Tuesday 14 September 2021
Arrangement of Business
My Lords, I am asked to remind noble Lords that if there is a Division in the House, the Committee will adjourn for 10 minutes, though it seems unlikely.
Ecodesign for Energy-Related Products and Energy Information (Lighting Products) Regulations 2021
Considered in Grand Committee
My Lords, the draft lighting products regulations were laid before the House on 1 July 2021 and the draft amending regulations were laid before the House on 5 July 2021. Before I begin, I will provide a brief overview of ecodesign and energy labelling and what these policies try to achieve.
Ecodesign policies regulate products that consume energy when in use, such as lighting products, by setting minimum energy performance standards to increase their energy efficiency. More recently, ecodesign policies have included resource-efficiency measures, which seek to make products more repairable and recyclable, thereby reducing the use of material resources. Ecodesign policies make the products that we use in our homes and businesses more environmentally friendly and support long-term product innovation. Energy labelling policies make clear and consistent information on a product’s energy use readily available to consumers at the point of purchase, to help them make more informed purchasing decisions. In effect, energy labelling encourages the uptake of more energy efficient products, thereby reducing energy usage and saving consumers and businesses money on their energy bills.
Taken together, these policies make an important contribution to reducing energy use, improving environmental outcomes and cutting energy bills. It is expected that the full suite of ecodesign and energy labelling policies in force in Great Britain will save consumers about £75 on their energy bills and save 8 megatonnes of carbon dioxide in 2021.
The lighting products regulations will raise the minimum energy efficiency of lighting products on the market in Great Britain. In effect, this will phase out the least energy-efficient lighting products—in other words, the costliest and most environmentally damaging products to run. The lighting products regulations will replace the existing energy label with a rescaled label, moving from an A++ to E scale to a simpler A to G scale, making it easier for consumers to identify the most energy efficient lighting products. New innovations in lighting technology have led to lighting products becoming much more energy efficient than they were a few years ago, making it necessary to rescale the energy label to show the difference in efficiency more clearly between today’s products. By setting ambitious boundaries for the A to G classes on the energy label, this policy will spur innovation in the design of lighting products as manufacturers compete to achieve the highest energy efficiency ratings.
In addition to rescaling the energy label for lighting products, the union flag must now be displayed on the label for products on the GB market, rather than the EU flag. The lighting products regulations reflect the technical requirements of two EU regulations, which the UK supported when it was a member state and which began to apply in Northern Ireland, under the terms of the Northern Ireland protocol, and the EU on 1 September.
By introducing these more ambitious and environmentally friendly ecodesign and energy labelling requirements, we will ensure that we will maintain high product standards in Great Britain and push the market to achieve even greater carbon savings. The measures introduced by the lighting products regulations will contribute savings of approximately 1.8 megatonnes of carbon dioxide in the UK by 2030, which increases to 2.6 megatonnes of carbon dioxide by 2050. On top of this, the resultant reduction in energy use will cut much money from household and business energy bills.
Lastly, introducing these requirements in Great Britain will ensure a mostly common set of product standards with Northern Ireland, thereby avoiding any technical barriers to trade across the Irish Sea and between Great Britain and the EU. A public consultation was conducted between November 2020 and January 2021. Feedback on the consultation proposals showed strong support for implementing these new requirements in Great Britain.
Moving on to the second instrument, the amending regulations will make amendments to retained EU ecodesign and energy labelling law in force in Great Britain. The EU has recently made these same amendments to its equivalent legislation, which must be complied with in Northern Ireland under the terms of the protocol. Therefore, this SI ensures that we avoid technical discrepancies with the equivalent legislation in force in the EU and Northern Ireland.
The amendments this instrument makes are to servers and data storage products with respect to ecodesign; and electronic displays, household refrigeration, dishwashers, washing machines and washer-dryers with respect to energy labelling. The amendments correct technical errors and improve accuracy with the aim of facilitating the understanding of and compliance with the requirements by product manufacturers.
Further, as for the lighting regulations, implementing these amendments in Great Britain avoids technical barriers to trade between Great Britain and Northern Ireland, and Great Britain and the EU as there will be mostly a common set of standards. A consultation was again conducted between March and April 2021 with those who will be impacted by the legislation. Respondents were supportive of implementing these new requirements in Great Britain.
In conclusion, introducing the lighting products regulations and the amending regulations is aligned with the Government’s ambitions to achieve our carbon budgets and our net-zero target. It will take us ever closer to reducing our energy use and environmental impact. Furthermore, both SIs will avoid technical barriers to trade and ensure an effective regulatory environment for business, while also providing greener choices for consumers and encouraging product innovation. I commend the regulations to the House.
