Tuesday 13 April 2021
Arrangement of Business
My Lords, the hybrid Grand Committee will now begin. Some Members are here in person, others are participating remotely, but all Members will be treated equally. I ask Members in the room to respect social distancing. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
Greenhouse Gas Emissions (Kyoto Protocol Registry) Regulations 2021
Considered in Grand Committee
My Lords, I beg to move that the regulations, which were laid before the House on 25 February 2021, be approved.
The statutory instrument is laid under the power of Section 8(1) of, and paragraph 21 of Schedule 7 to, the European Union (Withdrawal) Act 2018, to address deficiencies of retained EU law that arose from the withdrawal of the United Kingdom from the European Union. The purpose of this SI is to amend retained EU law related to the UK’s Kyoto Protocol registry to ensure that it will be operable in the UK. The statutory instrument is not introducing any new policy; it is simply ensuring continuity of the UK Kyoto Protocol registry, independent of the EU’s registry system.
As a party to the Kyoto Protocol, an international climate change treaty with which I am sure Members are familiar, the UK has a legal obligation to maintain a Kyoto Protocol registry. This registry enables the UK and UK-based account holders to hold and trade Kyoto units. Kyoto units are each equal to one tonne of carbon dioxide and can be traded on the international carbon market. Kyoto units held by the UK Government are used to demonstrate compliance with our emissions reduction targets under the Kyoto Protocol. Emission reduction commitments under the Kyoto Protocol covered the period from 2008 to December 2020. However, due to the time lag in collecting emissions inventory data, final accounting cannot be completed until several years after December 2020, hence the continued need for a registry. Future registry requirements under the Paris agreement, as the successor to the Kyoto Protocol, are due to be decided at COP 26 in November.
While the UK was a member state, the UK’s Kyoto Protocol registry was housed in the EU’s Consolidated System of European Registries. The UK has now established its own domestic platform to house the UK’s Kyoto Protocol registry, independent of the EU system. This platform is due to be operational in May 2021. The UK Kyoto Protocol registry enables the holding and trading of Kyoto units, just as a bank account does with money.
As an industrialised country with emission reduction targets under the Kyoto Protocol, the UK is allocated a number of units, known as “assigned amount units”. These units are held in the UK Kyoto Protocol registry. When finalising accounting for the Kyoto Protocol commitment period, countries have the option to trade or cancel any surplus units if they have met their emissions reduction targets through domestic action. The registry enables this activity.
Private entities can also open accounts in the registry to hold and trade Kyoto units generated through the clean development mechanism under the Kyoto protocol. The clean development mechanism allows a country with an emissions reduction commitment under the Kyoto protocol to implement an emissions reduction project in developing countries. Such projects can then earn certified emission reduction credits, each equivalent to one tonne of carbon dioxide, which can be counted towards meeting Kyoto targets. This mechanism can enable more cost-effective emissions reductions, and the emissions credits generated can be traded, thereby creating a carbon market.
This statutory instrument is about continuity and compliance rather than any substantive changes to policy. By amending the retained EU legislation relating to the Kyoto protocol, this statutory instrument provides a clear legal basis to operate and administer the UK registry domestically. This SI does not have any significant impact on businesses, charities, voluntary bodies or the public sector. The Environment Agency will continue its role as administrator of the UK Kyoto Protocol registry, as it did before our departure from the EU.
There are currently 112 businesses with accounts in the UK Kyoto protocol registry. The units and transaction history relating to these accounts are being transferred from the EU system to the new UK system hosting the UK Kyoto Protocol registry. As I mentioned, the new UK system is due to be operational in May 2021, which is when account holders will be able to register on the UK system to access their newly migrated accounts. Trading Kyoto units via the UK Kyoto Protocol registry should be possible from June this year.
Businesses with accounts in the UK Kyoto Protocol registry were given advance notice about changes to the registry while the transfer from the EU to the UK system takes place. The Environment Agency, in its capacity as administrator of the registry, continues to provide updates to account holders, and we are not aware of any concerns being expressed by those account holders. All four Governments of the UK nations have agreed with the purpose and content of this statutory instrument.
I therefore conclude by emphasising that I see the measures contained in these regulations as important, since they will ensure the UK’s ability to uphold its international commitments under the Kyoto Protocol, following our departure from the EU. I hope on this basis that noble Lords will feel able to support these measures and I commend these regulations to the House.
My Lords, I thank the Minister for these regulations, given that Brexit means that we are no longer party to the EU recording of emissions for Kyoto registry purposes.
I have three questions, two operational and one rather fundamental. First, can the Minister assure the House that this methodology for calculating greenhouse gas emissions will not be changed unilaterally by the UK and that, in terms of trends, we will be compatible with both past reported trends for the UK and the EU system of reporting, as well as simply meeting the requirements of the Kyoto registry?
Secondly, while the figures in this log will not determine what allowances can be traded in the new post- Brexit UK emissions trading scheme, can I assume that they will be compatible with it?
Thirdly, and more strategically, do the Government recognise that the methodology of determining individual nations’ contributions to greenhouse gas emissions, taken on its own, is fundamentally misleading? It reflects reduction within the national emissions’ geographical boundaries, not the national demand generated by that nation’s society and economy, which would produce a very different impact on global emissions. For example, the UK final demand will include demand for imports, in the production of which greenhouse gases will have been emitted in China, say, or on the high seas or in the air, in transporting them to the final user or consumer. The global total will be the same, but the relative contribution of each nation to that total will be radically different, and the implied policy priority for each nation will therefore also be radically different. To put it crudely, if countries such as the UK and the United States, or companies in those countries, in effect offshore or export their dependency on greenhouse gas emissions by shifting production to the Far East, it is our economy, our final user and our supply chains whose behaviour needs to be addressed, rather than, or as well as, those of the Far Eastern nations.
This, then, is an issue that the Kyoto mechanisms and registry need to address. I do not say we do not need this production-based data—we absolutely do—but it needs to be augmented by a parallel index analysing, as best we can, the carbon-equivalent content of each nation’s final demand. Production-based data is important and we need to keep it, but we also need demand-based data. Do the Government recognise this as a priority and, if so, is it an issue that will be discussed at the forthcoming COP 26 later this year, when the Government will be in a highly influential position to get the nations of the world to agree to work on a parallel system of demand-based greenhouse gas figures, as well as the figures covered in the regulations today?
My Lords, as this is an SI, there is obviously little we could do to change it, even if we wanted to, but it makes sense that this SI goes through post Brexit. Its importance is its link to the trading regime. I have always been a sceptic of the trading regime, unlike my noble friend Lord Teverson—we have both been in the House long enough that we were debating this between 2006 and 2009. However, trading has taken place, with differing levels of success. A friend of mine was a carbon trader and I asked him how he made up his mind whether to buy or sell. He said, “It’s very simple. When it’s sunny, I sell, because people want to buy on a sunny day, and when it’s raining, I buy, because people want to sell.” It was as simple as that, and he made quite a lot of money using just that simple methodology, which shows that it had less to do with the actual price of carbon and more with how traders felt about carbon on that particular day.
As we are moving to a registry, I will ask the Minister one thing. We now perhaps have the opportunity to become a little innovative in the way we move forward. Could we not look at a registry not just of carbon dioxide and greenhouse gases but based around methane? Methane constitutes 23% of our emissions and we could do a great deal to focus on it. There is a great deal that we could do internally on the methane marketplace that would have a major effect on climate change, because methane production is not always linked to fossil fuels.
My Lords, I thank my noble friend for his clear exposition of this SI. I am delighted that the Government have been showing strong commitment to addressing climate change, and of course I support the aims of the regulations and the amendment of EU law as it now applies to UK—which is, sadly, required following our departure from the EU. I also support our work to comply with our assignment amount units and targets under the Kyoto Protocol in order to reduce emissions.
In my brief time today, I shall ask my noble friend a few questions. What are the advantages from the extra costs incurred in setting up our own domestic registry, independent of the EU-wide CSEUR software platform, and how much is it expected to cost? Was there any opportunity to remain part of the EU system? Will my noble friend also provide an update on the progress so far and the Government’s confidence level in meeting the May deadline for transferring accounts over to the new UK system and for verifying the information from those accounts when they are transferred from the CSEUR?
This SI also removes obligations from the Environment Agency to comply with EU law. Now it only has to comply with our international climate law obligations. Will this departure from EU rules have any impact on the trade in certain sectors or products? I wonder whether my noble friend could comment on any assessment that may have been made of the implications of departing from the presumably higher EU standards.
Finally, following on from the remarks of the noble Lord, Lord Redesdale, could my noble friend comment on the possibility of bringing together the various different schemes? We have already established our own emissions trading scheme for greenhouse gases, and we are now setting up our own registry for the Kyoto Protocol. Are there plans under consideration to bring together all our climate change obligations so we can monitor them in a comprehensive fashion?
The next speaker on the list, the noble Lord, Lord Berkeley, has withdrawn from the debate, so I call the noble Lord, Lord Bourne of Aberystwyth.
My Lords, it is a great pleasure my good friend the noble Baroness, Lady Altmann, and I thank my noble friend the Minister for setting out so clearly the effect of these regulations.
I support these regulations, which amend retained EU law. We clearly need to do that in order to ensure the continued application of the UK’s Kyoto Protocol obligations, which, as my noble friend said, persisted from 2008 to 2020 but will clearly go on for several years after that. That is the importance of these regulations.
