Considered in Grand Committee
My Lords, I beg to move that this draft order, laid before the House on 14 April 2021, be considered. I am grateful for the opportunity this afternoon to debate this important order, which allows the Scottish Government to fully implement their new environmental governance body, Environmental Standards Scotland, which I will now refer to as the ESS. This order is part of the Government’s ongoing commitment to devolution and is made in consequence of the UK Withdrawal from the European Union (Continuity) (Scotland) Act 2021, which I shall now refer to as the continuity Act.
I will begin by providing some background to this order, which is to be made under the Scotland Act 1998. The 1998 Act devolved powers to Scotland and legislated for the establishment of a Scottish Parliament. Scotland Act orders are a form of secondary legislation made under the 1998 Act, which are used to adjust Scotland’s devolution settlement. The order before your Lordships today is a Section 104 order, which allows for necessary or expedient legislative provision in consequence of an Act of the Scottish Parliament. In this case, provision is required in consequence of the aforementioned continuity Act.
The continuity Act, which received Royal Assent on 29 January 2021, enables Scottish law to continue to keep pace with future EU developments, following the UK’s exit from the EU. It also establishes a new regime of environmental governance in Scotland, including the new governance body, the ESS. The ESS will enforce compliance by the Scottish Ministers and public authorities in Scotland with environmental law, and it will assume statutory powers and functions once fully vested. The ESS will also provide scrutiny of the effectiveness of environmental law and of its implementation and application. Reserved bodies in Scotland will naturally be excluded from its oversight.
It must be emphasised that the purpose of the debate is not to consider the content of the continuity Act or the powers of the ESS; rather, the amendments to reserved legislation that the order seeks to implement. The Scottish Parliament has already legislated to create the ESS, but consequential amendments are required to reserved legislation to give full effect to the ESS and allow it to carry out its functions.
I will now turn to the instrument itself and explain what it does. Its consequential purpose is twofold. First, it will make the ESS part of the Scottish Administration. This will provide for its designation as a non-ministerial office that is independent from Scottish Ministers but accountable to the Scottish Parliament. It also provides that the Crown Suits (Scotland) Act 1857 does not apply to the ESS, with the effect that the Lord Advocate cannot sue or be sued in place of the ESS. Secondly, it amends the House of Commons Disqualification Act 1975 by adding the ESS to the list of bodies whose members are disqualified from being Members of the House of Commons. This is required to ensure the independent basis of the body’s work.
The Scottish Government are unable to make these amendments to reserved law, so, without the order and the small changes it makes to UK legislation, the Scottish Government could not confirm the ESS as a body of the Scottish Administration. It would also mean that members of the ESS could stand in the House of Commons, which would undermine its purpose as an independent body.
Your Lordships may wish to note that equivalent provisions for environmental governance in England are contained in the UK Government’s Environment Bill. This Bill completed its Second Reading in this House yesterday, 7 June, and is now preparing for the Committee stage. Like the continuity Act, the Bill sets a new and ambitious domestic framework for environmental governance. The Government are aiming for the Environment Bill to have Royal Assent by the autumn.
This Bill will set up the office for environmental protection, which I will subsequently refer to as the OEP. The OEP is a similar organisation to the ESS and will hold the Government to account on their environmental commitments. Both the ESS and the OEP are still being set up. However, I can confirm that the ESS has been operating on a shadow, non-statutory basis since 1 January 2021. A transition team has been appointed to help to establish the ESS and to ensure that it is prepared to take on its statutory functions once vested. Similarly, work establishing the OEP is continuing at pace. From July 2021, the new interim office for environmental protection will be set up in non-statutory form to provide independent oversight of the Government’s environmental progress and to build a strong foundation for the OEP delivering its full statutory functions.
There will naturally be scenarios where governance bodies in different parts of the UK will have to co-operate on issues where there is an overlap or joint exercise of reserved and devolved powers. As independent bodies, it will be for these bodies to determine how best to work on these issues. However, we can be sure that good communication and co-operation will be key, and it is expected that both bodies will collaborate to maintain environmental standards across the UK.
One example here is standards for waste disposal, for which guidance documents have been produced for similar, but separate, regulatory systems in Scotland and England. Should any concerns be raised to either the OEP or the ESS with respect to the application of the guidance, it would make sense to work together to address concerns. Another example is producer responsibility, a UK-wide regime where co-operation would be needed for the regulation of compliance schemes registered in one nation but operating across the UK. Indeed, through their respective legislation, each body will be required to consult other environmental governance bodies where a particular exercise of its functions may be relevant to the exercise of the other’s.
