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House of Commons Hansard
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General Committees
13 July 2020

Delegated Legislation Committee

Draft Enterprise Act 2002 (Share of Supply) (Amendment) Order 2020

The Committee consisted of the following Members:

Chair: Caroline Nokes

† Anderson, Stuart (Wolverhampton South West) (Con)

† Bailey, Shaun (West Bromwich West) (Con)

† Barker, Paula (Liverpool, Wavertree) (Lab)

† Bowie, Andrew (West Aberdeenshire and Kincardine) (Con)

† Bradshaw, Mr Ben (Exeter) (Lab)

† Buchan, Felicity (Kensington) (Con)

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

† McCabe, Steve (Birmingham, Selly Oak) (Lab)

† Millar, Robin (Aberconwy) (Con)

† Onwurah, Chi (Newcastle upon Tyne Central) (Lab)

† Tarry, Sam (Ilford South) (Lab)

Thompson, Owen (Midlothian) (SNP)

† Tomlinson, Michael (Lord Commissioner of Her Majesty’s Treasury)

† Twist, Liz (Blaydon) (Lab)

† Wakeford, Christian (Bury South) (Con)

† Wood, Mike (Dudley South) (Con)

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

Anwen Rees, Committee Clerk

† attended the Committee

First Delegated Legislation Committee

Monday 13 July 2020

[Caroline Nokes in the Chair]

Draft Enterprise Act 2002 (Share of Supply) (Amendment) Order 2020

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Before we begin, I remind Members about social distancing: spaces available to Members are clearly marked, and unmarked spaces must not be occupied. Our Hansard colleagues would be grateful if notes could be sent to hansardnotes@parliament.uk.

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I beg to move,

That the Committee has considered the draft Enterprise Act 2002 (Share of Supply) (Amendment) Order 2020.

It is a pleasure to serve under your chairwomanship, Ms Nokes. Before we begin, I will take a moment to thank our colleagues in the other place for their scrutiny of these orders. The Secondary Legislation Scrutiny Committee has indeed brought this order and the section 58 order to the special attention of its House, which add a new public interest consideration on the grounds of public health emergencies to the Enterprise Act 2002. The Committee reported on these orders, noting that it

“considers that the policy changes made by the two Orders are potentially very significant.”

I value the continued work of both Houses in considering these legislative changes, and look forward to debating them today.

Investment, particularly overseas investment, is the lifeblood of our economy, and it is more important now than ever as our companies seek a much-needed boost to recover from the impact of covid-19. The UK economy is open to the world. International trade, investing abroad, and welcoming foreign investment at home are all central to our economic approach. The UK is often considered one of the best countries in the world in which to do business, if not the best. This is in no small part down to our educated workforce, world-beating science and sound regulatory framework, supported by an accessible and robust legal system. Last year, inward investment created more than 57,000 UK jobs. The vast majority of such investment raises no national security concerns whatsoever.

However, we need to be alert to the potential risks involved in ownership or control of critical businesses, which can provide opportunities to undermine our national security through espionage, sabotage or exerting inappropriate leverage. In the light of technological advancements, economic developments, changes in the national security threat, and of course the covid-19 emergency, it is now time for reform. Our international neighbours have acted decisively to address similar issues in Europe. Further afield, Australia has also amended legislation and processes. The pandemic has magnified the risks to our national security. We are now more exposed to opportunistic investors due to the depreciating effects of sterling and the financial pressures of a decrease in investor confidence, which has beset equities and the markets more widely.

We in the UK continually review and update the framework of laws and policies that protects our national security. That tradition of refinement and improvement has enabled the UK to remain internationally competitive, and a place where people can invest with confidence. It is time for us to reform again, to send a decisive message to those who would threaten our national security: the UK is open for investment, but not for exploitation.

I will briefly explain the amendments. The changes made by this order relate to the Government’s ability to intervene in mergers and, in the most extreme cases, block them. How and when the Government can intervene in this way is set out in legislation. Section 23A of the Enterprise Act 2002 includes a list of relevant enterprises: sectors where the threshold for Government intervention is lower. The relevant enterprises listed in the Act are all particularly sensitive sectors where there is a public interest or national security case for allowing the Government to intervene more readily. As it stands, there are three such sectors set out in the Act—military or dual-use technologies, quantum technology and computing hardware. However, as many colleagues will know, technology does not stand still. We now need to apply this lower threshold to other sectors too.

That is the effect of the order, which will add three further areas of the economy to the relevant enterprise list: artificial intelligence, cryptographic authentication technologies and advanced materials. Businesses falling within those categories are often at the forefront of research and innovation. They are small, agile businesses that thrive in an open, innovation-friendly economy. Those businesses produce cutting-edge technology, much of which may not yet be commercially viable but could have implications for our national security.