Along with other noble Lords, I am keen to hear from my noble friend that we will carry on in the same way. I think he gave that reassurance, but I hope that that will be carried across in our ambition to COP 26. As he said, there will be a fresh assessment made at COP 26, and I will say something about that in a minute, if I may.
I am also concerned by the hiatus, which my noble friend touched on, between the end of the transition period and the new regulations taking effect in, I think he indicated, June 2021. Clearly there is a gap there. I think I understood him to say that that gap has been catered for and that the 112—I think he said 112—businesses that are potentially affected by this are aware of this, and I hope that they have been given guidance on how that will affect them in the period before our own registry takes proper effect in June 2021. I would welcome that reassurance.
We as the United Kingdom have a historic opportunity with COP 26, and it is incredibly important that we seize it and go forward with at least the ambition that we had in the EU—and I hope beyond it—to show that global Britain really does mean business. I know my noble friend will say that this is a matter for the usual channels, but I hope that he will be able to convey to the usual channels and to other parties the importance of having a meaningful debate in your Lordships’ House well ahead of COP 26 so that we can express our collective ambition so that can be carried forward, because this is of crucial significance not just for our country but for the entire globe.
With that, I am more than willing to support these regulations, which make sense, but I would welcome my noble friend’s reassurance with regard to the hiatus and, I hope, to a meaningful debate on this issue.
My Lords, I echo the final question asked by the noble Lord, Lord Whitty, about the true nature of our carbon footprint in the world. I will also point out that global emissions are again set to rise, and that, while the goals of greening our economy and aiming for net zero are admirable, they and the Kyoto regulations, in whatever form we now take them on board in the registry, fall far short of what is needed to tackle climate change.
I am sorry to strike a slightly negative note. However, as Jeremy Warner remarked in last week’s Sunday’s Telegraph,
“unless China and the rest of the developing world are on board, all efforts to reach a net zero world are doomed. It matters not a jot what America and Europe do to reduce their emissions if the rest of the world isn’t doing the same.”
The Kyoto Protocol is 24 years old, but here we are still struggling to curb rising greenhouse gases, both CO2 and, even more of course, methane, which is 28 times as lethal. We really do need accurate and frank guidance on how to avert world climate catastrophe, which we are just not getting from the Committee on Climate Change and other authorities. This could be the opportunity to get the change needed.
As I said, global emissions are set to rise, after a pause during the pandemic, whereas to reach Paris accord targets they should be falling by at least 7.6% per year. Rising emissions in the big emitting countries, particularly from coal burning and particularly in Asia and Africa, are about to outweigh by far any reductions we can possibly make, so carbon concentrations in the atmosphere are set to continue growing almost unabated.
Coal of course produces about 46% of carbon emissions and, unless the technology for capturing and using carbon from these world sources is vastly improved and cheapened, and applied to all coal burning throughout Africa and Asia, there is not the slightest chance of meeting climate goals, which presumably is what we are about. This is where there should be an all-out concentration of resources and brainpower.
Present policies, although they involve enormous expenditure of national resources and are desirable in our narrow national interest, are not addressing the key issues. There is no safe haven here at home from climate change. What we need is not Kyoto or Paris but a multinational endeavour, a Manhattan-scale project, at least on the scale of China’s belt and road initiative.
Without this kind of new strategy emphasis, the rise in global emissions will continue. Kyoto, Paris, net zero and all the rest will do almost nothing to check the real drivers of global warming. That is the honest and frank message that I would like to see come from these discussions to shape policy priorities, and it is the real message and policy direction which the next generation deserves and which should shape the whole approach that we take at COP 26.
My Lords, in following the noble Lord, Lord Howell of Guildford, I respectfully disagree with his suggestion that any blame for lack of progress lies with the Committee on Climate Change. It is providing the advice that is needed. The failure is with government action, and I agree with the noble Lord on the extraordinarily urgent need for action.
I thank the Minister for his introduction to this statutory instrument. As he outlined, it establishes the new UK registry that is currently in development. As our own Secondary Legislation Scrutiny Committee noted with dry restraint:
“Until then, UK businesses that wish to trade KP units will have to open KP accounts in other countries’ registries.”
Once again, the Government are scrambling, still belatedly filling in basic gaps nearly six years after the Brexit referendum. This is continuity and compliance, as the noble Lord said, with an international agreement signed more than 20 years ago.
However, I will look primarily not backwards but forwards, as the noble Lord, Lord Whitty, did with his important focus on consumption emissions rather than just measuring territorial emissions. This debate comes on a day when both the Guardian and the ENDS Report carry articles from respected international figures expressing concern about the damage done to the UK’s moral authority, as chair of COP 26, by domestic decisions. Christiana Figueres, a key Paris climate talks figure, said:
“There have been recent decisions in the UK that are not aligning with the ambition of the net zero target. It is worrisome. There are raised eyebrows among world leaders watching the UK.”
What we have here is a problem not just with the decisions being made on roadbuilding, coal mines and airport expansion, but with the failure to deliver policies—the kind of slow, snail-like progress that we are seeing here today. Just look at a list of what the Government are supposed to deliver before COP 26: a heat and buildings strategy, a transport decarbonisation plan, a Treasury net-zero review, an England tree strategy, a hydrogen strategy, an industrial decarbonisation strategy, a nature strategy, and a net-zero strategy. Of course, we are still waiting for the crucially important Environment Bill, in the country ranked 189th in the world for its state of nature.
I do not expect the Minister to have complete answers to all these concerns today, but I ask him for an acknowledgement that the Government have heard these concerns from highly respected, knowledgeable, non-partisan international figures and are at least reflecting on them, and ask him whether he might acknowledge, at least privately, that attaching the label “world-leading” to every government claim is counter- productive and serves only to highlight, as today’s SI does, that the UK is currently profoundly unprepared for the climate emergency and nature crisis.
A “legally binding target” for net zero for 2050 is, in terms of its impact on members of the Government today, precisely meaningless. What matters is action— practical, workable, effective action today—to slash emissions by 2030. That is something the Government have to show progress on, once they are done with the catching up that this statutory instrument demonstrates.
My Lords, I am delighted to follow the noble Baroness. I welcome my noble friend Lord Callanan to his place and I look forward to his views. I also welcome the noble Lord, Lord Teverson, to his position and thank him for his excellent chairmanship of the outgoing EU Sub-Committee on the Environment.
I thank my noble friend Lord Callanan for his clear exposition of the statutory instrument, which I support as it gives a clear legal basis on which the UK register will function. Does he share my concern that there will be a number of months before any trading can take place? Is my understanding correct that these account holders have now left the international register and cannot start trading until June this year? If that is the case, I understand from paragraph 7.3 of the Explanatory Memorandum that his department is encouraging account holders to register with other countries. If that is the case, can he explain what the cost and administrative burden on these account holders will be? Does he accept my concern that this is a burden with which they could well do without? Is it the department’s intention that they continue to register on two registers—the UK’s and another country’s register—or is this meant to be a short-term fix for the five months until our register becomes operational?
Further, is my understanding from A5 in appendix 1 of the Secondary Legislation Scrutiny Committee’s report correct that the account holders have to register for two UK registers, effectively holding a register for the UK emissions trading scheme as well as for this one before us on the ETS allowances? Again, can my noble friend comment on what the cost and administrative burden to these companies will be?
Can my noble friend also assure me and other noble Lords who have asked him about this that we will not lower expectations on reducing greenhouse gas emissions now that we have left the European Union? What will be the mechanism? Will there be a role for the OEP under the Environment Bill in this regard?
My final point is that there has been no public consultation, but there has apparently been an ongoing communication with account holders. That is slightly alarming. Could my noble friend explain to us precisely what those forms of communication have been? If they have not been sufficient, is it therefore any surprise that no account holder has registered any dissent?
My Lords, I must admit that when I first looked at this instrument, I was severely disappointed with it. I can normally find in any secondary legislation at least 25 points of criticism to talk about for six minutes. Looking through these regulations, I could see nothing contentious at all.
That was until I started reading the explanation for them, which raised a number of concerns. One of them, which has been talked about a number of times, is the gap in trading. Given that we knew there was going to be a notice in this area, how come we have a gap in trading, even though only 112 organisations deal with it? I suppose that having to send our registrations on carbon abroad is one interpretation of global Britain, but that concerns me. I noted that the Minister said that the system was due in May, I think. He did not say that it would actually happen in May. I would be very interested if he would confirm that the system will be operational next month, so that we can all, let alone the users, have confidence in it.
I was also rather concerned by the last bullet point in paragraph 7.6 in the Explanatory Memorandum, which says:
“Amendments include … ensuring that provisions regarding the operation of KP registries are compatible with the software for the UK KP registry.”
That seems the wrong way round to me. Surely we design the software to meet the needs, rather than the needs to fit the software. I am interested to understand why it is that way around. Can the Minister assure me that we are not just buying an app from the Apple shop, or whatever? It seems very strange that we are not designing something that is right for this, but, rather, are having to change our systems to meet the software. I tried to look up the value of one of these traded units but could not find it, so perhaps the Minister could tell us, without conferring, the current-day price of these units. That would be very interesting to know.