I thank the Minister for his explanation of these regulations. This is my first time in a statutory instrument debate actually in the Moses Room because I always used Zoom over the last 15 months; notwithstanding that, I am very pleased to see everybody in the flesh.
I have certain questions. I am not opposed to these regulations or what they contain because I firmly believe in striving for climate change mitigation and for energy efficiency, which would help mitigate costs for the consumer. However, in that regard I have some questions and I hope the Minister might be able to provide me with answers. Does the new labelling scale indicate levels of greater safety? I do not think there is an indication of that. Who will monitor the safety of all these lighting appliances? Will there be reports on carbon reduction in relation to these lighting products to COP 26 in Glasgow in a couple of months’ time? Will Parliament receive an ongoing annual report about achieving zero targets in relation to lighting products?
I would be most grateful if the Minister could clarify whether there is any difference between what currently exists and what will exist under these new labelling arrangements. I would also like to ask the Minister what training will be provided to suppliers in terms of the new energy labels. I always fear that, when new labelling comes into play, a cost to the suppliers and those involved in the construction will be attached. I hope that the reduction in energy bills will not result in an increase, or no reduction, because of the costs that will be involved in the manufacture of these new labels. Could the Minister provide me with some detail on that? Will funding support be provided to small suppliers, because they will not have the type of financial outlay that bigger suppliers will?
Apart from flag designations, what other technical differences could exist? Could the Minister advise on that? Will electrical products conform to energy efficiency and climate change mitigation requirements? How will all this assist business development?
I notice that two of the regulations refer to the Northern Ireland protocol. I am glad to note that these are not areas where the contention will apply and that, generally, for these goods and services, there have been no impediments and there will not, we hope, be any. Could the Minister indicate whether he has received specific representations or overtures in relation to the application of the protocol? I note that these regulations apply to England, Scotland and Wales; I therefore assume that the Department for the Economy in Northern Ireland will have responsibility for lighting appliances from the Northern Ireland protocol perspective.
I look forward to the Minister’s answers on this welcome piece of legislation.
I thank the Minister for his introduction to the two instruments before the Committee today. I am very happy to approve them; I agree that both are uncontroversial as well as sensible and obvious. Energy efficiency continues to be vital in reducing carbon and cost, while we all agree that high cross-border standards should continue to advance in tandem in order to lower barriers to trade. All this helps drive changes in consumer choice towards better products, innovation and improvements.
With the United Kingdom no longer a member state of the EU, it continues to make best sense to maintain improvements in step together across Britain, the United Kingdom and the EU. Can the Minister confirm that that will remain the Government’s intention for the future?
These regulations reflect similar approaches and outcomes. The Committee debated a related instrument at the beginning of June, covering labelling, online and internet selling and welding equipment. Today’s two instruments relate to servers, data-storage products, electronic displays and household products such as washing machines, dishwashers and refrigerators on the one hand and light sources and separate control gears on the other. Both Explanatory Memorandums were exemplary and reflected close dialogue with industry, businesses and associations, which underpins successful regulation and will bring confidence to the public in their engagement.
The energy labelling consultation across four weeks in March and April could be regarded as straightforward in that only three responses were forthcoming, so no guidance is envisaged. However, can the Minister be confident that business will be aware of these changes and how does the department envisage further dissemination of information for the measures to be fully operable from 1 October this year? Can the Minister provide any further details regarding the provisions and improved accuracy of the regulations highlighted under paragraph 10.3 of the memorandum, following input from these three consultees?
The instrument on lighting makes some interesting changes, where the memorandum provides an impact assessment in detail for consideration. Under paragraph 7.6, the memorandum explains that labelling requirements for lighting products should secure
“an expected 10.6 TwH of electricity and 1.3 Mega-tonnes of CO2 by 2050.”
I was not sure whether the Minister mentioned slight variances to these figures that might give a different complexion to those savings. However, I congratulate him on the more ambitious requirements than those that are presently set far below what could be reasonably achievable. Could the Minister put further perspectives on this? How many terawatt hours of electricity and megatonnes of CO2 are currently generated by the lighting industry and what percentage saving does the introduction of these regulations represent? It is imperative that the Government provide coherent and emphatic encouragement for progress towards net zero.
I am grateful to the noble Baroness, Lady Ritchie, who asked interesting questions concerning COP 26 and engagement of the public with purchases towards lowering the footprint of the lighting industry in relation to net zero. I am also encouraged by the rescaling of energy lighting labels to a simpler A to G scale. This should provide greater clarity to the market towards the most efficient projects with more intelligent and accurate information. It must be far from clear that the consumer at present appreciates the distinctions at the top end of the scale between A++ ratings and A+.