Breakthroughs in artificial intelligence, cryptographic authentication and advanced materials science are fundamental to other areas of social and economic development. They have underpinned advances in the physical and digital world, and continue to do so. Those technologies are critical to a number of our capabilities, including, of course, defence and security. There may be a risk of losing advantage in those areas if UK companies and the intellectual property that they generate are controlled by opportunistic or, dare I say it, malicious investors.

It goes without saying that the Government must be able to mitigate national security risks. Should an opportunistic investor wish to acquire and exploit a business, and if it would pose such a risk, we need to be able to intervene. The order will allow us to do so both by expanding the list of relevant enterprises to sectors where it is likely to be an issue as I have just set out, and by adjusting the test that applies to them.

In 2018, the £70 million turnover test was introduced and was reduced to £1 million for relevant enterprises. In addition, an amended share of supply test was applied. As a result, the Government can intervene where a relevant business that already has at least 25% share of supply is taken over. The acquiring party need not have any share of the supply of the same goods or services for the test to be met. Of course, that is not the case for businesses outside the scope of relevant enterprises.

We now propose to make a second statutory instrument, the day before the commencement of this share of supply test order, by the negative resolution procedure. It will allow the Government to intervene in mergers involving the three additional enterprise categories, if the target relevant enterprise has a UK turnover of more than £1 million, rather than the £70 million currently required by the 2002 Act.

The order has no impact on the forthcoming national security and investment Bill, which the Government intend to bring forward when parliamentary time allows. It is intended as a short-term measure that will apply until more fundamental reforms can be taken forward through the Bill. The provisions are of great importance to our national security and it is vital that the Government should be able to intervene in situations where UK national security is at risk.

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It is a pleasure to serve for the first time with you in the Chair, Ms Nokes, and on a debate of such national importance.

The Labour party welcomes foreign direct investment into the UK. It helps to protect jobs and keeps us economically competitive on the international stage. The UK has been a magnet for foreign investment, attracting more than any other country in the European Union—when we were in it, of course; and we hope that will not change now that we have left. However, mergers and acquisitions can have implications that go far beyond the companies concerned. They may significantly reduce competition, leaving consumers vulnerable. They may provide unacceptable threats to jobs and communities. They may have an impact on our national security and the resilience of our critical national infrastructure.

With regard to the last two points in particular, enhancements to the Enterprise Act 2002 are required from time to time, to reflect evolving national security and critical infrastructure requirements. We understand perfectly that it is important to maintain national capabilities in key areas. Indeed, if we had acted to maintain capability in the key area of telecommunications, we would be in a much better position when dealing with the challenge of high-risk vendors, such as Huawei, to the security of our mobile communications.

By the way, we are still waiting for the telecoms security Bill that was a belated attempt to do just that, so perhaps the Minister can tell us when we will see it. An important example of updating the criteria of the Act in response to evolving requirements was Labour’s introduction of the UK’s financial system as a criterion in the Act following the 2008 global financial crisis—an intervention that will no doubt be protecting businesses from hostile takeovers during the covid-19 recession.

Labour broadly welcomes the addition of artificial intelligence, cryptographic authentication and advanced materials in the relevant enterprise categories. As the shadow Minister for science, research and digital, I know only too well how vital those sectors are to our national security and infrastructure, and the importance of retaining pioneering tech organisations, but I am concerned that the Government do not value our world-leading tech enterprises enough.

In 2014, Britain had probably the most important and groundbreaking artificial intelligence company in the world, DeepMind, which Forbes described as “world-leading”. Nevertheless, the Government allowed it to be sold to Google for £400 million with no investigation or action, even though its acquisition generated significant concerns of monopoly provision.

Concerns have previously been raised by stakeholders about the suitability of the definitions of the relevant enterprise categories. It is important that the Government show they are listening and respond to businesses asking for further clarity, to ensure that no business falls under the scope of the Act without good reason. The Government will also need to keep the relevant enterprise category lists under review and up to date with any relevant new technologies and sectors as they emerge, with the consent of Parliament.

It is important to know what discussions the Government have had with key institutes and societies in the field to define the categories. For example, have they discussed the definition of artificial intelligence with the Alan Turing Institute? I find the definition quite broad.

Small businesses play a significant role in driving innovation in the sectors that we are talking about, as the Minister mentioned, so Labour supports the principle of lowering the turnover threshold from £70 million, which will be applied by a parallel order made under section 28(6) of the 2002 Act. However, I reiterate the anxieties of trade associations, which say that the £1 million figure that the Minister cited could lead to microbusinesses that develop or trade in products or services that could be a threat to national security slipping through the net.

Why does the Minister think it is necessary to have a threshold barrier to the Government intervening on mergers on the grounds of public interest or national security? Could the Competition and Markets Authority not decide whether a merger was important enough to meet the tests? Why was the £1 million figure chosen? We encourage the Government to remove or review the figure in due course.