I move on to an area of potential confusion for us all here between the Kyoto trading system and the new UK ETS. I realise that that is not the direct subject today, given the very important role of this new UK ETS, but it would be useful if the Minister could help us to understand this. Its first trading day is due in May, so it would be very useful to have clear understanding and to be certain that it will happen at that point. I know there is a wish, which I applaud—it may be a hope—that there might be a connection between the EU ETS and the UK ETS in future, giving greater liquidity for the UK market. I would be interested to understand from the Minister whether those conversations have started and already take place, or even whether that is still the Government’s wish or objective.
Lastly, in that area, consumption figures were mentioned, as was offshoring, which is one of the problems of having high prices on national emissions. Are the Government considering or investigating further a carbon border tax, which has been mentioned more broadly in the western world?
I agree absolutely with my noble friend Lord Redesdale about methane. One of the areas of climate change concern is that methane emissions have increased quite substantially, and what is perhaps even more worrying is that most authorities do not understand why that is the case. Any insight the Minister can give us on that would be very useful. The consumption figures are extremely important. I congratulate Defra, which looks after consumption, rather than BEIS, which looks after production, for that time series, and I encourage government to give it more publicity and more time.
I will not go into the broader issues of climate change and COP 26, which has been covered very adequately indeed by the noble Lords, Lord Whitty and Lord Howell, and by the noble Baroness, Lady Bennett, in particular, but even on these smaller issues, not least the UK ETS, it would be very good to have confirmation from the Minister about those important areas.
I add my thanks to the Minister for his introduction to the SI before the Committee today. As he said, the Kyoto Protocol and its mechanisms have been crucial in setting up co-ordinated international regimes to combat climate change. The treaty agreement has focused on green development through sustainable technology and investment. It has helped countries to meet emission reductions targets, removing carbon from the atmosphere cost-effectively, and has certified trading through registries to encourage industries and companies towards sustainability.
This statutory instrument continues the necessary arrangements to set up a complementary UK protocol registry following the UK leaving the EU emissions trading scheme, and I approve of it. However, as others have commented, the Government have not yet got the UK registry operational in time for the end of the transition period. The UK Kyoto Protocol registry will not become available until May this year, albeit that that is now only a few weeks away. Can the Minister confirm that everything is on track and that the trading of KP units will begin in June this year? Granted that priority has been given to the UK emissions trading scheme to be operational at the end of the transitional period in January, can the Minister confirm that this scheme has been embedded successfully and that the preparatory work undertaken so that the necessary international connectivities can proceed under this protocol will now proceed smoothly?
The Secondary Legislation Scrutiny Committee highlighted in its 48th report the possible impacts on businesses. Interestingly, neither the department nor the Environment Agency has received complaints from businesses about interruptions or costs as a consequence of this failure to maintain continuity with the EU registry. As the noble Lord, Lord Bourne, has asked, will any issues become more pressing by June, when businesses bear the costs? While being reassured that any damage may prove to be minimal, does the Minister expect any consequences at all? Perhaps he could comment further on the point that the UK KP registry serves as a distinct and separate policy from the UK ETS registry. Along with the noble Lord, Lord Teverson, I think that an understanding of these technicalities would be most helpful.
At this point in the process of establishing the UK regime, the future objectives and priorities of the scheme closely resemble those of the EU. Does the Minister’s department have any variations in mind that might enhance the UK’s path towards net zero? Any changes to the scheme, including calculations on emissions, must have only that intention and direction in mind in order to avoid the offshoring of emissions.
We are also somewhat in the dark regarding the Government’s intentions. The weakness of this statutory instrument is that it is silent on all this. How similar to and how compatible will it be with the EU scheme? Indeed, what links may there be at all? As my noble friend Lord Whitty asked, will the UK scheme address carbon demands within the UK economy or merely reflect production? Will it add to the focus on the need for more attention to methane emissions, as the noble Lord, Lord Redesdale, asked? There are also issues about possible competitive distortions in state aid to certain industries. The greater challenge is halting the relentless increase in global warming, as emphasised by the noble Lord, Lord Howell. It may well be a challenge to the Minister, but if he could reveal anything at all, that would be most helpful.
I thank all noble Lords for their contributions to the debate. The noble Lord, Lord Teverson, summed it up well. This is fairly uncontroversial territory and I am pleased that most Members are supportive certainly of the principle of this legislation. As I expected, most of the questions did not focus on the content of this fairly dry statutory instrument but covered a range of other areas connected to our emissions reduction and greenhouse gas policies. However, in an effort to be as helpful as possible to the Committee, I will endeavour to answer as many of those questions as I can.
The noble Lord, Lord Whitty, asked whether the methodology for measuring greenhouse gas emissions will not be changed by the UK. I can assure him that the UK will continue to report greenhouse gas emissions under the Kyoto Protocol using exactly the same methodology as it did when we were an EU member state. The noble Lord also asked whether the Kyoto Protocol allowances would be compatible with the UK ETS. I can tell him that, under the UK ETS, the Kyoto Protocol units will not be able to be converted to allowances, and international credits are not permitted in the UK ETS at this time. However, the Government and the devolved Administrations are open to reviewing the usage of offsets in future, especially in deciding how best to implement the carbon offsetting and reduction scheme for international aviation, or CORSIA as it is known, alongside the UK ETS.
The noble Lord, Lord Whitty, also suggested that the UK should include imported emissions in its climate target. That issue was also raised by the noble Baroness, Lady Bennett. In our view, targets should strive to follow the best available science and methodologies to account for emissions and it is currently standard international practice to set such targets based on territorial emissions. Including imported emissions would, of course, risk double-counting emissions that had already been captured in other countries’ national efforts.
The noble Lords, Lord Redesdale and Lord Grantchester, asked about the important subject of methane, as well as carbon. I can tell them that methane is covered under the KP and calculated as a CO2 equivalent, following internationally agreed methodology provided by the IPCC.
My noble friend Lady Altmann asked about the costs of the new domestic registry system and plans to bring together all our climate commitments. The UK KP register has been developed as part of the same IT project as the UK emissions trading system registry. The two systems share a lot of the same IT functionality and we are able to maximise economies of scale and increase value for money by housing the two separate registries on the same system. I know that she will approve of that.
My noble friend Lord Bourne of Aberystwyth asked whether we have provided guidance to businesses affected by the change in the registry. The answer is yes, we have provided regular updates to account holders about the changes. Account holders were given advance notice that the UK KP registry would be inaccessible for a period while the transfer from the EU to the UK system took place. They were advised that, should they wish to trade Kyoto units before the UK registry had been successfully transferred on to the new domestic platform, they could open a KP account in another country’s registry. As yet, we have no evidence to suggest that any businesses with accounts in the UK KP register have felt the need to take that step.
My noble friend Lord Howell rightly expressed concern about the urgent need internationally to reduce emissions and he made some good points, particularly about the number of current coal-fired power stations built by China and elsewhere. That indicates the challenge that faces us for the COP meeting, but I reassure my noble friend that we are making progress on international efforts to address these matters. That is certainly a priority for the Government through our presidency of COP and we will continue to make those points strongly to other member states, jointly with Italy and in partnership with many other countries.
The noble Baroness, Lady Bennett, in her predictable manner, made many of the same points that she always makes in these debates, not many of which had anything to do with the subject facing us in the statutory instrument, but let me reassure her that over the past three decades the UK has achieved record clean growth and has met its climate change commitments. Those commitments are indeed world-leading. I understand that they will never be enough for the noble Baroness, but nevertheless we think that we have made considerable efforts. Between 1990 and 2019, our economy grew by 78% while our emissions decreased by 44%, which is faster than any other G7 nation. The Prime Minister is building on that progress and has set out his 10-point plan for the UK to lead the world into a new green industrial revolution. This innovative programme sets out ambitious policies and significant new public investment to support green jobs, to accelerate our path to reaching net zero by 2050 and to lay the foundations for building back greener.
The noble Baroness, Lady McIntosh, asked about the impact of the changes to the KP registry on account holders. The instrument impacts a limited number of organisations that hold the Kyoto Protocol registry accounts. Our analysis has shown that the costs to businesses are expected to be minimal, as the instrument allows for the continued functioning of businesses through the operation of a UK KP registry, rather than making any substantive changes to existing policy. As I mentioned, account holders were advised that, should they wish to trade Kyoto units before the UK KP registry had been successfully transferred on to a new domestic platform, they could access another county’s register, but so far, as far as we are aware, none has done so.
I can also tell the noble Baroness that the UK will not be lowering its climate standards or commitments as a result of leaving the EU. Our UK ETS is more ambitious than the EU system that it replaces—I know that this will be hard for some noble Lords to appreciate, but it is true. From day one, the cap has been reduced by 5%, which just goes to show that, as usual, we can do things better than the EU does.
The noble Lord, Lord Teverson, asked about the gap in trading for account holders following the end of the transition period. As I said, we have provided regular updates to them. I earlier covered the point about what they could do in the meantime. The value of CERs, the most commonly traded unit on the Kyoto Protocol registry, is approximately 20p.
The noble Lord, Lord Grantchester, asked whether the registry will be ready for June and why there are two separate systems. I can reassure him that the scheme will be ready for trading in June. That may be a commitment that I will regret, but I give him it. We are working closely with the Environment Agency and the IT software developer and keeping in regular contact with account holders to ensure that the transition goes smoothly. The registry must be connected to the UNFCCC international transaction log. Before being reconnected, it must pass a series of tests that meet the international standards. The registry is currently undergoing those tests and is on track to pass them. Once those tests are passed, the register will be able to go live.