Finally, I note the concerns expressed under paragraph 10.3 on the
“possible health implications of certain lighting products for photo-sensitive people”,
and that these regulations place
“requirements on lighting products to limit any potential adverse health effects”.
Can the Minister say what considerations the Government are giving towards limiting light pollution in general? I noted that during the pandemic many areas, especially along motorways, limited the usage of lighting during the night hours. Have the Government undertaken any balance of considerations between light pollution and energy saving with safety concerns about dark areas on roads and in our cities?
In finishing, I remain in firm approval of these regulations.
My Lords, I thank the noble Baroness, Lady Ritchie, and the noble Lord, Lord Grantchester, for their contributions to this debate.
As I have said before, the Government are committed to delivering on their carbon budgets and net-zero target. The lighting products regulations will make a modest contribution to achieving those targets by setting higher product standards. I will reiterate the figures for the benefit of the noble Lord, Lord Grantchester: 1.8 megatonnes of carbon savings will be made in the UK by 2030, which will increase to 2.6 megatonnes of carbon dioxide by 2050. The amending regulations will help to achieve this by safeguarding the carbon savings that will be secured from our retained EU law.
On the questions posed to me by the noble Baroness, Lady Ritchie, on product safety, which of course is not part of these regulations, the Office for Product Safety and Standards enforces ecodesign and energy labelling requirements placed on manufacturers and importers across the UK. Trading Standards and the Department for the Economy enforce energy labelling requirements placed on retailers in Great Britain and Northern Ireland respectively. The Advertising Standards Authority is responsible for ensuring that marketers’ advertising of energy labelling across various forms of media is in accordance with UK advertising codes. All market surveillance authorities work hard to uphold high product standards on the UK market and to ensure that businesses are supported to understand their obligations.
I can also tell the noble Baroness that there are currently no plans to report on the specific carbon-saving reductions from these regulations, but of course the Government will update Parliament on their carbon-saving targets on a more aggregate level. She also asked about differences between old and new requirements. The main difference introduced by these new energy-labelling requirements is the reinterpretation or reintroduction of the simple A to G scale. Many products under the previous regulations achieved A+ or A++ ratings, so the new scale has been reorientated to make them more understandable for consumers and enable consumers to better discern the most energy-efficient products. This would also encourage innovation by manufacturers to achieve the highest rating. We know that industry is already innovating to meet the highest levels of energy efficiency from lighting products, and we are working with it to understand how these technologies can go further to save even more energy, reduce carbon and of course, at the same time, reduce consumer bills.
On the noble Baroness’s questions about support to businesses, we expect the new requirements to have very limited impact on small businesses. Nevertheless, we have ensured that we work closely with suppliers of the affected products to help them understand the new requirements, and we have liaised closely with trade associations, which play a vital role in providing guidance to small and medium-sized businesses. Despite the new regulations creating some small new costs to manufacturers in the short term, they will in the longer term save businesses and consumers money on their energy bills. We estimate a net saving of something like £18 million a year for businesses up to 2050, due to their reduced energy bills. It is also important to emphasise that no products are being taken off the market; if they are currently on the market, you can sell out supplies of existing products before you need to move on to the newer ones, so nothing will be scrapped and nothing wasted.
With regard to working together with the noble Baroness’s home Province of Northern Ireland in relation to implementation of energy labelling, we work closely with officials in the Northern Ireland Executive to ensure that they are aware of the new requirements, including in relation to enforcement of these regulations on retailers, which, as I said, is the responsibility of the Department for the Economy in Northern Ireland. The OPSS enforces requirements on suppliers across the UK and has an excellent relationship with stakeholders in Northern Ireland.
I move on to the questions from the noble Lord, Lord Grantchester, who asked about awareness of the new regulations. The noble Lord can be assured that we have engaged extensively with the lighting industry to communicate the changes to the regulations, and we have provided guidance and support to manufacturers that have taken the trouble to contact us directly. The OPSS has also communicated widely to remind businesses of the new regulations coming into force.
On light pollution, ecodesign and energy labelling have played an important role in contributing to reducing UK emissions, and we believe that additional savings through better policy could make an important contribution to the Government’s carbon budget targets and to net zero. We are always exploring whether further energy savings could be made by using light products in smarter ways, which would help to contribute to an aim that we all share—that of reducing excess light pollution. The noble Lord can be assured that we will work closely with our colleagues in the Department for Environment, Food and Rural Affairs to see what more can be done with using smart lighting products and so on to reduce light pollution.