One of the main reasons that small innovative businesses actively seek out acquisition or foreign investment is to access finance and resources. Since its acquisition, DeepMind has benefited from significant support from Google, a company whose resources exceed that of many states—although not, I hope, the United Kingdom. Does the Minister have plans to do anything in those key technology sectors apart from blocking takeovers?

When a takeover is blocked on those grounds, what support will be offered to the UK company concerned? For example, if the sale of DeepMind had been blocked, as it could well have been, had the Government understood the importance of artificial intelligence earlier, what support would it have received from the UK Government? Are the Government looking at new models to support businesses in critical areas such as this?

I am referring to something that the Government find it very hard to talk about: industrial strategy. As I have said, we have seen nothing of the promised industrial strategy to diversify our telecoms supply chain. What measures are the Government looking at to strengthen and diversify the supply in artificial intelligence, cryptographic authentication and advanced materials? Earlier this year, I asked in a parliamentary question how much the Government were spending on developing quantum computing technologies, one of the existing sectors. I received a garbled response, which talked of

“combined public and private investment through the UK’s ten year National Quantum Technologies Programme”,

without actually answering the question.

The legislation will provide a means of stopping companies being acquired by foreign investors but not of helping them. Indeed, it will not even stop companies relocating. I refer the Minister to the example of PsiQuantum, a world-leading quantum computing company credited with building the world’s first useful quantum computer. Quantum computing is already a relevant enterprise category, and the company was started in Bristol by local academics but relocated to Silicon Valley to access greater support. How will the Minister address such cases?

PsiQuantum and DeepMind exemplify the fact that, although our security concerns might currently be directed towards China, takeovers may come from anywhere in the world. Indeed, many of them have come from the US. The Minister seemed to imply that the legislation would be used only against malicious takeovers and mergers, but does he recognise that many takeovers and mergers are made on purely commercial grounds but may nevertheless have the effect of reducing our capability in a critical national area? DeepMind was one such example. I do not consider Google to have been a malicious actor on that occasion, but perhaps the Minister would like to correct me on that. Does he agree that the measures must not be targeted at one particular country or purely at what are considered to be malicious actors?

Lastly, we ask the Government to commit to a formal review of the order in due course, in order to assess the additional administrative burden on businesses that now fall within its scope and any negative impacts that it has had on foreign direct investment overall. Britain is a world-leading science country, but we do not benefit as we should from the commercialisation of the science. We also need to recognise the strategic as well as the commercial importance of critical new technologies to our national security. Labour welcomes measures to support our national security in mergers and acquisitions.

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Let me attempt to address some of the issues raised by the hon. Lady, who is a fellow engineer—we need more of them in Parliament. She rightly asked what will happen after a deal is blocked, and how the Government would intend to support a business that needed liquidity. The first thing to remind the Committee is that the Government have never blocked a deal, although it is important to retain the power to do so, given that some mergers may be such a risk to national security that softer remedies are not possible. It is far more likely, however, that the Government will work with the relevant parties to agree undertakings in lieu of a phase 2 CMA investigation. The UK Government have only ever agreed undertakings and have not yet blocked a deal.

With regard to injecting liquidity and providing urgent liquidity to small and medium-sized businesses by different routes, I hope that the hon. Lady would agree that the coronavirus business interruption loan scheme, the large business interruption loan scheme and the bounce back loan scheme have been truly innovative interventions in the economy to help businesses weather the storm of covid.

The hon. Lady also asked what plans the Government have to expand the concept of the public interest regime. The mergers regime is designed to offer clarity for businesses and build investor confidence, because that confidence makes our economy so dynamic and, as a result, highly regarded the world over. It is based on transparent rules, administered consistently by expert bodies—namely, the Competition and Markets Authority. Our regime restricts Ministers’ ability to intervene to public interest grounds, covering only national security, financial stability, public health emergencies and media plurality, hence why we are making these orders.

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Just to clarify, I was not asking whether they have plans, or suggesting that they should have plans, to expand the regime. I wanted to understand what additional support, outside of the mergers and acquisition regime, would be given to companies that fell under this provision. Having identified these sectors as being key, what other support, apart from in mergers and acquisitions, is being offered?

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The hon. Lady will forgive me if I strayed into areas that she did not ask about—additional transparency is always good for the Committee. She is right to talk about that, but we should look at the Chancellor’s track record. When many companies in these emerging technologies were deliberately loss making, the Chancellor acted immediately with the future fund to bring liquidity to those businesses, matched by their current investors. That fund has been incredibly successful. I remind the House that this Government are committed to raising investment in research and development from £12 billion a year, where it is today, to £22 billion a year by 2024-25. That is a truly ambitious target to invest in emerging technologies.

I will conclude shortly, but first I will respond to a couple more things, including the question about whether the provision chokes off investment for these firms. I do not believe it will, but rather it will allow us to focus more on becoming an innovative knowledge economy in the future.

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Can I remind the Minister about my question regarding the £1 million threshold?