In response to the question of the noble Lord, Lord Teverson, about linking the UK ETS with the EU ETS, of course we recognise the importance of international co-operation on carbon pricing and the important role that international carbon markets can play. We are indeed open to linking the UK ETS internationally in principle. We are considering a range of options, but no formal decisions have been made at this point on any linking partners.
I hope that I have been able to reassure noble Lords, following the breadth of their questions, that the statutory instrument is worthy of their approval. I think that the only remaining question was from the noble Lord, Lord Bourne, about scheduling a debate. In asking the question, he predicted the answer: this is a matter for the usual channels. I am sure that the Whip has taken careful note of his concerns and will relay them to the Chief Whip, who will consider them accordingly. With that, I commend the regulations to the Committee.
The Grand Committee stands adjourned until 3.35 pm. I remind Members to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
My Lords, the hybrid Grand Committee will now begin. Some Members are here in person, others are participating remotely, but all Members will be treated equally. I ask Members in the Room to respect social distancing. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) (Amendment) Regulations 2021
Considered in Grand Committee
My Lords, I beg to move that the Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) (Amendment) Regulations 2021, which were laid before the House on 25 February 2021, be approved.
This is an uncontroversial statutory instrument, which is required to implement a protocol, signed by the Governments of the United Kingdom and Japan on 16 December 2020, to amend the 1998 nuclear co-operation agreement between the UK and Japan. The statutory instrument amends regulations to ensure that the United Kingdom can comply with the provisions of that protocol.
To understand the importance of this statutory instrument, one first needs to understand the background to, and purpose of, the nuclear co-operation agreement and the protocol. Nuclear co-operation agreements are commonly used international agreements that give legal underpinning to civil nuclear co-operation. They provide key non-proliferation assurances, including in respect of nuclear safeguards, and a framework for nuclear trade. In 1998, the United Kingdom signed a nuclear co-operation agreement with Japan, reflecting Japan’s position as an important partner in nuclear co-operation and non-proliferation for the United Kingdom. Both countries collaborate in the areas of nuclear regulation, research and development, decommissioning and advanced nuclear technology development.
On 16 December 2020, the United Kingdom and Japan signed a protocol to the nuclear co-operation agreement. The primary aim of the protocol is to maintain this mutually beneficial relationship between the United Kingdom and Japan on civil nuclear trade and co-operation. It achieves this by ensuring that the United Kingdom-Japan nuclear co-operation agreement, which it amends, is fully operable now that the United Kingdom operates its own domestic safeguards regime and is no longer part of Euratom.
However, it also goes further by including provisions that strengthen the mutually beneficial relationship between the United Kingdom and Japan. These additional provisions cover issues such as co-operation in research and development, intellectual property, safety and the expansion of the scope of the nuclear co-operation agreement to include information. The protocol therefore maintains and builds on both countries’ commitments on non-proliferation and ensures the continued peaceful uses of nuclear materials and information.
Until this protocol comes into effect, the current nuclear co-operation agreement remains operable through an exchange of notes, which was agreed as an interim measure between the UK and Japan in February 2019. This exchange of notes came into effect at the end of the transition period.
I shall now explain the purpose of this instrument and what changes it effects. The statutory instrument amends regulations to ensure that the United Kingdom can comply with the provisions of the protocol and ensure that its objectives can be achieved. First, it amends the Nuclear Safeguards (Fissionable Material and Relevant International Agreements) (EU Exit) Regulations 2019, so that the protocol is included under the definition of “relevant international agreement” for the purposes of the Energy Act 2013.
This concerns primarily the role and responsibility of the UK’s nuclear regulator, the Office for Nuclear Regulation. One of the Office for Nuclear Regulation’s statutory purposes is to ensure that the UK complies with relevant international agreements. These regulations ensure the protocol is captured as such an agreement. Failure to pass this statutory instrument would therefore mean that the Office for Nuclear Regulation’s role would not include any reference to what has been agreed in the protocol, leaving the UK at risk of breaching this agreement. That, clearly, is not acceptable.
The second change effected by this statutory instrument is the inclusion of the protocol under the definition of “specified international agreement” for the purposes of the Nuclear Safeguards (EU Exit) Regulations 2019. This is achieved by extending the requirement in the Nuclear Safeguards (EU Exit) Regulations 2019 for operators to provide information to the Secretary of State relating to qualifying nuclear material or other relevant items in respect of the protocol.
For the purposes of the Energy Act 2013 and the Nuclear Safeguards (EU Exit) Regulations 2019, the Office for Nuclear Regulation and operators are currently required to fulfil certain reporting obligations relating to the UK-Japan nuclear co-operation agreement. Operators are therefore already required to provide information on nuclear material to the Office for Nuclear Regulation, and information on non-nuclear material and equipment to the Department for Business, Energy and Industrial Strategy. As a result, there are existing reporting mechanisms that will allow them to meet the additional obligations detailed in these regulations, specifically on information. We therefore expect the administration costs associated with implementing new requirements under the protocol to be very low.
There is a statutory requirement to consult the Office for Nuclear Regulation and others that the Government consider appropriate on these regulations. The Government have therefore worked closely with the Office for Nuclear Regulation and the civil nuclear industry to implement the new domestic safeguards regime and to ensure that the appropriate mechanisms are in place to implement obligations contained in international nuclear agreements such as this protocol. It has been of utmost importance to ensure that their interests and concerns were reflected throughout the policy process.
Moving forwards, we will continue to work closely with the Office for Nuclear Regulation and to engage regularly with the civil nuclear industry, highlighting the guidance available and addressing any questions and concerns. The Government have also engaged with the Business, Energy and Industrial Strategy Committee, the Lords EU Environment Sub-Committee, and the Lords EU International Agreements Sub-Committee, informing them of the protocol and the changes it makes.
The territorial extent and application of the statutory instrument is England and Wales, Scotland and Northern Ireland. The Government have shared it with our colleagues in the devolved Administrations so that they are aware of the obligations it creates.
I conclude by emphasising that I see the measures contained in these regulations as important but uncontroversial, since they will ensure that the United Kingdom can comply with the provisions of the protocol to the UK-Japan nuclear co-operation agreement. I hope that noble Lords will support these measures.
My Lords, this is one of those SIs that you cannot find any reason to object to, so I will be extremely brief. While it talks about co-operation, it is unfortunate that Toshiba cancelled the Moorside project in 2018. Since then, two further projects have been cancelled at nuclear power plants.
Of course, this SI is relevant to the EU exit regulations. One of the issues raised was that, by moving away from Euratom and joint co-operation with our EU partners, we are in effect increasing costs to those organisations that would want to undertake development of nuclear power plants in this country. It seems that EDF is the only viable alternative for nuclear power plants at the moment, but could the Minister give an indication of how much the new regulations are costing industry, or maybe write to me?
My Lords, I thank my noble friend the Minister for introducing these regulations. I declare my interest as a consultant to the Japan Bank for International Cooperation and as a member of the advisory board of Penultimate Power.
The introduction of our own nuclear safeguards regime, supervised by the ONR, should enable us to comply with IAEA standards in a less cumbersome and less expensive manner than when we were able to while a member of Euratom. We no longer need to rely on complicated verification processes that do nothing to ensure full compliance with IAEA standards. Our NCAs of course ensure that our independent safeguards regime will permit no diminution whatever in the maintenance of the highest possible standards.
However, can my noble friend the Minister confirm that under our independent regime we no longer have issues such as those faced by Urenco in the past? These included the requirement for Euratom’s approval of any new contract and firm declarations on end use for the material. All that required much expensive bureaucracy, which added nothing to the agreements with, and undertakings to, the IAEA, which were not needed by non-European competitors.
Of course, UK companies remain fully covered by the Government’s undertakings to the IAEA, and any shipments from the UK have to meet the requirements of UK export controls. However, it is not clear yet whether, after the inevitable teething problems, the Government have got to grips with the need to ensure that costs and bureaucracy are reduced to the maximum extent compatible with the necessary maintenance of the highest international standards.
I welcome the introduction of these regulations, whose effect is to add technology to the scope of the UK-Japan NCA through its amending protocol. This will enable the ONR to ensure the UK’s compliance with the amending protocol. Will the Minister confirm that the Government agree that co-operation with Japan in civil nuclear power is even more important than it has been until now? The energy White Paper recognises the need for at least one more major large new nuclear power station project, besides confirming the Government’s intention to continue to support the development of SMR and AMR technologies.
As the Minister is aware, Wylfa is perhaps the best available site for a nuclear power station in the country, if not in Europe. Is she also aware that Hitachi waited some 18 months after its decision to suspend the project before cancelling it, and that if the Government had come forward with additional financial support and a committed operator within that time, the project might have been rescued as a tripartite UK-Japan-US project? Would that not also have sent a very positive message about our trade and investment relationship with Japan, coming hard on the heels of the signing of the CEPA, and provided strong support for our tilt towards the Indo-Pacific, so important for the success of global Britain?
Does the Minister also agree that it is important that, where possible, major investors in our nuclear energy projects should be from countries whose security and defence interests are aligned with our own? What steps are the Government taking to revive the Horizon project? Does she agree that it is in our interests for them also to support other UK-Japan nuclear projects such as that on which Penultimate Power is collaborating with the JAEA to commercialise its high-temperature gas-cooled reactor technology in this country?
I am delighted to follow my noble friend Lord Trenchard. I welcome my noble friend the Minister to her position and thank her for her clear and lucid explanation of the SI before us, which I very much welcome.