To close, I underline once more that the main purpose of these regulations is to raise the minimum energy efficiency of a range of lighting products sold in Great Britain and to reform energy labels for lighting products by rescaling the energy classes and introducing an energy scale. Both SIs will help to avoid technical barriers to trade, while also bringing significant benefits to consumers in the form of reduced energy bills and to the environment in terms of lower emissions. With that, I commend these regulations to the House.
May I just delay the Committee for one short moment and thank the Minister for clarifying those figures on the savings from the lighting regulations? However, could he perhaps write to me with wider details of what the power generated is in a more total setting of the lighting industry, and what percentage these savings should represent against that total?
Ecodesign for Energy-Related Products and Energy Information (Amendment) Regulations 2021
Considered in Grand Committee
Health Protection (Coronavirus, Restrictions) (Steps etc.) (England) (Revocation and Amendment) Regulations 2021
Considered in Grand Committee
My Lords, these regulations are an important milestone on our journey through the pandemic—and, I hope, beyond. On their introduction, most coronavirus restrictions in England were lifted, so on 19 July we moved to step 4 of the Government’s road map—the final step of our cautious journey out of lockdown.
I do not need to detain your Lordships for very long setting out the content of these regulations. Almost all legal restrictions have been lifted. Businesses across all sectors are able to open again. We can now attend weddings, birthdays and festivals and spend time with our families, friends and loved ones without legal restrictions on social contact. The balance has truly shifted, with most restrictions enforced in law now replaced with guidance.
I am pleased to see that our theatres and the wider entertainment sector are blossoming once again. I know that many of us have enthusiastically welcomed the return of singing in churches and amateur choirs. In the broadest sense, community life has returned, and I do not think we realised quite how much we missed it.
I know that many people may feel nervous, particularly those who are immunocompromised or immunosuppressed. We must all continue to act carefully, respond to the latest guidance and remain cautious to protect ourselves and those around us. That means continuing to follow the Government’s advice on protecting ourselves and others: for example, by getting the vaccine, letting fresh air in if meeting indoors, and getting tested when symptomatic and isolating when necessary.
The pandemic is not over. The virus will remain part of our lives. We are undoubtedly in a better place now than when we embarked on the road map out of lockdown in February this year. This is a testament to the expertise and dedication of all those involved in building our defences against the virus.
We have a toolkit in place for tackling the virus in the months ahead. The Government have set out our plan for managing the virus over these difficult months, and the Secretary of State has recently finished making his Statement in the other place. Our plan A is to continue to build on the progress we have made and manage the virus without the need for restrictions that impact on the lives and livelihoods of citizens.
We are implementing the biggest and most successful vaccination programme the country has ever seen, with more than 48 million people having now received their first vaccine dose. Data shows that the vaccination reduces overall symptomatic disease by 80% to 90%, hospitalisations by more and deaths by around 95%. The vaccination programme has substantially weakened the link between infections and serious illness or disease.
We will continue to bolster the wall of defence provided by vaccines by encouraging take-up and through booster jabs. Extensive planning for a booster vaccination programme is well under way, and the NHS is preparing to start booster doses from next week. Details have emerged during the course of today. This will protect the most vulnerable throughout the winter months and strengthen our wall of defence even further.
Vaccines are now being offered to 16 and 17 year-olds, and the Government have accepted the advice of the four Chief Medical Officers to offer vaccination to all healthy 12 to 15 year-olds. Invitations for vaccinations will begin shortly.
Our test, trace and self-isolate system is another of the key defences in our armour against the virus. We have established the largest network of diagnostic testing facilities in British history. The UK has conducted 274 million Covid tests and reached 15.9 million people who have either tested positive or been in contact with someone who has. I look forward to updating noble Lords further on the test, trace and self-isolate systems when we debate important changes to the self-isolation regs later this afternoon.
We are supporting the NHS and social care. Last week, we announced a £5.4 billion cash injection for the NHS to support the Covid-19 response over the next six months, including £1 billion to tackle the elective backlog. Our world-leading scientific expertise has created significant breakthroughs in the treatment of Covid-19. Robust clinical analysis has enabled us to take decisions based on evidence and rigorous science to improve patient care. We continue to manage risks at the border and support a global response to reduce the risk of variants emerging globally and entering the UK. The safety of the public will always come first.