In summary, this instrument facilitates the implementation of the ESS by adding the body to the Scottish Administration, and ensuring that its members are disqualified from becoming Members of the House of Commons. It demonstrates the commitment of the UK Government to strengthening the devolution settlement and the partnership working between the two Governments to deliver for Scotland. I commend the order to the House, and I beg to move.
My Lords, I am pleased to have this opportunity to discuss the statutory instrument before us this afternoon. I thank my noble friend Lord Younger of Leckie for introducing it and for the brief conversation we had earlier in this regard.
I want to focus on some of the issues that my noble friend highlighted in his introduction: primarily, what the relationship will be between the ESS and the OEP, and what remedies will be at the disposal of each respectively. I should perhaps also declare that I am a non-practising member of the Faculty of Advocates.
With regard to the role of the ESS, I take the opportunity to explore and perhaps understand better what powers, and in particular what resources, will be available to the ESS and, more specifically, what the comparative remedies will be and whether they will be sufficient. My noble friend referred to the debate yesterday on Second Reading of the Environment Bill. We are tasking both these bodies with major jurisdiction and enforcing not just new targets that may be set under the Environment Bill but our existing international responsibilities.
I understand that each will have their role set out in their respective jurisdictions in implementing our current international commitments. I am thinking of the Berne convention, which looks at some of our international obligations in habitats and environmental protections, as well as the whole raft of retained EU law. In particular, what will cause great interest in the context of the Environment Bill is the EU habitats directive and the extent to which we may stray from what was originally intended and which in any event has been gold plated.
My further understanding is that the trade and co-operation agreement provides for a level playing field, which commits the UK—I therefore understand that the ESS will apply this in Scotland and the OEP will apply it in England—to maintain the broad common standards on environmental regulations to which we have agreed. I understand also that the trade and co-operation agreement, which we have concluded as part of our agreement with the EU, although that seems a long time ago now, includes a commitment for the EU and the UK to co-operate effectively in maintaining and enforcing the law on climate.
It is intended that regular meetings will be held between the EU and relevant supervisory bodies in the UK. I understand, if the Scotsman is correct, that the ESS has already undertaken almost a courtship with, or a reaching-out to, its EU counterparts in the EU Commission. Can my noble friend follow up in writing, if not today, on the extent to which that is the case and, if it is the case, whether it is intended that there will be separate overtures from the ESS representing Scotland in this regard and the OEP representing England in a similar regard? That would be very helpful to know.
It is not just the domestic issue of environmental enforcement to which I refer but our current and future international commitments, to which my noble friend referred in passing. That is the main thrust of my interest today, along with the degree of independence which the ESS will enjoy from the Scottish Administration and the OEP will enjoy from the English Administration. I understand that the order before us today says that the ESS will become part of the Scottish Administration. I have great difficulty understanding that expression if it is actually to operate independently. That is referred to in paragraph 2.1 of the Explanatory Memorandum. It would be helpful to understand the extent to which it is intended that the ESS will operate independently.
It is very clear in paragraphs 16 and 17 of the relevant schedule to the Environment Bill—I cannot remember which one it is—that the English Secretary of State will have regard to the independence of the Organisation for Environmental Protection. However, Clause 24 of the Bill clearly says that the Secretary of State will issue guidance, which it is expected the OEP will follow. That is highly regrettable, and I am tabling an amendment to explore that further in Committee, because it goes to the heart of independence that the OEP should be operationally independent. I hope my noble friend will be able to confirm that, perhaps in writing subsequent to this meeting. I certainly hope that he will be able to confirm this afternoon that it is expected that the ESS will operate independently of the Scottish Government.
Perhaps particularly vexatious are the remedies that will be available to each body. It does not seem to be set out in any great detail what the remedies would be, should there be what used to be called an infraction proceeding. In the Commission, you used to be able to refer this to the European Court of Justice, which would uphold any of the effective remedies—not just fines but demands to desist that could be laid down by the European Commission. Paragraph 6.3, on page 2 of the Explanatory Memorandum, simply tells us:
“ESS has the power to investigate whether a public authority is failing (or has failed) to comply with environmental law, as well as any question about the effectiveness of environmental law or whether it is (or has been) implemented or applied effectively.”
This is obviously only a cursory reading. The EM goes on to say:
“ESS has the power to take appropriate action to secure a public authority’s compliance with environmental law, and to secure improvement in the effectiveness of environmental law or how it is implemented or applied.”
My concern in regard to that part of the statutory instrument before us today was reflected in the words of the noble Lord, Lord Anderson of Ipswich, in yesterday’s proceedings on the Environment Bill. The OEP does not seem to be empowered to issue fines or any demands to desist. The noble Lord said:
“Of course, the OEP, resources permitting, can apply to a court for an environmental review, but that procedure is itself fatally limited for two interlocking reasons”—[Official Report, 7/6/21; col. 1231.]
which the noble Lord went on to highlight.