I note in the Explanatory Memorandum that the UK already has a number of bilateral nuclear co-operation agreements with countries such as Australia, Canada and the USA, which is very welcome in addition to the measure before us. Are any other agreements in the pipeline of which we should be aware? That would be welcome news indeed.
I particularly welcome the extension that my noble friend outlined in her introduction. She said that the mutual co-operation will continue to exist, but that it will be extended to R&D, international property and the other items that she mentioned. That is very positive.
I really have only one question, which I appreciate is not directly relevant to the SI before us. It deals with civil nuclear co-operation but, in view of the Government’s recent announcement that we are to increase—I presume unilaterally—the number of nuclear warheads in this country, has her department had any negative feedback in relation to civil co-operation? It is interesting that my noble friend dwelt quite positively and strongly on this being a key nuclear non-proliferation safeguard. Obviously, it could be a potential setback, so I would be very interested in that regard, particularly in view of the sometimes tense relations that we have with my home country of Scotland, the place of my birth.
With those few remarks, I thank my noble friend for giving us the opportunity to consider the SI before us. I would very much welcome hearing more broadly of other co-operation agreements. I hope that we will continue to co-operate with Japan and the other countries along the terms that she outlined to us this afternoon.
I thank the Minister for her introduction to the instrument this afternoon on the relevant international agreements on nuclear safeguards. The UK regime was one of the crucial elements necessary for having effective and coherent UK controls in place during the Brexit process. The Nuclear Safeguards Act 2018 gave powers to the Office for Nuclear Regulation to monitor and regulate the nuclear co-operation agreements, one of which was with Japan.
I am very happy to approve these regulations today, which amend and update the original 1998 UK-Japan agreement with the December 2020 amending protocol. They provide a framework for further trade in nuclear materials and technology, and facilitate research, development and exchanges of information. Without the details of the updates with Japan, can the Minister advise the Committee whether this amendment to the 2019 agreement is made further to the position under Euratom? As I understand it, the 2019 amendment merely confirmed the NCA with Japan in the original Euratom protocols under the IAEA. If my hunch is correct in any way, do the Government intend to update other NCAs, most notably with the US, Canada and Australia, in a similar fashion? Have the Government received any comments from the IAEA?
When the Nuclear Safeguards Bill, now an Act, was before the House in 2018 one of the concerns was the recruitment and training of nuclear inspectors for the ONR to undertake what was then its new task to the high IAEA standards. For interest, it would be helpful if the Minister could give any update on the operations of the ONR. Maybe she can confirm whether any ONR review or report is intended to focus on the nuclear safeguards part of its responsibilities.
I thank noble Lords for their valuable contributions to this short debate. The points that we have been discussing today highlight that these regulations will ensure that the United Kingdom can comply with the provisions of the protocol agreed between the Governments of the United Kingdom and Japan. The amendment ensures that the protocol is captured under the Office for Nuclear Regulation’s statutory purpose: to ensure compliance by the UK with relevant international agreements, and that operators provide information on qualifying nuclear material or other relevant items to the Secretary of State.
In response to the questions from the noble Lord, Lord Redesdale, and my noble friend Lord Trenchard regarding the Government’s commitment to minimising cost and bureaucracy, I must emphasise that a number of requirements already existed through the agreements between the UK and Japan which this protocol amends. Under the new regime, operators are required to provide information on nuclear material to the Office for Nuclear Regulation and information on non-nuclear material and equipment to the Department for Business, Energy and Industrial Strategy. There is no requirement to provide information to Euratom. We therefore expect the administration costs associated with implementing new requirements under the protocol to be very low.
My noble friend Lord Trenchard also asked whether co-operation with Japan in civil nuclear is more important than ever, and whether it is important to have major investors in our nuclear energy projects from countries whose security and defence interests are aligned with our own. Japan is a significant strategic partner for the UK and we regularly discuss a range of issues, including nuclear energy. Both countries collaborate in areas of nuclear regulation, research and development, decommissioning and advanced nuclear technology development—although it would not be appropriate to comment on the detail of these discussions. As Japan requires a nuclear co-operation agreement with countries before it will conduct nuclear trade with them, the protocol in this secondary instrument is an important enabler of co-operation between the UK and Japan on any future nuclear projects.
Both noble Lords mentioned the Wylfa project. We recognise that Hitachi’s decision to pull out of the proposed project at Wylfa and wind up Horizon Nuclear Power was disappointing for local communities, and personally for me as the spokesperson for Wales. Ultimately, though, these were commercial decisions, and the future of the site is a matter for Hitachi. However, as my noble friend Lord Trenchard rightly pointed out, the energy White Paper is clear that nuclear remains an important part of the UK’s energy mix. We have committed to at least one more 1 gigawatt power plant and we will continue to discuss new projects with other viable companies and investors wishing to develop sites, including the one in north Wales. The civil nuclear sector continues to be of key strategic importance to the UK and we welcome foreign investment in our infrastructure, subject to thorough scrutiny and the need to satisfy our robust legal, regulatory and national security requirements. I point my noble friend to the National Security and Investment Bill that is going through the House this week.
In relation to the question on high-temperature gas-cooled reactors, in 2019 the UK and Japan signed a memorandum of co-operation on energy innovation. This is the beginning of discussions on what the UK-Japan collaboration on advanced nuclear might look like. The joint NNL and JAEA report was published in October 2020 to provide a technical basis to establish and agree the next phase of collaboration, which will be welcome.
In response to my noble friend Lady McIntosh of Pickering, I will say that the UK Government are considering NCAs with other countries. We cannot comment on any ongoing negotiations, but we are of course keen to put in place NCAs with any country where such an agreement would be mutually beneficial. All the NCAs that the UK has in place are operable and we review them regularly.
With reference to the change in the UK’s overall weapons stockpile, the UK Government have consistently stated that we will both keep our nuclear posture under constant review, in light of the international security environment and the actions of potential adversaries, and maintain the minimum destructive power needed to guarantee that the UK’s nuclear deterrent remains credible and effective against the range of state nuclear threats from any direction. We regret that the security environment has necessitated this change, but we must recognise that the security situation has worsened since the previous Government’s declaration of their intended nuclear warhead stockpile ceiling in 2010, since when we have seen an increase in nuclear challenges. Against this backdrop, the UK must ensure that its nuclear deterrent remains credible and effective against the full range of state nuclear threats from any direction.
I thank the noble Lord, Lord Grantchester, for his question about the interests of the IAEA in relation to this SI. The IAEA seeks to promote the safe, secure and peaceful use of nuclear technologies. The nuclear co-operation agreement between the UK and Japan seeks to do the same. As a former chair of the Nuclear Suppliers Group, I am sure that IAEA director-general Grossi will be pleased to see that we have brought our agreement up to date and in line with NSG guidelines.
To close, I will underline that the protocol, and by extension these regulations, reaffirm the importance that the Government place on ongoing co-operation with the UK’s international partners in the civil nuclear sector. It highlights the continued value we place on mutually beneficial co-operation on the peaceful uses of nuclear energy. I commend these regulations to the Committee.
The Grand Committee stands adjourned until 4.40 pm. I remind Members to sanitise their desks and chairs before leaving the Room.
Arrangement of Business
My Lords, the hybrid Grand Committee will now begin. Some Members are here in person, others are participating remotely, but all Members will be treated equally. I ask Members in the Room to respect social distancing. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee.
As we expect a further Division in the House, we have agreed that the Committee will adjourn now until five minutes after the vote has been called on Amendment 6, if that vote is called. I remind the Committee that, should there be a further Division, we will also adjourn for five minutes. So the Committee now stands adjourned until we know whether there has been a decision on Amendment 6 to call a vote—and, if there is, five minutes after that decision has been taken.
Sitting suspended for a Division in the House.
Audiovisual Media Services (Amendment) Regulations 2021
Considered in Grand Committee
My Lords, I am pleased to introduce this instrument, which was laid in both Houses on 25 February and is being made under the European Union (Withdrawal) Act 2018. This instrument will remedy certain failures of retained EU law arising from the withdrawal of the United Kingdom from the EU. It addresses minor and technical issues in domestic law after transposition of the audio-visual media services directive by the Audiovisual Media Services Regulations 2020, and is necessary to ensure that the law remains fit for purpose beyond the end of the transition period.
These regulations amend references to EU legislation, substituting domestic law references and making references to EU legislation ambulatory where appropriate. They also remove the requirement for Ofcom to notify the European Commission of services in scope falling within the UK’s jurisdiction, and address Ofcom’s co-operation with EU member state regulators.
I will now look at the regulations in more detail. The audio-visual media services directive, also known as the AVMS directive, is long-standing EU legislation that co-ordinates the regulation of audio-visual media services. The AVMS directive was revised in 2018 to take into account changes to the media landscape since the last revision of the directive in 2010.
The UK’s Audiovisual Media Services Regulations 2020, which transposed the revised AVMS directive, were made and laid in Parliament on 30 September 2020. Those regulations came into force on 1 November 2020. They introduced rules for video-sharing platform services for the first time, with Ofcom as the national regulatory authority for video-sharing platforms falling under the UK’s jurisdiction. The new rules for video-sharing platforms stipulate that platforms which have the required connection with the UK must have appropriate systems and processes to protect the public, including minors, from illegal and harmful material. The “required connection with the UK” means that if the platform provider is established in the UK, or if a group undertaking of the provider is established in the UK and the service is not regulated by another EEA country, Ofcom will in those circumstances have jurisdiction to regulate the video-sharing platform service.