This comprehensive toolkit will stand us in good stead over the coming winter. As far as possible, we will avoid reimposing social and economic restrictions. The progress made so far is built on the perseverance and resolve of us all. If we are to safeguard the return of familiar freedoms, everyone needs to continue to follow behaviours and actions set out in the guidance on how to limit the spread of Covid-19.
I am sure your Lordships will join me in extending heartfelt thanks to all those in the NHS, the social care sector and wider support services, including the many volunteers, who have helped make this progress possible. Indeed, I particularly thank every person and every organisation that has contributed to this achievement and made sacrifices to protect themselves and others during this difficult time. Thanks to them all, we can look forward with optimism and a sense of resolve as we learn to live with the virus.
I sincerely regret that we are debating the regulations only now. We have always been clear that restrictions would be in place for only as long as they were needed. It was therefore essential to bring these regulations quickly once the four tests had been met, allowing us to move to step 4. The content of each step of the road map has Parliament’s prior approval, and we debated the Oral Statements setting out the shape of step 4 and announcing the move to step 4 prior to these regulations being laid. As ever, I welcome the scrutiny of Parliament and noble Lords’ valuable contributions to this. I commend these regulations to the Grand Committee.
My Lords, I am very glad to follow the noble Lord and to speak to these regulations. They were laid two months ago and, once again, we are debating regulations that in a sense have been superseded by the various announcements made over the last 24 hours. I realise that this week we will probably debate at least two of the Statements, as well as looking forward to a lot of activity when we return.
I will focus on the instruments. At the time they were brought into force, the Government stated:
“The vaccine deployment programme continues successfully … Evidence shows vaccines are sufficiently effective in reducing hospitalisations and deaths in those vaccinated”
and that confidence in vaccine effectiveness against the delta variant has increased significantly. I hope the Minister can update us on that.
Can he confirm the number of adults who have not yet been vaccinated? I think there are figures in the winter plan that I have just seen. Does he agree that, while one should applaud all the efforts of those who have made the vaccination programme possible, it is still striking that so many adults have irresponsibly decided not to vaccinate? I know we will debate the issue of children aged 12 to 15 later this week, but I for one feel very uncomfortable that, even with just one jab, there will be a small risk to those taking it— particularly some boys—partly because of the selfishness of adults in not taking the vaccine. I personally think there are some ethical issues and am not surprised that the JCVI found this a very difficult decision. What else does the Minister think can be done to encourage adults to take up the vaccine?
Could the Minister also say a little about the unknown risks of vaccine effectiveness in high-prevalence environments where transmission pressures are high? I will also ask about the relationship between the booster jabs, which I think the Chief Medical Officer recently announced are to happen, and the flu vaccine programme. I understand that there is concern that immunity to the virus is low, leading to fear that flu, together with other winter viruses, could put the NHS under extreme pressure. Could he also comment on the likely effectiveness of the flu vaccine, which I gather is pretty low?
May I also ask about face coverings? These regulations remove the requirement for people to wear face coverings when using public transport services and in relevant indoor settings. The rationale for that was that the success of the vaccination programme meant we could move away from strict legal restrictions towards personal responsibility and informed judgment. Last week we debated this to an extent and the Minister pointed to data that his department had showing that this had not had much impact on people’s behaviour. From talking to noble Lords, I note that there is some surprise about this, because to the visible eye mask-wearing has dropped off considerably, particularly among men. I wonder about the extent to which this is being monitored and whether we need to step up some programmes about why it is still to be encouraged.
Finally, I will ask about local authority powers. These regulations enable local authorities to take action where an outbreak or risk of outbreak is linked to premises or an event, with local authorities retaining powers to respond to local serious and imminent public health threats. That is a very sensible provision. The Government then describe those regulations as continuing
“to act as an important public health tool for local authorities”.
Could he update me on the use of these regulations since they were passed?
My Lords, I am speaking in this debate because my noble friend Lady Brinton cannot be in her place to take part. We have the technology to enable remote participation in debates in the Moses Room, but the House authorities have not yet permitted that for contributions in Grand Committee, so virtual participation in these proceedings is unfortunately not possible, even though we have seen in this last week that the very few participants who need to take part remotely can be managed very effectively without recourse to extensive speakers’ lists.
It is also a loss to the Committee, because my noble friend Lady Brinton cannot take part for one very important reason, about which she has been quite public: she is clinically vulnerable, and one thing she cannot do is travel on public transport, which she cannot do because people are not wearing masks. Of all people, she should have been able to be here to make that point.
Yet again, these SIs were tabled very late. They came in just before the recess in late July, so yet again we are back to debating things that are long in the past. We have repeatedly asked the Government to respect the House and timetable SIs when they are not genuinely urgent. However, these are, as the noble Lord, Lord Hunt of Kings Heath, said, quite pertinent in view of the Statements being made this week.
