose.

Draft Climate Change Act 2008 (Credit Limit) Order 2016

The Committee consisted of the following Members:

Chair: Sir Roger Gale

Boswell, Philip (Coatbridge, Chryston and Bellshill) (SNP)

† Carmichael, Neil (Stroud) (Con)

† Costa, Alberto (South Leicestershire) (Con)

† Frazer, Lucy (South East Cambridgeshire) (Con)

† Gardiner, Barry (Brent North) (Lab)

Gwynne, Andrew (Denton and Reddish) (Lab)

† Harris, Rebecca (Castle Point) (Con)

† Hoare, Simon (North Dorset) (Con)

Keeley, Barbara (Worsley and Eccles South) (Lab)

† Lynch, Holly (Halifax) (Lab)

† McCaig, Callum (Aberdeen South) (SNP)

† Murray, Mrs Sheryll (South East Cornwall) (Con)

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

† Pincher, Christopher (Tamworth) (Con)

† Sandbach, Antoinette (Eddisbury) (Con)

† Sturdy, Julian (York Outer) (Con)

Thomas-Symonds, Nick (Torfaen) (Lab)

Woodcock, John (Barrow and Furness) (Lab/Co-op)

Fergus Reid, Committee Clerk

† attended the Committee

Fourth Delegated Legislation Committee

Monday 18 July 2016

[Sir Roger Gale in the Chair]

Draft Climate Change Act 2008 (Credit Limit) Order 2016

I beg to move,

That the Committee has considered the draft Climate Change Act 2008 (Credit Limit) Order 2016.

It is a great pleasure to serve under your chairmanship, Sir Roger. This order—I speak as someone who has gone from being a complete innocent on these topics to being a raddled veteran in the course of three hours—fulfils the requirement under the UK’s Climate Change Act 2008 to set a limit on the number of international carbon credits that the Government could count towards the third carbon budget, which runs from 2018 to 2022. The Act, which was passed with near-unanimous support, allows for the flexibility of using carbon credits to meet a carbon budget. That ensures that even if unforeseen circumstances cause our planned emission reduction measures to come off track, the UK can continue to ensure that we meet our emissions targets under the Act.

The order will set the credit limit for the third carbon budget at 55 million tonnes of carbon dioxide equivalent, which is only about 2% of the total carbon budget. That is the same amount of flexibility as the House agreed for the second carbon budget credit limit. In determining the appropriate third carbon budget credit limit—the subject of the present discussion—the Government have taken into account the advice of the independent advisers, the Committee on Climate Change, as well as the views of the devolved Administrations. We have also considered the range of factors required by the Act, including the economic, fiscal, social, scientific and international circumstances. Although the Committee on Climate Change recommended a zero credit limit, the Government have concluded that it is best to maintain a small amount of flexibility over the third carbon budget period. Although the Government’s policies are ensuring that we are on track for the third carbon budget, it is still prudent to allow ourselves flexibility in the future to manage the uncertainty in emissions projections. I therefore commend the order to the Committee.

It is, once again, a pleasure to serve with you in the Chair, Sir Roger. Just for the sake of good order, I again welcome the Minister, given that this is his first day in the job. I do so just in case anyone reading Hansard would think that I was rude not to, even though an hour ago we spent the same time in another statutory instrument Committee congratulating each other.

The order does indeed do what the Minister said. These offsets are separate from all the traded credits that we might accrue through the EU emissions trading scheme, and the order allows 55 million international carbon units to be used as offsets against domestic action. That amounts to 2% of flexibility on domestic carbon reductions for the third carbon budget.

There is really only one question that the Minister must answer, and he attempted to do so in his remarks. Why is this Committee being asked by the Government to go against the independent advice of the Committee on Climate Change on this matter? The Minister stated—I do not know whether this was justification or explanation—that the Government were following the precedent from last time. Indeed they were, but again on that occasion the Committee on Climate Change had recommended that they should not use the flexibility of these credits, and the committee was proven right because the credits were not needed—as indeed on this occasion the Minister believes, I think, and I believe that they will not be. They should not be required. We are already below the level that has been set, and unless the Minister knows of any reason why our energy policy should start to increase emissions dramatically, it is almost inconceivable that we will need the flexibility that the order allows.

The chief executive of the Committee on Climate Change said to the Environmental Audit Committee earlier this month:

“The committee has always been very clear that, unless there are exceptional and unpredicted circumstances, international offsets should not be used as a reason not to act domestically.”