Three key requirements have been placed on video-sharing platforms: first, to take appropriate measures to protect minors aged under 18 from harmful content; secondly, to take appropriate measures to protect the general public from material inciting hatred or violence, and certain illegal content; and thirdly, to introduce standards around advertising.
Ofcom is currently actively engaging with platforms that may be affected and has published guidance on scope and jurisdiction. In March, Ofcom published draft guidance for consultation on the list of measures that video-sharing platforms can take to protect users from harmful material. More vigorous regulation will commence once all guidance on video-sharing platform regulation has been published later this year.
I now draw the attention of the Committee to the report from the Secondary Legislation Scrutiny Committee considering this instrument, and thank it for its work. The committee’s helpful report flagged two key areas: first, Ofcom’s power to co-operate with EU regulators and, secondly, the delay in the introduction of the online safety Bill.
I will first address the committee’s concern that replacing Ofcom’s duty to co-operate with a power to co-operate with EU regulators could result in uncertainty regarding enforcement for platforms whose services are used in the UK but where the platform is based and regulated outside of the UK.
Co-operation and sharing information between national regulatory authorities is helpful for the purpose of enabling authorities to fulfil their functions in the most efficient and joined-up way, and to collaborate on matters of common interest. In this post-transition period, co-operation continues to be important and this instrument provides Ofcom with the power to co-operate with its EU member-state counterparts. Engagement with other national regulatory authorities will be helpful to resolve any jurisdictional issues and help ensure that UK users are protected from illegal material appearing on a video-sharing platform where the provider of the platform does not have the required connection with the UK.
Ofcom will be able to use this power in a number of circumstances: addressing jurisdictional matters, such as determining where a provider is established; co-ordinating enforcement action; engaging to ensure cross-border compliance; and exchanging regulatory best practice. Without that power, Ofcom would be able to engage only in non-case specific informal co-operation with other EU regulators—for example, exchanging regulatory best practice rather than co-ordinating enforcement action. This could result in a lack of transparency between regulators and could lead to less effective protection of UK users, including minors.
Although this instrument does not guarantee that EU counterparts will reciprocate and co-operate with Ofcom, these regulations show a willingness on the part of the UK Government that Ofcom should engage and promote collaboration in this important area of online safety. Leaving a duty to co-operate in place would be inappropriate because of the lack of reciprocity from EU member states, and would provide no incentive for EU national regulatory authorities to co-operate with Ofcom.
I will now address the committee’s concerns about the timing and introduction of the online safety Bill. While we recognise the importance of being online and the benefits that this can bring, we acknowledge that online safety is a major concern. There are serious risks that users, especially children, currently face when they are online, and the prevalence of the most serious illegal content and activity online is unacceptable. We are working at pace to prepare online safety legislation, which will be ready this year. In the meantime, we are working closely with Ofcom and will continue to engage with parliamentarians as we prepare the legislation.
The current regulation of video-sharing platforms shares broadly the same objectives as the upcoming online safety legislation. In particular, it places requirements on UK-established video-sharing platforms to have systems in place to protect their users. The online safety regime will be broader and is expected to apply to a much wider range of online platforms. It is therefore the Government’s intention that the UK video-sharing platform regime in Part 4B of the Communications Act 2003 will be repealed and superseded by the online safety legislation once the latter has been implemented. Ahead of the repeal, Ofcom, through regulating video-sharing platforms, is gaining invaluable knowledge about systems regulation and how best to keep UK users safe online. This knowledge and experience will help the Government to meet our objective to make the UK the safest place in the world to be online.
My Lords, I appreciate the explanation given by the Minister. I have to mind the old joke about déjà vu all over again, because we have been here and will undoubtedly be here again to discuss the necessary measures that, I hope, will emerge from the online harms legislation, which we are all anticipating and looking forward to scrutinising following the Queen’s Speech in May. We are looking forward to it, because the situation that we face at the moment, as outlined by the Minister, is totally unsatisfactory.
I appreciate that this is just a technical measure, and that is why I can be brief. However, the technicality of providing a power to Ofcom to collaborate and share illustrates the paucity of any real measures that we have to hand to be able to deal with the situation whereby a platform is outside the UK but is beaming into and is used extensively in the UK. That is the problem, as we all know, with this technical regulation. Very few, if any, of the major platforms that we are talking about fall into the category of being overseen by Ofcom, and we need collaboration across Europe and the world to deal satisfactorily with online harms.
That has been thrown into contrast by one of the continuing emotional spasms during the recess—namely, the issue of whether boys are a dangerous species in our schools. I do not underplay it; I have written about it, and do not want to be misinterpreted. There is a real problem. But the problem, in part at least, springs from pornographic material that, sadly, is available for young people to access, and the distorted view of relationships, including sexual and emotional relationships, which are affected by it.
I wanted to put on record this afternoon that it will be absolutely crucial that we get the new legislation right and ensure that the powers will be available, whether the major platforms and big tech like it or not, in order to be able to protect our citizens, and particularly our young people, from the harms that they currently face.
My Lords, last November, when we debated the earlier SI, I welcomed it but raised a number of concerns. Frankly, today’s extra-technical fixes do not allay those concerns. A critical concern was about who would regulate to our satisfaction services that are available in the UK but are based elsewhere. The Minister said in November:
“Under the revised AVMS directive, each EU member state and the UK is responsible for regulating only the video-sharing platforms that fall within its jurisdiction. There will be only one country that has jurisdiction for each platform at any one time.”—[Official Report, 27/11/20; col. 440.]
So we have no say in the regulation of on-demand platforms, such as Netflix, which will be regulated in the Netherlands, and video-sharing platforms, such as YouTube, which will be regulated in Ireland.
Today’s SI does not help. It merely replaces the duty on Ofcom to co-operate with EU regulators with a power for Ofcom to do so. As the Minister explained last November,
“Ofcom will rely on informal co-operation with the relevant EU regulatory authorities for information regarding determination of jurisdiction and discussions on co-operation and consistency of approaches towards video-sharing platform regulations”.—[Official Report, 27/11/20; col. 451.]
So it is down to informal co-operation rather than, as previously, having membership of the European Regulators Group for Audiovisual Media Services, which sets the rules for how all other EU regulators will operate.
I have frequently asked whether Ofcom will seek at least observer status of ERGA so that we may have something a little more than “informal co-operation”. Can the Minister tell us whether the Government are urging Ofcom to do so? Of course, if it were significantly updated to cover ODPs and VSPs, the Council of Europe’s Convention on Transfrontier Television could provide a way for us to have a greater say, as, along with most EU countries, we remain in membership of the council. Are the Government considering this? Can she outline the intended regulatory regime once we have our much-awaited online harms legislation?
Last November, I asked the Minister:
“Do the Government intend their online harms legislation to bring all VSPs that impact on UK consumers under the scope of UK regulation?” —[Official Report, 27/11/20; col. 444.]
I did not get an answer then. Can she tell us now? If the answer is no, surely the much-vaunted taking back control will be a sham.
Finally, I ask the Minister to reflect on something else she said back in November, when she commented that
“if a platform has no physical presence in any country covered by the AVMS directive, then no country will have jurisdiction over it, even if the platform provides services in those countries.” —[Official Report, 27/11/20; col. 440.]
Are we really to believe that if a service provided to UK customers is based outside the EU or UK—say, in China—we will have no power to regulate it? I hope she can explain.
My Lords, the regulations are obviously necessary. However, the powers cover only those platforms that fall within UK jurisdiction, as has already been said, and where it is necessary to protect the public, including, especially, children, from illegal or harmful material. We are immediately in difficult territory. In order to become subject to control, the definition is limited to those VSPs that either display a physical presence in the UK or are based or established here. Those companies with a presence elsewhere cannot be controlled, and only one country can have control at any time. Many of the VSPs are international concerns, as we know, such as Facebook or YouTube, where video material is widely propagated. Examples of child sexual abuse being displayed are, sadly, becoming more common, and the Internet Watch Foundation, with which I am connected, has drawn attention to the growth of undesirable content.
Also, the regulations on the powers of Ofcom do little to control online advertising, which is another source of concern in the need to protect children, in contrast to TV advertising, which is controlled. Few of the most widely patronised VSPs meet our requirements for Ofcom or government attention or control. Many of the most popular, including Facebook and YouTube, but also Instagram and Twitter, are outside our jurisdiction. Some are based in EU countries, including Ireland. That leaves us unable to intervene effectively and our citizens in danger. Can my noble friend advise how else we can gain more control in view of the rules that we now accept? The new online harms Bill, which we are promised, is still awaited with interest, and perhaps we can hear today from my noble friend how it might deal with the obvious limitations we currently have.
I have been arguing in the field of technological legislation that we should try to ensure that it is smart legislation—that is, updatable, like the software we use in computers and cars. If it is not, technologically will inevitably always be ahead of the regulators and any desirable controls the Government might need to protect us. In view of the fact that the EU and other countries have their own criteria to apply to online content, which might be very different to our own, what steps are being taken to try to maintain that common approach, with common limits on acceptability of content?