Say, for example, that there was a huge chemical spill and it was the fault of a chemicals company, or there was sewage in a major river. My main concern, having sat as an MEP for 10 years, is that we are stepping back from the powers that the European Commission had, and it was made very clear at the time we were leaving the European Union that we would have similar powers in UK legislation. So I would be grateful if my noble friend could point to the ESS’s specific powers, and ideally also the OEP’s.
I will conclude by saying that it is very good to have had the opportunity to discuss these issues. What is as yet unclear is how the relationship between the OEP and the ESS will unfold and who will have the responsibility for ensuring that the two co-operate and collaborate as intended under the instrument before us this afternoon.
My Lords, as the Minister said, this order is needed to enable Environmental Standards Scotland to become fully operational. As he also said, the board has been appointed, it has been meeting monthly since January, and it is laying the foundations for its work once it is vested later in the year. Of course, this order is necessary to enable it to be vested.
The objective is for it to be independent of the Scottish Government and transparent in its working. However, it is worth noting that its board members are appointed by Scottish Ministers, who also control its budget. So time will tell how effective its teeth as a watchdog will prove to be.
It is a matter for the Scottish Government how divergent environmental standards in Scotland will be from those in the EU or in the rest of the UK. However, the Scottish Government have stated their objective of staying close to the EU in pretty well every aspect. This is primarily to sustain the fantasy promoted by Scottish Government Ministers that there will be a quick and easy route back into the EU for an independent Scotland. Close—or even cursory—examination of the facts would suggest otherwise. Nevertheless, the fantasy is maintained.
In those circumstances, I would presume that Ministers would want minimal divergence from EU rules. The question is whether the ESS, an independent body, would be able to take a different view if it felt that it was in the interests of the Scottish environment. If England or other parts of the UK pursue different environmental standards over time—I accept that there is an agreement to try to maintain the same standards at the moment, but this could change—that too could present a tension that tested the independence and the powers of the ESS.
It is asserted in the Explanatory Memorandum that the ESS does not affect small businesses as it applies to public bodies, but might there be an indirect effect for businesses; for example, businesses supplying goods or services to public agencies that may be required to comply with environmental standards? Indeed, they should be required to comply with such standards, but it is difficult to see the case for saying that it has no impact on small businesses.
The Minister said specifically that reserved agencies were exempt from the ESS’s jurisdiction. Are the UK Government relaxed about the direction the ESS may take as a fully devolved body? Will engagement on shared or common issues that may arise be pursued on a constructive basis of mutual respect and compromise? I speak as a member of the Common Frameworks Scrutiny Committee, which met this morning and had an extremely useful evidence session with the noble Lord, Lord Dunlop. One point that is being made is to try to create a climate of co-operation across the United Kingdom rather than one of megaphone confrontation. Of course, these new agencies will not be subject to common frameworks because they did not exist when that process was set in motion, but will the very useful principles being developed by common frameworks be applied to any divergence, difference of opinion or potential dispute between the emerging new agencies in different parts of the UK?
The Minister mentioned the UK internal market Act. Might that impinge on the work and operation of the ESS? Under the Act, would UK Ministers be able to overrule the ESS? Will the ESS be consulted on or informed of likely impacts on environmental standards during any trade negotiations? From utterances from Ministers and other government officials at this stage, the answer would appear to be no, their argument being that it is a reserved matter that devolved Administrations should not be part of, which the devolved Administrations of course strongly challenge.
If the UK Government negotiated a trade agreement that changed, for better or worse, environmental standards in England, would they be able to say that, under the terms of the trade agreement, those standards would have to be accepted by the ESS, with the ESS therefore effectively finding itself independent of Scottish Ministers but subject to direct jurisdiction of UK Ministers? I would be grateful if the Minister could clarify whether that is likely to be the case. I hope the Minister will at least agree that any divergence of approach on environmental standards needs to be handled with extreme sensitivity.
In conclusion, does the statutory instrument effectively guarantee the independence of the ESS from Scottish Ministers, given that they appoint and control the budget, and does it have the same effect for UK Ministers? Clearly, that will be a matter of some concern in the future. We have operated under the umbrella of the European Union for more than 40 years. That has been the testing framework to ensure that tensions were minimised. There is no immediate desire to diverge from that, but, over time, there may well be differences and changes that could create tensions. One would like to think that there will be mechanisms and a will to ensure that those tensions are resolved. I must make it clear that that will needs to come both from the UK Government and from the devolved Administrations. I accept and understand the purpose of this order, but I hope that the Minister will in turn accept that it raises some pretty interesting questions which we would like to hear answers to.