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I was about to come to that. Forgive me; that was my final response to the hon. Lady. To remind the Committee, the question was about worries about small companies below the £1 million threshold. We currently have a range of powers to ensure that national security remains protected. The lower threshold of £1 million is considered to be an appropriate level of turnover to capture those businesses that, although small, may have a critical role in matters that may affect national security.

I will end by thanking you, Ms Nokes, and the Committee for its consideration of the statutory instrument and its valuable contribution to this important debate. The amendments contained in the SI are essential. Without this SI, the Government would not have the powers we need to protect our national security in the specific enterprise categories outlined in the order. The order is a proportionate amendment to ensure that the Government can scrutinise the most worrying of mergers in three sensitive areas, at an unprecedented time, and I commend it to the Committee.

Question put and agreed to.

Committee rose.

Draft Barnsley, Doncaster, Rotherham and Sheffield Combined Authority (Functions and Amendment) Order 2020

The Committee consisted of the following Members:

Chair: Ms Nusrat Ghani

† Aiken, Nickie (Cities of London and Westminster) (Con)

† Amesbury, Mike (Weaver Vale) (Lab)

† Baynes, Simon (Clwyd South) (Con)

† Bristow, Paul (Peterborough) (Con)

Bryant, Chris (Rhondda) (Lab)

† Cairns, Alun (Vale of Glamorgan) (Con)

† Clark, Feryal (Enfield North) (Lab)

† Clarke, Mr Simon (Minister of State, Ministry of Housing, Communities and Local Government)

† Eastwood, Mark (Dewsbury) (Con)

† Elmore, Chris (Ogmore) (Lab)

† Hughes, Eddie (Walsall North) (Con)

† Hunt, Tom (Ipswich) (Con)

† Jarvis, Dan (Barnsley Central) (Lab)

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

McDonagh, Siobhain (Mitcham and Morden) (Lab)

† Mullan, Dr Kieran (Crewe and Nantwich) (Con)

† Richardson, Angela (Guildford) (Con)

Liam Laurence Smyth, Committee Clerk

† attended the Committee

Second Delegated Legislation Committee

Monday 13 July 2020

[Ms Nusrat Ghani in the Chair]

Draft Barnsley, Doncaster, Rotherham and Sheffield Combined Authority (Functions and Amendment) Order 2020

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Before we begin, I remind Members about social distancing rules. Spaces available to Members are clearly marked, and unmarked spaces must not be occupied. Hansard colleagues would be grateful if you could send any speaking notes to hansardnotes@parliament.uk.

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I beg to move,

That the Committee has considered the draft Barnsley, Doncaster, Rotherham and Sheffield Combined Authority (Functions and Amendment) Order 2020.

As a veteran of many such Committee sittings, I can testify that they are not always riveting. However, today’s is of genuine and lasting significance. The draft order, if approved and made, will implement the devolution deal agreed in 2015 between the Government and the Sheffield city region. Since then, the Government have been consistently committed to the deal, which will bring significant benefits to the people of South Yorkshire. In January this year, the South Yorkshire authorities decided that they wished to progress the deal’s implementation. We welcomed that decision and now, following the public consultation undertaken by those authorities, we seek parliamentary approval for the process.

The order confers significant powers on the Mayor and the combined authority as envisaged in the devolution deal. Such powers relate to transport, education, skills and training, housing, regeneration and planning. It also amends certain combined authority governance arrangements to reflect those powers and the role of the Mayor. Most importantly, the making of the order will unlock £30 million of annual investment funding for South Yorkshire for the next 30 years. It will also devolve to the area the £35 million annual adult education budget.

Together, these powers and funding will help the Mayor and local leaders to drive the city region’s economic and social recovery from the covid-19 pandemic. They also represent a significant contribution towards the Government’s commitment to level up our country and transform the growth prospects of communities and the life chances of their residents. With that in mind, I pay warm tribute to the Mayor, the hon. Member for Barnsley Central, for everything he has done to help make today possible. He has been a consistent voice of good sense of co-operation, and we thank him. I also thank local leaders and their councils for all they have done and continue to do to support the area and local people as they face the challenges of the current situation.

If the order is approved and made, it will give effect to the provisions of the devolution deal. The Mayor will have control over a consolidated and devolved transport budget, with the power to pay grants to the four constituent councils in relation to the exercise of their highways functions to improve and maintain roads. The combined authority will take on duties to promote and provide education and training which, with the devolved adult education budget from 2021-22 onwards, can be better aligned to locally determined priorities and to help boost economic growth.

In order to improve the supply and quality of housing, the combined authority will be conferred the land acquisition and disposal powers that Homes England already has. Such powers will be exercised concurrently with those of Homes England, enabling the combined authority, working closely with Homes England, to promote housing policies. The Mayor will also be given the power to establish mayoral development areas, which is a necessary step to establish mayoral development corporations in the future.