Ofcom is on record as saying that it will prioritise only the most serious potential breaches arising following our leaving the EU until it has fresh and comprehensive guidance. Does my noble friend not believe that clearer guidance should now be given? This is an area of our lives which will not wait and where we need always to be up there with those who provide these services. Online services can be a force for good, just like TV and radio communications, but there is evidence that they can be accessed by those whose aims are less beneficent and, in some cases, criminal. We cannot preside over such uses.
My Lords, I thank the Minister for the straightforward way in which she introduced this statutory instrument. It is, as she said, a technical instrument and I even welcome it in part. It is a positive that the UK will continue its commitment to the European works regime. As a generator of content, our creative industry will be a beneficiary of this regime and it makes sense to continue that involvement.
However, I can only echo the concerns expressed by others this afternoon about the limitations left unanswered by this legislation. With so much content being generated by platforms based outside the UK, our users of social media in particular and platforms generally are being left highly vulnerable to what is produced that is not regulated from the UK. This is a matter not just of the pornography that is being piped out and, as the noble Lord, Lord Blunkett, said, inflicting damage on our youngsters. An immense amount of really dangerous stuff about suicide gets circulated online. On anorexia, thinness websites are pushing our young ladies into starving themselves. It is really appalling. It will not be stopped by the regulators in other countries and I am afraid that our regulators will not be able to do it.
We have heard many times already this afternoon about the long-awaited online harms Bill, but when will it actually hit the statute book? How extensive will it be? Anyhow, I query whether Ofcom will be ready to deal with it when it arrives. From looking at its website, it is desperately trying to recruit people to deal with this. It still needs a principal to deal with online harms —somebody who can build and lead a multidisciplinary force across Ofcom to deliver high-quality policy and advice on complex issues. It is still hunting for a policy manager to support the development of its approach to regulating online harms. Can the Minister reassure us that Ofcom will be able to fulfil the duties being imposed on it to protect our country from online harms?
My Lords, I welcome my noble friend the Minister to her place and thank for the very clear exposition of and background to the regulations before us. I declare my interest as on the register as chairman of the Proof of Age Standards Scheme board.
I will make two points and ask my noble friend a question on each. Is she in a position to give us the timetable for the online harms Bill, in particular as regards identifying and proving the age of minors to ensure that they are not subject to harmful images and content online? What discussions has she had with her opposite number in the Home Office, in particular my noble friend Lady Williams, with whom we have been working closely at PASS in this regard, to establish a digital ID and to verify how proof of age for the purposes of such a digital ID for young people can be set up? It is extremely important that these departments co-operate and work very closely together in this regard. I would welcome an early meeting with my noble friend if that is potentially helpful.
Secondly, on the issue raised by the noble Lords, Lord Blunkett and Lord Foster, and others who have spoken so far, all making the same point, how do the Government intend to resolve the question of jurisdiction and the potential for video service providers to escape the control of Ofcom, although offering services in the UK? What provision do the Government intend to make in that regard?
Finally, paragraph 7.2 on page 4 of the Explanatory Memorandum says:
“The references in the transposing Regulations which are being fixed include amending and substituting references to EU legislation with references to domestic law”.
The duty on Ofcom to co-operate with the European Commission, and presumably other member state bodies, is therefore being replaced with powers for it to co-operate with EU regulators. How does my noble friend expect that these changes will be made? Personally, I regret that there is a downgrade from a duty to powers for it to co-operate. I will follow this very closely.
My Lords, as the noble Lord, Lord Blunkett, indicated, this debate is but one small piece of a larger jigsaw which Parliament will have to put together in the new Session in May. I pay tribute to the Secretary of State and his colleagues, including the noble Baroness, Lady Barran, for the painstaking way in which they have gone about consultation and involvement in preparing for the online harms legislation. I hope that they will go one step further by including pre-legislative scrutiny in the process by which the proposals will be brought forward.
Nineteen years ago I sat on the Puttnam committee, the Joint Committee of both Houses which gave pre-legislative scrutiny to what became the Communications Act 2003. That pre-legislative scrutiny made for a better Bill. The SI before us makes a number of tweaks to that Act, which was, of course, the legislation which created Ofcom. I remember that pundits at the time were predicting that the media vested interests would overwhelm Ofcom—or, as it was indelicately put then, “Murdoch’s lawyers will have them for breakfast”. This proved not to be the case, but there is no doubt that the same vested interests will be at work trying to draw the teeth of legislation designed to limit their powers to make money. As my noble friend Lord Foster and the noble Lord, Lord Kirkhope, indicated, who regulates what could turn out to be a lawyer-fest.
The Communications Act 2003, which we are amending today, contains the crucial Puttnam amendment, imposing on Ofcom the statutory duty to further the interests of citizens. That has been crucial in ensuring that regulatory decisions are not dictated by market criteria but governed by proper considerations of the broader public interest. It is essential that the Puttnam protections appear in the new Act. That statutory duty becomes even more important as Ofcom takes on the role of online regulator. As the noble Baroness, Lady Wheatcroft, outlined, it will be essential in reinforcing its ability to protect citizens, including children and the vulnerable, from a range of social harms as well as the threats to our democracy via fake news and disinformation.
Ofcom’s willingness to shoulder those responsibilities and the way it works with our other regulators—the ICO, the CMA and the Financial Conduct Authority—in the newly created digital regulation co-operation forum will depend on the effectiveness of the protection we now seek against internet harm. The protection of the citizen and of the wider public interest must remain part of the architecture of the regulatory system that we seek to put in place.
My Lords, it is a pleasure to participate in this short debate. I congratulate my noble friend the Minister on the way that she introduced the regulations. In doing so, I declare my relevant interest as a board member at Channel Four Television Corporation.
These are technical regulations, so forgive me if my questions are of a somewhat technical nature. What mechanisms and technologies are currently in place to ensure that the power to co-operate can be exercised effectively and in real time? To echo my noble friend Lady Wheatcroft’s point, does the Minister believe that Ofcom currently has the resources and expertise required in this area in terms of individuals, and the hard and soft resources to back this up?
In her opening, the Minister set out the learnings that would come through Ofcom’s engagement with VSPs. How will those learnings feed into the online harms legislation process and can a mechanism be established to ensure that they can be fed into any pre-legislative scrutiny in real time, because they could be invaluable to that process? I agree with my noble friend Lady McIntosh that, as with so much that we are considering now, a lot of this tracks back to the need for a distributed digital ID. Can the Minister outline some of the work going on in her department? What can be done to accelerate that and what proofs of concept may be undertaken that could be particular to the issues we are discussing?
Does the Minister agree that we have world-class broadcasters and content producers in the UK, and that it is essential that we have world-class online harms legislation? Will she conclude the debate by giving us a date for when the legislation will be introduced?
My Lords, it is ironic that we keep coming back to this set of audio-visual media services regulations, yet this regime is only ephemeral and rather limited in scope. Schedule 15A was inserted only in November, as the Minister said, and is destined to be repealed, we hope, within a short space of time. This is really a dry run, as the Minister accepted, for what we are expecting to be the much wider scope of the online harms legislation, due, we hope, shortly after the Queen’s Speech, at least in draft. That is why we need to kick the tyres pretty hard at this stage on the way in which Ofcom plans to regulate and on the provisions of this SI.
As my noble friend Lord Foster asked, how many on-demand and VSP services are now covered, or have been since 6 April? He also asked what the Government intend as regards VSPs not based in the UK when the new online harms legislation is introduced. The Minister used the phrase “wider ambit”. Is that a commitment? We can, of course, talk about the provisions of the regulations themselves, the duty of co-operation and so on. She referred to the findings of the Secondary Legislation Scrutiny Committee and its view that the SI created some uncertainty.
The Minister was not wholly convincing in pushing back on the fact that the powers are essentially informal. There are not duties that require formal mechanisms of co-operation, least of all those belonging to the association of regulators mentioned by my noble friend Lord Foster. Perhaps the Minister can also talk about the consequences of the “ambulatory” definition of “European works”. There seems to be some confusion about the way in which that will operate. It is important to have transparency between the regulators and a commitment by the Government to make sure that our legislation is on all fours, at least during the interim period and probably for some time thereafter. I agree with the noble Baroness, Lady Wheatcroft, about the concerns over the timing of the introduction of the online harms legislation.
We should all be interested today in the substance of the Ofcom consultation on the video-sharing platform guidance. Of course, we are all concerned about the question of freedom of expression, but Ofcom in its consultation said
“The VSP Regime does not set standards for content which providers should meet”.
Is that going to be the online harms approach? I very much hope that we will go further and adopt the risk assessment and management approach discussed later in the VSP consultation by Ofcom. That would fulfil what my noble friend Lord McNally referred to as the Puttnam criteria.
The noble Baroness, Lady McIntosh, mentioned age verification. Ofcom said:
“For VSPs which specialise in, or have a high prevalence of pornography, we think robust and privacy preserving forms of age verification are key to providing necessary protections for under-18s”.
I entirely agree with that, and with what the noble Lord, Lord Blunkett, had to say. But will this be mandatory or a matter of judgment? What sanctions will there be if age verification is not introduced?
It is evident from the answer to the recent Written Question from my noble friend Lady Grender that user-generated content will be more heavily regulated than commercial pornography sites which do not carry user-generated content. Is that the Government’s settled approach? If so, they will have a fight on their hands, especially in the light of BBFC research which showed that parents agreed with a statement that there should be robust age-verification controls.