My Lords, I am grateful to the noble Viscount, Lord Younger, for his clear explanation of what this order does. We on these Benches broadly support the purpose of the order, which I understand to be to make Environmental Standards Scotland a part of the Scottish Administration as a non-ministerial office accountable to the Scottish Parliament. I echo the concerns of the noble Lord, Lord Bruce of Bennachie, and the questions asked by the noble Baroness, Lady McIntosh of Pickering.
I shall frame my concerns about the ESS, if I may call it that, under six headings. The first is independence. The noble Lord, Lord Bruce of Bennachie, made the point that all the board members are appointed by Ministers and the budget comes, in effect, from Holyrood Ministers. The independence of the ESS is important, because one of the major bodies it will be acting as a guardian of and watchdog over will be the Scottish Administration. Will the Minister explain how the independence of the ESS is to be ensured?
The second is the differences between the ESS and the OEP. We on this side of the House are concerned to see that environmental standards are kept up in Scotland and right across the United Kingdom. That will necessarily require co-operation between the ESS and the OEP. What steps are being taken to ensure that there is proper co-ordination between the activities of the two bodies and, separately, co-operation between the ESS and the enforcement of European Union standards?
The third is enforcement power. We on this side of the House are disappointed that in Holyrood the Tories and the SNP worked together to defeat a Labour amendment that would have empowered the ESS to take enforcement action on individual decisions. That would have provided continuity for the existing European Union arrangements under which anyone in Scotland could have raised a complaint if they thought that a decision taken by a public body contravened environmental law and could have expected action to be taken if that complaint turned out to be justified. If the ESS does not have the power to take that sort of action, how will complaints that public bodies are contravening environmental standards be enforced in the courts after the setting up of the ESS?
The fourth is the overall relationship between the devolved Parliaments and the United Kingdom Parliament. The noble Lord, Lord Bruce of Bennachie, referred to a megaphone relationship between the two. I agree. I noted that the Prime Minister of the United Kingdom indicated that there was going to be a summit which he invited the First Minister of Scotland, the First Minister of Wales and the First Minister of Northern Ireland to attend. That has now been postponed while there is haggling over the agenda. Will the Minister explain what has happened about that summit? Could he give us some indication of what steps the United Kingdom Government are taking to move on from a megaphone relationship to a proper relationship between the two?
My fifth point is a more technical question. Section 19 of the 2021 Scottish Act establishes Environmental Standards Scotland, the ESS. On what date is Section 19, and therefore this order, coming into force?
My sixth and final point echoes a point made by the noble Lord, Lord Bruce of Bennachie. What is the relationship between the internal market Act and the powers of the ESS? Can the UK Government in effect put a stop to an the ESS enforcement action, if they want to, with their powers under the internal market Act?
I thank noble Lords for their valuable contributions to this short debate. Let me start by saying that I appreciate the broad support for this order from all concerned. Let me also say, particularly in relation to the six points made just now by the noble and learned Lord, Lord Falconer, that if I do not answer all the points today, I will most certainly study Hansard and write to him.
The Government are absolutely committed to working collaboratively with the Scottish Government to ensure a functioning settlement for Scotland, and I hope that this instrument and my remarks today demonstrate that commitment. However, important questions have been asked both recently and this afternoon, querying the relationship between the ESS, the OEP and other devolved environmental governance bodies. I hope that I can attempt to answer them.
My noble friend Lady McIntosh of Pickering asked how the ESS and the OEP will work together near the borders. I will answer that in a moment. She also asked about the funding aspect. Again, I have an answer for that.
Clearly, there was a mood in this debate—particularly from the noble Lord, Lord Bruce, the noble and learned Lord, Lord Falconer, and my noble friend Lady McIntosh—regarding independence. The Scottish Government have designed the ESS as they see fit, which is consistent with the devolution settlement. Similarly, the UK Government have carefully designed the OEP for it to deliver its functions effectively in England and over reserved matters.
My noble friend Lady McIntosh asked about the ESS and its engagement. I can confirm for her that the ESS has already undertaken early engagement with the OEP and the UK Government. The trade and co-operation agreement—the so-called TCA—is a complex matter. I will need to write to my noble friend, as I think she expected.
My noble friend also asked about the powers of the OEP. As she might expect me to say, I realise that this matter was raised during yesterday’s debate on the Environment Bill. I do not believe that this is the place to debate it, but I understand the gist of her question; I know that she will have time to debate it before too long during the upcoming Committee stage of the Environment Bill.