The order also provides that the general power of competence, exercisable already by the combined authority, is exercisable by the Mayor. By using that general power of competence, the Mayor will be able to prepare and publish a spatial strategy for the combined authority area, subject to the unanimous consent of the constituent councils and the combined authority.

The order also includes constitutional provisions reflecting the powers conferred and the role of the Mayor. There is provision regarding voting arrangements so that any decision of the combined authority about its new powers conferred through the order must include the Mayor among a majority of members in favour of that decision. The order also provides for the establishment of an independent remuneration panel to recommend the allowances of the Mayor and the deputy Mayor.

If Parliament approves it, the order will be made under the Local Democracy, Economic Development and Construction Act 2009, as amended by the Cities and Local Government Devolution Act 2016. As required by the 2016 Act, along with the order we have laid a report that provides details about the public authority functions that we are devolving to the combined authority, some of which are exercisable by the Mayor. The statutory origin of the order is in a governance review and scheme adopted in January 2020 by the combined authority and its four constituent councils, in accordance with the requirements of the 2009 Act. The scheme proposed additional functions to be conferred on the combined authority as envisaged in the devolution deal, and specified those that will be exercised by the Mayor and for certain amendments to governance arrangements.

As provided for by the 2009 Act, the combined authority and the councils consulted on the proposals in their scheme, promoting consultations through regional and local media, social media and posts in public buildings. Responses were accepted through the combined authority website, as well as by letter and email and in hard-copy form. The public consultation ran from 3 February to 15 March 2020, and 675 responses were received. As statute requires, the combined authority provided the Secretary of State with a summary of the responses to the consultation in April. The consultation results show that the proposals are strongly supported by the public and by stakeholders. The seven questions posed in the consultation all received clear majority support, and five received positive public responses of 80% or above.

In laying the draft order before Parliament, the Secretary of State is satisfied that the statutory tests in the 2009 Act are met—namely, that no further consultation is necessary; that conferring the proposed powers would be likely to improve the exercise of statutory functions in the combined authority area; that it would be appropriate, having regard to the need

“to reflect the identities and interests of local communities”

and

“to secure effective and convenient local government”;

and that where the functions are local authority functions, they can be appropriately exercised by the combined authority. As required by statute, the Mayor, the combined authority and the four constituent councils have consented to the making of the order.

In conclusion, the draft order will devolve a range of powers to the Mayor and combined authority for the benefit of the whole of South Yorkshire. It will drive growth, contribute to the city region’s economic recovery and renewal, and help deliver our agenda to level up opportunity and prosperity across the UK. I therefore warmly commend the draft order to the Committee; I hope it is the first of several establishing new mayoralties in the months ahead.

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It is a pleasure to serve under your chairmanship, Ms Ghani, and a pleasure to speak on the issue of devolution. As an MP who was put into this place to give more power and resources to regions and local communities, it is a special honour to be here today.

Before having the pleasure to represent Weaver Vale, I served as a city councillor in Manchester and worked for the current Mayor of Greater Manchester, Andy Burnham. I put together his first-term manifesto—one that he is delivering on and that he will build on. It is fantastic to represent the Opposition on the Front Bench and to assist my hon. Friend the Member for Barnsley Central by playing a small part in this landmark moment, which we share as a Committee. We are all determined—especially my hon. Friend—to get the best deal for the people of South Yorkshire.

As happy as I am for my hon. Friend the Member for Barnsley Central, I have to admit that I am more than a little jealous of him. One half of my constituency benefits from devolution, as it falls in the Liverpool city region authority and the careful hands of the Mayor, Steve Rotheram. The other half, comprising Cheshire West and Chester, does not. I have seen the difference that a combined authority makes to the part of my constituency contained within it. A local power funding accountability making a difference in health, skills, transport, planning, energy, jobs, and, in Barnsley’s case, education, can really transform communities and lives. I want that for the rest of my constituency in the Cheshire and Warrington areas, and I look forward to the long-awaited details from the Minister, who announced several coming down the line.

I have examples of real difference on the ground. The Liverpool Households into Work programme provides one-to-one support—a household approach—to tackle long-standing issues of unemployment to prevent people getting into unemployment and removing barriers over time. This will be more important than ever because of the national and international health, and undoubtedly economic, crisis. The Mersey tidal power project, which it was announced today will be directed by the industry veteran, Martin Land, will provide enough energy for 1 million homes, supply thousands of jobs and contribute towards a net zero target. Expansion of the Merseyrail system will not only provide the public transport that the region deserves but the infrastructure that it needs to—again, I will use the words—level up. This is a genuine example of how we can do that.

In Manchester, we have seen what can happen when devolution has real depth to it. Mayor Andy Burnham’s relentless focus on ending rough sleeping with the A Bed Every Night initiative has had considerable impact, again in partnership with recent Government initiatives around homelessness. Our pass gives young people in education free bus travel so that they can access all that the region has to offer. Bus reform, which is long overdue in Merseyside, the midlands and Greater Manchester, is something that devolution and Mayors can take forward.