This statutory instrument mostly deals with the revocation of statutory instruments on 21 July, which confirmed a number of the changes in the Prime Minister’s so-called freedom day. However, there is one extension, in Regulation 4, to the expiry date of the Health Protection (Coronavirus, Restrictions) (England) (No. 3) Regulations, which are now to end on 27 September. The Explanatory Memorandum says that this
“will ensure that local authorities retain powers to respond to local serious and imminent public health threats as a result of the spread of coronavirus. The No. 3 Regulations will continue to act as an important public health tool for local authorities in their local coronavirus outbreak management, compliance and enforcement activities. This is particularly important in light of the revocation of the other restrictions mentioned above”.
As we have said all the way through this pandemic, it is important that local authorities have the power to manage local outbreaks. Simply extending that power in law, but not making sure that they have the resources, will not work. As epidemiologists have said to us in terms, there will inevitably be points when it is important to close all the pubs in a certain area, simply because an outbreak has to be contained. While we welcome that, it behoves the Minister to say something about local authorities such as Croydon, which is insolvent, and how it will have the resources to manage this significant and enduring public health problem.
We regret the removal of face coverings on public transport and other crowded venues. I can say, as somebody who travels on the London Underground every working day, that fewer and fewer people are wearing masks and, as more and more people are on the Tube, I am certain we will see a spike in infections as a result. I also point out to noble Lords that the bad messaging on this does not help. There is genuine confusion. One of my colleagues was on a train to Scotland in the summer and, when it got to the border, there was an announcement that the law now required everybody on that train to wear a mask, and they did, as they should have done all the way.
It is now clear that the Government, and in particular the Prime Minister, have been so desperate to place emphasis on the vaccination programme as our primary defence that they have forgotten to look at the role of other mitigations against the disease. Although we support the passing of these regulations, we need to make the messaging clearer as a matter of urgency, so we can avoid the confusion that is now prevalent among people in England.
My Lords, I welcome the regulations and congratulate my noble friend on bringing them before us. To a certain extent, my comments echo those that have already been made by previous speakers. I was fortunate enough to visit my family in Denmark and Scotland this summer, and the guidance in each place was much clearer. Speaking as an older person, I prefer to keep my mask on, on all forms of public transport. I am sure my noble friend will recognise that one of the reasons why there was not a high incidence of flu last year was, in large measure, because we followed the example of the Asians after the SARS epidemic in the late 2000s of masking up. Even the common cold was kept under control.
I understand the Department of Health and Social Care’s concern about a high incidence of flu this year, but I am sure we can encourage people to mask up, particularly in areas of close proximity. The noble Baroness, Lady Barker, mentioned the Tube. I am still reluctant to go on the Tube at busy times, but even the trains on the east coast main line are incredibly busy now, and you can find yourself next to someone who you are not normally accustomed to seeing.
To me, wearing a mask is not an infringement of my liberty; it is my passport to health and keeping safe. I hope that it will keep others safe as well. Does my noble friend imagine that the guidance will be revisited? It is in stark contrast to what has applied in Denmark and in Scotland.
Having visited Scotland, I was alarmed to see that, just 10 days after the schools returned, the incidence of Covid in general circulation was so high and increasing. The Government there have said in no uncertain terms that they will bring back restrictions, as have our Government in England. That is welcome. To what does my noble friend attribute the high incidence of circulation among the general community in Scotland, which we have not seen in England? I take great comfort from that, but is there a concern that, after the schools have been back for three weeks in England, we might see a similar rise here?
I applaud the pace and efficiency of the vaccine programme and I congratulate all those who were involved in rolling it out, from the department down to the general practices, as well as all those in the big vaccination venues. It was absolutely amazing. One of the positives to come out of Covid was seeing the vaccine not only created, approved and produced but then rolled out so efficiently.
My particular concern is the vaccines for those aged 12 and upwards. I would like to press my noble friend on the medical evidence. If I was a 12 year-old female or male, I would be concerned about what exactly the evidence is. I understand that a young boy might be vulnerable to this infection around the heart. Are these young people more at risk of being sick by being vaccinated or are they more at risk of being hospitalised or seriously ill from contracting Covid? Are we asking them to be vaccinated for the health of the general population? It would be helpful to know that from the point of view of the parent and the individual.