Moving on to the details of the ESS, my noble friend Lady McIntosh raised the matter of how the ESS deals with Scottish public authorities that breach environmental standards and environmental law. This is really more a question of remedies. Once the relevant provisions of the continuity Act have been commenced, the ESS will have a range of formal powers at its disposal to ensure that public authorities comply with environmental law, including powers to prepare compliance notices and improvement reports. I am aware that the organisation’s principles state that it will seek to resolve issues through agreement, where possible, with recourse to its formal powers where the ESS considers it necessary to deliver the expected outcomes. The ESS has powers to issue compliance notices to public authorities where an authority is failing to comply with environmental law and that failure is causing, or has caused, environmental harm or a risk of such harm. The ESS will also have the power to report public authorities to the Court of Session where they fail, without reasonable excuse, to adhere to the compliance notice.
On the ESS and the OEP working together within a common or similar framework, I assure the Committee that, as both bodies are independent of Ministers, it would be inappropriate for a common framework to be agreed. However, environmental bodies across the UK will need to co-operate to ensure that shared environmental objectives continue to be achieved through effective delivery. Where devolved Ministers or public bodies are also responsible for delivery through devolved functions, it would be for the relevant governance body, such as the ESS in Scotland, to agree how to co-ordinate any subsequent action, depending on the specifics of the particular issue.
As I said earlier, the Scottish and UK Governments have started discussions on co-ordination in UK governance as part of wider discussions on the implementation of the trade and co-operation agreement. In particular, there will need to be agreement on how our arrangements will meet aspects of that agreement covering good regulatory practice and co-operation on effective performance.
To come to my noble friend Lady McIntosh’s question about the ESS and the OEP working together on the border, as independent bodies it is for them to determine their approach to collaboration and co-operation. The legislation that establishes these bodies ensures clarity for parties when dealing with matters of mutual interest. The UK Government anticipate that this network of bodies will deliver effective governance across the UK.
In terms of matters European, which a couple of speakers raised, I was asked whether the ESS will look to apply policies to Scotland that are being developed in Europe. That is a key question. In exercising its functions, the ESS may keep under review developments in international environmental protection legislation to inform advice on whether changes should be made to Scottish environmental law. The power to make provision corresponding to EU law in devolved areas rests with the Scottish Parliament. Part 1 of the continuity Act gives Scottish Ministers the discretionary power to make regulations to achieve alignment with EU law where no specific powers are available.
Moving on to independence, which was raised, I may need to write more on this matter. Perhaps I may reiterate to my noble friend Lady McIntosh, and particularly to the noble Lord, Lord Bruce, and the noble and learned Lord, Lord Falconer, that the ESS, as a non-ministerial body, is accountable to the Scottish Parliament but has operational independence from both the Scottish Parliament and Government. The appointment of board members must be approved by the Scottish Parliament, and Scottish Ministers must seek parliamentary approval to remove members on the grounds of impairment or unsuitability. I feel that I may need to write further on a point raised by the noble and learned Lord on the appointment of board members. I hope that I have given some reassurance, but I may need to go slightly further.
I was asked how the ESS will be funded. The ESS will receive a budget allocation from the Scottish Government and will publish its own annual reports and accounts. Under the continuity Act, Scottish Ministers are required to ensure that the amount of resources allocated for use by the ESS is reasonably sufficient to enable it to perform its functions. In its annual report, the ESS must include an assessment of whether the resources allocated for its use in the financial year to which the report relates were sufficient to enable it to carry out its functions, so I hope that gives some reassurance.
The noble Lord, Lord Bruce, asked whether the OEP will be extended to Northern Ireland. I know that the answer is that it is very much for the Northern Ireland Assembly to decide whether to extend the OEP to cover Northern Ireland. If the OEP is to operate in Northern Ireland, it will clearly be beneficial to ensure that any gap between it becoming operational in England and Northern Ireland is minimised. I think he will know that DAERA and Defra officials are working closely with the chair-designate of the OEP to ensure that as much preparatory work as possible can be completed in advance of the Environment Bill receiving Royal Assent, thereby allowing the Northern Ireland Assembly to consider commencement at the earliest opportunity.
I believe that I have covered the majority of questions raised. However, other questions were raised, and judging by my notes I will need to read Hansard tomorrow. I think I shall have to write, as there are some questions that I still need to address, but I hope that has covered the bulk of it.
I conclude by saying that the UK’s new approach to environmental governance, which we have discussed today in relation to this order, is testament to our leadership on environmental issues. I am very aware of COP 26, which is being hosted in Glasgow. I believe the ESS will make a valuable contribution to this cause. With that, I commend the order to the committee.