Our national situation is very different from what it was at the outset of devolution. The medical and economic impacts of covid-19 have further exposed the urgent need for local decision making, something that I am sure we can all agree on in Committee today. We cannot continue to tolerate the inequality of power driving inequalities of prosperity across the country, especially given the challenges that we now face. This needs to happen through radical change, not by cosmetic tinkering with the Government firmly gripping the power and the purse strings, which results only in delegated authority rather than what we need: local decision making with the funding and power behind it in genuine devolution.

Today, South Yorkshire takes a big step on its devolution journey. May it continue to do so and may others follow closely behind. We await crucial tests of the Government’s commitment to devolution later this year, including the White Paper that the Minister mentioned. However, will he use his time to outline the Government’s timeline for the devolution deals that have as yet to reach the House?

In conclusion, I know that my hon. Friend the Member for Barnsley Central is eager to get the order through as soon as possible so that he can use the powers and resources to create a locally led pathway to greater prosperity, health and wellbeing for all the citizens of South Yorkshire. I wish the Mayor well in his historic endeavour.

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It is a great pleasure, Ms Ghani, to serve under your chairship. I thank both the Minister and the shadow Minister for their opening remarks. First, I should formally declare a massive interest. As well as having the great privilege to be the Member of Parliament for Barnsley Central, I am also the Mayor of the Sheffield city region, in which capacity I chair the Barnsley, Doncaster, Rotherham and Sheffield combined authority—it is a catchy name—to which the order relates. It is genuinely a little surreal to be here today, but primarily it is a great pleasure to see that this devolution deal has finally become a reality.

As I think the Minister could perhaps have alluded to very politely in his remarks, the road to get to this point has been long and hard. We were the only devolved administration without a full deal in place from the beginning and getting one has taken an enormous effort; I have the scars to prove it. None the less, we have achieved a lot, even without the full tools of this devolution order.

I am grateful to the Minister for his support, and by working with him we have already been able to secure £166 million from the Transforming Cities Fund; we have initiated an innovative Working Win employment programme, which has helped more than 6,000 people with mental and physical health challenges to find work and stay in it; and we have allocated more than £100 million of local growth funding for culture, transport, urban regeneration and flood prevention. This month, again by working with the Minister, we have secured an additional £81 million for infrastructure and housing.

Although those numbers matter—and are, of course, very significant—I think that the greatest achievement is the agreement of a deal and the drawing together of our local authorities and partners through the combined authority, in a way that provides us with the framework to co-operate and drive our region forward for the benefit of all our residents.

Almost 90% of people in South Yorkshire said they wanted to see more devolution, and now that we have it I am absolutely determined that we will seize the opportunity that it presents. Devolution will unlock our local knowledge and our networks; it will bring power closer to the people. It will also help us to reshape both our economy and our society in a way that reflects our values and priorities.

Devolution will help us towards the three great transformations that we need to see: an economic transformation to create not just a bigger economy but a better one, which is more innovative and of higher value; a green transformation to decarbonise our economy urgently, improve our environment and revolutionise our public transport; and a transformation of well-being and inclusion, raising our quality of life, widening opportunity and reducing inequality. It will also help as we struggle, like other parts of the country, not just for recovery from covid but for a renewal that advances the goal of a stronger, greener and fairer South Yorkshire.

We must, however, be clear that, even with this deal, South Yorkshire cannot fulfil these ambitions on its own; devolution will only work if we work together. To fulfil our potential, we must continue to build a culture of co-operation within our combined authority. There are great opportunities for us to work across all of Yorkshire, especially through the Yorkshire Leaders Board, and we need to work across the wider north as a whole, especially on environmental issues and on renewing our transport infrastructure.

We also have to work at the national level with the Government here in Westminster. Perhaps the most important aspect is that we need the Government to work with us to make our vision of transformation a reality. In the short term, we need the Government’s support for the covid renewal action plan that we have developed as a roadmap back from the ravages of the covid pandemic, and in the longer term, we need the Government to fulfil their pledges to level up the country. We must work together to use the public investment that we are able to draw down to boost the economy and finally end the wasting of our potential, benefiting not only South Yorkshire but the whole of the country.

So today marks a very important milestone, but it is not our final destination. Devolution is a process and not an event, and it is not about local and regional government competing against each other for funding pots administered in Whitehall. To realise its promise, devolution must be about the meaningful transfer of power and resources away from Westminster.

The UK is, to our detriment, one of the most centralised developed nations on the planet. We urgently need a deep national conversation on how to restructure and renew our democracy; without it, there is a risk that our country may not survive the currents of division already tearing at it. Today, however, we can and should give thanks for having come this far. I am grateful to everyone who has played their part.