The Minister needs to challenge his officials a little bit more strongly on the issue of domestic action. According to the Committee on Climate Change’s 2016 progress report to Parliament, our average annual emissions are already below the level needed to meet the second and third carbon budgets up to 2022. The Department of Energy and Climate Change’s impact assessment of this legislation notes that using credits

“could lead investors to expect that policy would target a slower rate of domestic emissions reduction in the near-term. This could affect investment decisions in low-carbon infrastructure and supply chains, although this impact is likely to be minimal.”

That is the Government’s own impact assessment.

At a time of increased uncertainty since Brexit, we need every assurance that the Government’s actions will not undermine ambition or the energy investment that the Minister and I were saying was so required in the earlier Committee that considered the carbon budget. The Government should surely now be building certainty about upholding their commitments and delivering on their domestic targets.

The legislation allows us to use the ETS allowances for the traded sector in place of actual emissions, in accounting for our net carbon budget, so flexibility is already built into the system. There is serious uncertainty, which I have already flagged up to the Minister, about the UK’s future participation in the ETS. I trust that he will try to resolve that uncertainty as quickly as possible.

The Opposition would prefer to go with the recommendation of the Committee on Climate Change. We will therefore oppose the order.

I am very grateful to the shadow Minister for his comments. He and I are rapidly turning into the Mutt and Jeff of the climate change world, but it is a pleasure to address the concerns he raises.

Let me remind the Committee that this is not a matter of buying credits; it is a matter of setting a credit limit. The Government have never bought credits and do not contemplate doing so as part of either the second or third carbon budgets. It is also true to say that the Government have not ignored the Committee on Climate Change. On the contrary, we have engaged closely with it and adopted its main recommendations consistently. Here, however, there is some licence to deviate. The Government have done so in this case for the reasons I set out in my opening remarks. The first is following the precedent set by the previous budget. The Government understood that that was potentially problematic from the Committee on Climate Change’s standpoint, but we did that because we sought a degree of flexibility, and that degree of flexibility is again sought today.

That is not a way of getting ourselves off the hook. The progress made under both the second and third budgets is already manifest. In fact, that progress is sufficiently clear that it should not bring into question whether the Government are committed, because we clearly are making very good progress.

The Minister and I are agreed that there is little likelihood of the credits being required. The key thing here is whether one follows the advice and whether one sets a precedent. He knows that the really difficult budget is the fourth carbon budget, not this one. Therefore, he has beseeched precedent by referring back to the previous carbon budget, saying, “Well, we allowed it there, so we should allow it here.” That is exactly the precedent that needs to be nipped in the bud because we need to send a strong signal to investors that the fourth carbon budget, which will be difficult to achieve, must be achieved through domestic action.

I think it is a point well made. I would go further and say that the Government do not disagree that the use of credit limits of this kind are not a way of getting off the domestic carbon policy reduction agenda. That remains central to the focus of the Government and the Department. It is, however, important to recognise that aspects of carbon reduction plans could be set back. For instance, although we have had some rather warm winters recently, it is not impossible that we could have a series of winters of unusual severity. It is not likely to happen and the Government do not believe that that will happen, but it is a possibility.

It is wise to have flexibility in general, provided that it is not open to abuse. Setting the limit at 2% over a five-year period—0.4% for each year—is not a total that can be regarded as abuse. The question is how one balances the direction and principle with an element of pragmatism that allows the Government a degree—but not too great a degree—of freedom of manoeuvre, and that is what the order provides.

I thank the hon. Gentleman for his contribution and reiterate that the Government remain committed to combating climate change. Climate change has not been downgraded as a threat, and is widely recognised across Government as one of the most serious long-term risks to our economic and national security. At the heart of the Government’s commitment is the Climate Change Act 2008 and its target to reduce emissions by 80% by 2050, as against 1990 levels. The interim carbon budgets have been set against that framework, and under the Act, we need to set a limit on the number of international carbon credits that the Government can count towards that budget.

Although we remain on track, it is prudent to recognise and accommodate a degree of potential uncertainty. That is why we have proposed a credit limit of 55 million tonnes of carbon dioxide equivalent—just 2% of the total third carbon budget. That represents an appropriate level of insurance, in case emissions turn out to be higher than projected. I therefore commend the order to the Committee.

Question put and agreed to.


That the Committee has considered the draft Climate Change Act 2008 (Credit Limit) Order 2016.

Committee rose.