I could go through age ratings and the DRCF workplan mentioned by my noble friend Lord McNally. I strongly support the proposal for a centre of excellence. The dispute resolution mechanisms discussion is also of great interest, and I declare an interest as chair of the board of Ombudsman Services Ltd. The Government have said that they do
“not intend to establish an independent resolution mechanism”.
Ofcom clearly considers it important to have independence, and I hope that the Government will have changed their mind by the time we come to the online harms legislation. Furthermore, Ofcom’s statements are very cogent about media literacy, but where is the Government’s strategy?
Finally, are Ofcom’s enforcement guidelines fit for purpose in regulating VSPs? What kind of assessment has been made of them and what assurance can the Government give? I have great confidence in the way in which Ofcom is steering its activities towards preparing for online harms regulation. I am not so sure about the Government, however, given the regulatory framework and the policies that they are adopting.
My Lords, the noble Lord, Lord Clement-Jones, is right to say that this afternoon’s discussion is something of a dry run. If that is the case, there will be anxious people around the world concerned to know exactly what we are going to get in the online harms Bill, when it is forthcoming.
In a previous debate, I raised the question of how we would regulate the big players such as YouTube when they are established elsewhere if they are regulated entirely by the EU and outside our jurisdiction. That question has cropped up again today. I welcome the fact that colleagues across the House have begun asking the Government more about that issue, because it is a very important one. I look forward to the Minister’s response on that.
Noble Lords have said this afternoon in no uncertain terms that they find the current situation highly unsatisfactory. Reference was made to resources by the noble Baroness, Lady Wheatcroft, while the noble Baroness, Lady McIntosh, asked about jurisdiction. The noble Lord, Lord Kirkhope, was clearly concerned to ensure that we have the online harms Bill brought forward sooner rather than later. While the noble Lord, Lord McNally, was happy to see detailed consultation carried out, I think that he also would like to see some of that during the pre-legislative process, so we can all understand how the legislation will work.
I, like the noble Lord, Lord Holmes, want—[Inaudible]—online regulation, and that is the view of my party. So while the changes made by this statutory instrument were not felt to be day-one critical, it was always inevitable that they would have to be made to ensure that Ofcom’s powers and duties reflect the new informal relationship between the UK and the EU and EEA regulators, and the fact that the UK no longer needs to notify the European Commission of certain changes.
As noted by the Secondary Legislation Scrutiny Committee, however, there was a recommendation for this instrument to be upgraded from the negative procedure to the affirmative. We welcome the fact that the Government accepted this recommendation, but the fact remains that there is too little information on the proposed timetable for the online safety Bill for us to be entirely reassured. I hope that the Minister will address those concerns and perhaps give us a timetable for pre-legislative scrutiny and the final introduction of the Bill. Can she do that this afternoon? We need to have some certainty. Does the Minister also accept that the current regulatory vacuum, where significant video-sharing platforms operate but are entirely outside our jurisdiction, rather undermines the Government’s commitment to protect users?
We welcome the Government’s plan to introduce a duty of care on online service providers, but while legislation exists only in draft form this does nothing to keep users, particularly younger ones, safe at present, despite various voluntary initiatives. We continue to see worrying cases of users encountering harmful and inaccurate content online.
Paragraph 2.13 of the Explanatory Memorandum notes:
“Guidance issued by the European Commission will continue to have relevance in the UK should it be updated.”
This makes sense, but it could be argued that this approach is inconsistent with the handling of similar guidance in some other policy areas. What was the rationale for this specific decision? DCMS says that the new ambulatory reference will fall away if the EU opts to adopt an entirely new definition or guidance. Can the Minister put on record her understanding of the current regime and the level of regard UK bodies should have for it in the light of this statutory instrument? What future changes to the EU guidance would DCMS consider inappropriate in the UK context?
Paragraph 2.15 of the Explanatory Memorandum says that the Government are giving Ofcom statutory powers to co-operate with EU and EEA regulators in part because
“it is hoped it will incentivise other regulators to co-operate with Ofcom.”
What has this co-operation been like during the first three months of the new relationship? Does the Minister accept that we have become dependent on the good will of others, something that we are increasingly needing to rely on in our new relationship with the EU? I look forward to hearing the Minister’s responses to this and the other important points raised from across the Committee today.
My Lords, I start by thanking all noble Lords for their valuable and insightful contributions to this debate. I will do my best to answer the points raised in the time allowed, but if I run out of time I will of course write to your Lordships.
A number of noble Lords, including the noble Lord, Lord Blunkett, and my noble friends Lord Holmes and Lord Kirkhope asked how this approach would work in practice in terms of co-ordination with EU regulators. I believe that I covered some of this in my opening remarks. I would just add that the UK and the EU have similar objectives regarding online harms and continue to share similar values. Both the digital services Act and the online safety legislation will set out new expectations on companies to ensure that they have proportionate systems and processes in place to mitigate risk and to keep their users safe online. We are committed to working with our European and international partners, as well as businesses themselves, to understand how we can implement these existing frameworks better. However, I would like to be clear, in response to many noble Lords’ requests for clarification on jurisdiction, that our forthcoming online safety regime will regulate platforms irrespective of jurisdiction.
The noble Lord, Lord Clement-Jones, asked which platforms would be regulated by this new instrument. From 6 April this year, VSP providers in UK jurisdictions have been legally obliged to notify their services to Ofcom. Existing providers have one month—until 6 May —to notify their services, and the list of providers will be published shortly thereafter. We expect, and this is very important in light of the very valid concerns that your Lordships raised, that this will include some smaller platforms that have never previously been in scope of regulation.
A number of questions were asked about ambulatory references. These ensure that UK law reflects updates to the definition of European works and/or the relevant guidance attached to that, so that when the EU makes changes to legislation, a full legislative process has to be gone through and the UK will therefore get a reasonably lengthy period of notice in which to consider whether or not to disapply the ambulatory reference. As a matter of policy, however, the UK wants to keep close to the EU on the definition of European works, which is why the definition is ambulatory. It is also a technical definition and has links to the European Convention on Transfrontier Television, to which the UK is a party.
A number of questions, including from the noble Lord, Lord Clement-Jones, were asked about the use of age-assurance and age-verification measures within the video-sharing platform regime. Age assurance is one possible appropriate measure in the VSP framework. In order to comply with the VSP regime, age-assurance measures may be adopted by VSPs, along with other measures such as age ratings and parental controls. When considering which measures are needed to protect users adequately, platform providers must consider what is practicable and proportionate, which includes taking into account the rights of users.
Ofcom is committed to promoting best practice in this area within the VSP regime, and its guidance is consistent with the guidance on establishing age within the Information Commissioner’s age-appropriate design code. Throughout the duration of the regime, Ofcom will work with the ICO to provide clarity on roles and coherence in approach. I can tell the noble Lord, Lord McNally, that this will be done with a risk-based approach, both in this regime and in the forthcoming online safety regime.
The noble Baroness, Lady Wheatcroft, asked whether Ofcom had sufficient resources to fulfil its role. Ahead of the online safety Bill we are working closely with the regulator to understand the challenges that it faces, and we are working to ensure that it has the resources, processes and expertise to start building its capability as an effective regulator of VSPs and of course, importantly, as the future online safety regulator.
My noble friend Lady McIntosh of Pickering and the noble Lord, Lord Bassam of Brighton, asked again about jurisdiction and the regulation of platforms not established in the UK. VSPs that are not established in the UK will be regulated not by Ofcom but rather by the EEA state in which they are established. Ofcom will regulate VSPs that are not established in the UK but have a group undertaking in the UK, if the VSP does not fall under the jurisdiction of an EEA state. We hope that the regulation provided by other EU member states will be effective enough to provide protection to UK users in the interim. But, as I said earlier, our online safety regulation is intended to be the long-term regulatory framework.
Lastly in relation to this instrument, my noble friend Lord Kirkhope asked about the regulation of advertising. Under the VSP regime, the requirements placed on providers with regard to restricted material and relevant harmful material in videos apply to adverts as well.
In the time remaining, I will turn to the online harms legislation. Most noble Lords asked me to clarify the timing of the online safety Bill. We are working at pace to prepare the legislation, which will be ready this year. As for pre-legislative scrutiny, I thank the noble Lord, Lord McNally, for his kind remarks about our engagement with parliamentarians, which we have found extremely useful. We will make a final decision on pre-legislative scrutiny nearer the time of introduction, but your Lordships will have heard the Secretary of State say that he is minded to undertake it.
A number of noble Lords asked for clarification on what would be included in the new regulatory framework. In brief, the framework will prioritise action to tackle illegal content and the protection of children. All companies in scope will need to tackle illegal content on their services and protect children. The noble Baroness, Lady Wheatcroft, cited some of the most troubling examples of legal but harmful content. In that case, companies will be required to set out clearly what content and behaviour are acceptable on their services.
I fear that I am running out of time and have not answered all noble Lords’ questions. I will follow up in writing. As I have set out clearly today, these regulations are required to fix the remaining issues of the transposition of the AVMS directive to ensure that the law remains clear and operable beyond the transition period. This instrument will allow Ofcom to continue regulating video-sharing platforms effectively and will give it the power to co-operate with EU regulators when it is appropriate to do so. This will help to ensure that online users, particularly those under the age of 18, will benefit from the protection from illegal and harmful content provided by Ofcom’s regulation of video-sharing platforms ahead of the upcoming online safety legislation. With that, I commend the regulations to the Committee.
Committee adjourned at 5.44 pm.