I take this opportunity to place on record my thanks to the Minister for his support and guidance both in his current role and in his previous ministerial role. I also thank all the leaders of our local authorities and pay tribute and offer my profound thanks to the civil servants at the Ministry of Housing, Communities and Local Government and those in other Departments, as well as all my team in Sheffield and Barnsley, who have all made this happen.

We should all look forward to the things that we are now able to do which we could not do before, but we should not pause too long before we continue down this road. The greater part of its promise still lies ahead.

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It was remiss of me not to pay tribute to you on your first occasion in the Chair, Ms Ghani. It is a great pleasure to be part of this historic first. It is also an historic first for South Yorkshire. I fully join with the Mayor, the hon. Member for Barnsley Central, in what he said about this being a collective, cross-party achievement, which has very much involved local leaders and the civil service, who have been marvellous in negotiating all the various hurdles.

The hon. Member rightly said that devolution is not an end in itself; it is about unlocking the benefits that can flow from it of better and more responsive government. The Government are clearly determined to try to roll out devolution as far as we can across the rest of England, because we are concerned about the increasing asymmetry between those parts of the country that have mayoral devolution and those that do not. It is about not just the absence of a strong, effective voice to champion those areas but the imbalance in funding that flows from that. We are keen to close that gap. The White Paper referred to by the hon. Member for Weaver Vale will come forward this autumn, and it will not lack boldness in setting out our ambition to finish the job we have started and ensure that we end those gaps in the devolution jigsaw.

It is a significant achievement that once the West Yorkshire mayoralty stands up next spring, 63% of the north of England after will be covered by mayoral combined authorities. That is something on which we are hoping to make swift progress. A number of other conversations are ongoing, including with York and North Yorkshire; Cumbria; Lincolnshire—I had meetings with Lincolnshire MP colleagues this afternoon—Hull and East Riding; and Cheshire and Warrington, to which the hon. Member for Weaver Vale referred. A lot of places are starting to come forward, and I will use this opportunity to send a clear message that we are ready and willing to begin those conversations with areas that want to engage with us.

It is clearly important that we do not just look at one tier of governance. The hon. Member for Barnsley Central rightly referred to the Yorkshire Leaders Board and the northern powerhouse. We do not seek to establish hard borders on these new mayoralties. Absolutely, that culture of collaboration needs to expand across wider geographies so that we achieve the maximum possible benefit. We will bring forward important proposals this autumn, and I hope that Members across the Committee will see the value in them. This is an area of considerable policy consensus, and it is about making sure we negotiate the right arrangements for each area. We will certainly be devoted to doing that.

Let us recognise that today is a really good news day for the Sheffield city region. We can all be pleased that we have played our part in helping to make it happen. The Lords process will follow in the next few weeks, so the arrangements will be all in place before summer recess, which is fantastic.

I should address the question asked by the hon. Member for Weaver Vale about the timeline for deals currently in negotiation. We will move at the pace we can, but we are certainly open in principle to the first of those new deals being completed by May 2022, subject to progress in those talks. We would like to see those that we cannot get over the line by that point concluded by May 2023. The objective is to maximise the number of new Mayors, with new unitaries created underneath them, so that we move forward from this period with a reformed local government structure that is better able to help us with our current crisis and, more broadly, the challenges we face as a nation in terms of levelling up and the gaps that we know exist between the wider regions and the greater south-east. We were elected to deliver on that, and we can help to achieve that if we get the right local government structures in place. Today is another stride on that journey.

Question put and agreed to.

Committee rose.

Draft Competition Appeal Tribunal (Coronavirus) (Recording and Broadcasting) Order 2020

The Committee consisted of the following Members:

Chair: † Ms Angela Eagle

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

† Baldwin, Harriett (West Worcestershire) (Con)

Butler, Dawn (Brent Central) (Lab)

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

Cadbury, Ruth (Brentford and Isleworth) (Lab)

† Carter, Andy (Warrington South) (Con)

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

Coutinho, Claire (East Surrey) (Con)

† Cunningham, Alex (Stockton North) (Lab)

† Edwards, Ruth (Rushcliffe) (Con)

Higginbotham, Antony (Burnley) (Con)

† O'Brien, Neil (Harborough) (Con)

† Philp, Chris (Parliamentary Under-Secretary of State for Justice)

† Pursglove, Tom (Corby) (Con)

† Saxby, Selaine (North Devon) (Con)

† Spencer, Dr Ben (Runnymede and Weybridge) (Con)

Timms, Stephen (East Ham) (Lab)

Ben Street, Committee Clerk

† attended the Committee

Third Delegated Legislation Committee

Monday 13 July 2020

[Ms Angela Eagle in the Chair]

Draft Competition Appeal Tribunal (Coronavirus) (Recording and Broadcasting) Order 2020

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I beg to move,

That the Committee has considered the draft Competition Appeal Tribunal (Coronavirus) (Recording and Broadcasting) Order 2020.