I looked at the regulations closely and I may have missed it, so I end with one question about PCR tests. I had to have various PCR tests in my visit to Denmark. I was disappointed that, because we were saying how high the infection level was in July, the Danish Government immediately whacked us into the red zone and I had to quarantine for four days, although it was not unpleasant and I passed the time as best I could. I should add that the PCR tests were completely free in Denmark. They were paid for by the Danish Government, for which I am grateful. I do not contribute to the Danish economy other than when I am there, but the fact that the Danish Government took that approach has helped the tourism trade and the travel industry hugely, so my noble friend may like to revisit that with the Department for Transport here.
My understanding was that the reason why all of us were paying these high levels for PCR tests going out and slightly less for the two-day test on our return was that they would all be investigated to see whether we had contracted Covid—thankfully in my case, I had not, but I was grateful for the opportunity to test myself out of self-isolation. Being a Scot and living in North Yorkshire, I was prudent and shopped around, but I paid about £130 as an individual, which is a substantial amount of money. I understood that, where there were positive tests, they would be investigated to see if there was a particular variant—the delta variant or a new variant. Can my noble friend confirm that that is the case? He may not have the figures at his disposal, but he could perhaps write to me and give a copy of the letter to the Library in the usual way. I am alarmed that these high rates have been allowed with no follow-up on those who have contracted Covid as evidenced by these PCR tests. The term “rip-off” comes to mind. Many of these companies seem to have taken advantage of the British public and others visiting the UK. If that is the case, it is deeply regrettable.
With those few remarks, obviously I welcome where we are today. In particular, as chairman of the proof of age PASS board, it is welcome that those in casinos and other nightlife who rely on PASS cards will be able to open up in the same way as other establishments such as coffee bars and restaurants have done. That is particularly welcome, and I welcome the broad thrust of the regulations this afternoon.
My Lords, I thank the Minister for introducing this late regulation. As I said to him last week, there is a sort of “Groundhog Day” tendency in having to deal with these things. I would also like to register with the noble Baroness, Lady Barker, that the House needs to address the issue of the noble Baroness, Lady Brinton, being able to access these sessions in the same way that she can access the Chamber. I would even go so far as to say that it is discriminatory that she cannot. As well as that, we are missing her wisdom, words and her representation of her points of view.
The noble Baroness, Lady Barker, and my noble friend Lord Hunt have covered many of the points and have asked many of the questions that need to be asked on this regulation. As noble Lords have said, it triggers the end of most of the lockdown restrictions in England by revoking regulations and amending regulations listed in the schedule from 19 July. I echo what other noble Lords have said. Does the Minister believe that it was premature to remove face mask regulations? I have not yet read the 30-odd page toolkit document in full, so I do not know whether the option is there to reintroduce them as part of the autumn-winter Covid plans. Would that be mandatory?
At the time of lifting the restrictions, from these Benches we opposed and still oppose the decision to remove the requirement to wear a face covering indoors and on public transport. The risk of transmission inside a crowded bus or train will be high. If it is true, as the scientists say, that one in 70 of us in England has Covid, and the capacity of a double decker bus is about 70 and a full Tube train or regular train carriage can carry up to 140 passengers, that would mean that on average one person on a crowded bus and two people on a crowded Tube train will be contagious. They will have Covid, and with little ventilation and no legal requirement to wear a mask.
I travel on public transport all the time—it is how I get to your Lordships’ House and go home—and it is certainly noticeable that mask-wearing, particularly among young men, has fallen. It is true that on the Tube there are marginally more people wearing masks than on the Overground, but the number has fallen. It is very concerning and worrying, and I have got to the point where I have stopped being a mask monitor and offering people masks if they have not got one on, because there are too many of them on the Tube and on trains without masks on.
We supported the removal of restrictions on gatherings, but we thought the Government were going too far and too fast at the time. We were also concerned that the lifting of all the restrictions was confusing to businesses. Has the Minister had feedback about how effective the lifting of those restrictions was? This instrument extended the expiry date of the Health Protection (Coronavirus, Restrictions) (England) (No. 3) Regulations to the end of September to ensure that local authorities retain the power to respond to local serious and imminent public health threats as a result of the spread of coronavirus. Can the Minister confirm whether the Government intend to further extend these provisions? If it is in the winter plan I apologise, but I think we will be discussing that tomorrow or Thursday.
I suspect that the winter plan contains which bits of the Coronavirus Act are being retained and which will be got rid of. However, what worries me is whether in three or four weeks’ time, if infection rates have increased enormously as a result of the schools going back, there will be sufficient powers to deal with that, and sufficient powers if we need to go into further restrictions. The Minister must explain what will happen if the worst happens. The byword throughout the whole pandemic has been “Let’s plan for the worst and hope that we don’t have to use those powers.” If all those powers are being rescinded now, what will we do if there is a new variant further into the winter or we see a spike in the next three or four weeks? We need to know that.