It is a pleasure to serve under your chairmanship, Ms Eagle, I think for the very first time—the first of many, I hope. The draft order grants the Competition Appeal Tribunal a temporary exception to section 41 of the Criminal Justice Act 1925 and section 9 of the Contempt of Court Act 1981, allowing it to broadcast its hearings to the public either by audio or video link. The exception will apply until March 2022—it is time-limited and subject, as always, to judicial discretion, should the judge have a reason not to allow broadcast.

As I am sure Committee members know, the Competition Appeal Tribunal, more commonly known as the CAT, is a specialist tribunal whose main function is to hear and decide appeals on decisions from the Competition and Markets Authority and some other regulators. As Members are aware, the covid pandemic means that courts and tribunals throughout the country must adhere to public health measures. However, in order to allow justice to be seen to be done, we legislated in the Coronavirus Act 2020 to allow tribunals to conduct hearings via electronic means. However, owing to the speed with which that Act was passed, and because the CAT sits outside the unified tribunal structure, there was an oversight by which the CAT—I apologise, Ms Eagle, I can see your disapproval— was inadvertently omitted from the broadcasting exemption. We are taking the opportunity now to correct that, so that the proceedings of that tribunal can be publicly broadcast until the expiry of the regular Act, which is, as I said, 25 March 2022.

The draft order is relatively uncontentious and simply rectifies an oversight that occurred in the haste with which the Coronavirus Act was prepared three or four months ago.

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Thank you very much, Ms Eagle. This is also the first time that I have served under your chairmanship. It will be a brief service on this occasion.

I thank the Minister for summarising the purpose of the statutory instrument, which in the Opposition’s view makes perfect sense and brings the procedures of the Competition Appeal Tribunal—the CAT—into line with other courts and tribunals, and corrects the Government oversight that he mentioned. We support the important provisions contained within the Coronavirus Act 2020 to allow the use of video and audio technology in courts and tribunals. That allowed for cases to be heard remotely, as well as for certain proceedings to be broadcast, and in so doing upheld the vital principle of open justice.

As we know, although those provisions extend to the High Court and other tribunals, they did not extend to the CAT. As a result, CAT proceedings currently take place effectively on a closed basis. If someone wishes to observe the proceedings, they must register their interest with all parties to the proceedings, and that request must then be approved. That is, in effect, an obstacle to open justice.

As a result of that problem, there is a real risk that the legitimacy of proceedings before the CAT could be challenged, on the basis that they have not been conducted in accordance with the rules of the tribunal. That real risk must be avoided, and for that reason, Labour supports the draft order, which will enable the tribunal to continue to carry out its statutory functions in accordance with its own rules, and in public. It is vital that the concept of open justice be defended, and that all proceedings in all courts and tribunals that were available to the public before coronavirus are still open to the public today.

I have, however, a few questions for the Minister. First, how will he ensure that there is full access to justice, with an ability to participate fully for all those involved, and particularly those who take part remotely? Secondly, what plans does he have to monitor the effects of the provisions of the draft order to ensure that they operate as they should and that there are no unintended consequences? Finally, will he update the Committee on the current backlog of work facing the Competition Appeal Tribunal and his plans to deal with it?

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I will briefly address those questions. On the issue about justice not being seen to be done, I entirely concur with the shadow Minister, and that is why we moved quickly to approve the draft order today. During the pandemic, four hearings have taken place under the circumstances he described. As he says, people who wished to view those proceedings could apply to the judge to do so, but that is not the best way of doing it. We would rather that proceedings were broadcast openly, which is what will now happen as a consequence of the draft order. The judge will of course oversee how that happens, to make sure that proceedings take place in the right way and that the relevant participants can participate fully. That answers the first question posed by the hon. Gentleman.

We will of course be in close contact with the judiciary to receive feedback from them as they observe how proceedings unfold. However, the use of broadcast in the unified tribunal system and, indeed, of remote hearings more generally, has been a great success in the last few weeks and months. Every day, about 4,000 hearings take place by audio and video across the entire justice system, which is getting on for 10 times higher than the number that were heard before. In fact, that equates to about half of all hearings that happened in person previously, so there has been an enormous move towards audio and video participation. The draft order refers to broadcast, which is different, but I just make that point since the shadow Minister raised it himself.

On the shadow Minister’s final question on the backlog, as he will gather from the fact that only four such hearings have taken place in the last three months, this is a very low-volume tribunal. Not that many decisions are made by the Competition and Markets Authority, so the CAT does not have issues with high caseloads that some parts of the system experience. However, we will of course monitor performance carefully.

More generally, the shadow Minister will have read the courts recovery plan, which was published recently and which aims to get the entire court system—not only tribunals—up and running as quickly as possible, reopening all physical locations by the end of this month and opening 10 brand-new locations as well and exploring the possibility of extended opening hours. I am sure that we share the objective of making sure that justice is done not only openly but rapidly.

Question put and agreed to.

Committee rose.