In terms of mask wearing, I went on holiday to Scotland by train and it is true that as we neared the border, there was an announcement that everybody had to wear a mask, and everybody put a mask on. It was not an issue. Like the noble Baroness, Lady McIntosh, I do not regard mask-wearing as an encroachment on my civil liberties. I regard it as something that protects me and with which I protect others. We seem to have lost that message in the wearing of masks. Are the Government going to do anything about that?
My Lords, I thank noble Lords very much for an extremely helpful debate, and I very much welcome this return to the Moses Room. It is very nice to be back in the intimate and more conversational style of Committee.
The Secretary of State has been on his feet this afternoon to talk about the toolkit. My understanding is that there will be some kind of Statement repeat, and I look forward very much to going through the toolkit during that. I apologise in advance if I cannot answer every question on that right now, but I would like to tackle a couple of points that were raised. Before I do, I will say a word of appreciation for the contributions of the noble Baroness, Lady Brinton—her presence is highly valued—and for those who organised the virtual House and our current arrangements. It is all a massive compromise and uncomfortable, but I am extremely grateful for the work that has been done to make this return possible. I am hopeful that even more can be done in October.
A number of noble Lords, particularly the noble Lord, Lord Hunt, asked about the booster. The NHS will be rolling out a booster programme to protect those who are most vulnerable to Covid, as we announced previously. It will now be extended to individuals who received vaccination in phase 1 of the programme: that is, JCVI groups 1 to 9. That includes those living in residential care, all adults over 50, front-line health and social care workers, and all those aged between 16 and 40 who have underlying health conditions that put them at a higher risk of severe Covid.
This is very good news. There is very strong evidence that a booster programme such as this can have a very big impact, particularly on those who are immunosuppressed or who live with the immunosuppressed. The JCVI has advised that the booster vaccine programme is offered no earlier than six months after completion of the primary vaccine course, and that will of course affect many people. The vaccination programme has been planning booster vaccinations for some time, which means that the NHS is now in a position to offer booster doses from next week. As most younger adults will have received only their second Covid vaccine dose in late summer, the benefits of booster vaccination in this group will be considered at a later date. I think noble Lords would agree that this is a reasonable and proportionate approach to this complex issue.
Following the advice from the JCVI, the four CMOs and the NHS, working with the school immunisation teams, will offer a first dose of vaccine to 12 to 15 year-olds from next week. That is incredibly good news and sees through the immense amount of work that has gone into assessment. A decision will be made in consultation with a GP. If there is a dispute with parents, there will be a four-stage process for determining whether a young person has capacity to consent to a vaccination, as is the case with all vaccinations of children, as I am sure noble Lords know.
On the subject of face coverings, this came up last week and after the debate I looked into the figures on the wearing of them. The noble Lord, Lord Hunt, is right that there has been a change in the wearing—or the perceived wearing—of face coverings. The reassurance that I had seen in previous figures changed after the 19 July step 4 change, as many noble Lords noted.
We believe that the measures we have put in place are proportionate. It is our view that you cannot put something as intimate and detailed as face covering into law for very long periods. We have to trust the people themselves. That is why in step 4 the Government removed the legal requirement to wear face coverings. The success of the vaccine programme is not the only thing we are relying on, but it puts us in a position to relax some restrictions. Face coverings remain an incredibly important way to reduce the spread of the virus and that is why the Government expect and recommend that they continue to be used in indoor spaces where you come into contact with people you do not normally meet, particularly where there is a risk of greater transmission, such as the Tube, whether overland or underground. The government guidance on face covering enables people to make informed decisions about how to manage the risk to themselves and others. It is our hope that people will continue to respect that guidance and to be considerate to others.
The regulations provided local authorities with powers to enable local authority enforcement officers to issue improvement and restriction notices to persons not meeting Covid-secure business obligations, as the noble Lord, Lord Hunt, and the noble Baroness, Lady Barker, rightly noted. These regulations were revoked as part as the move to step 4 of the road map. We believe that the tests set out in the number 3 regs, including engagement with DPHs to ensure that they are proportionate, will mean that DPHs are left in a position to conduct whatever interventions they feel they need to. There is an appeal mechanism, and they can rely on that, if necessary.
In answer to the question from the noble Lord, Lord Hunt, about how often number 3 regulations have been used by the authorities, I can share with him that they have been used 330 times since the regulations were laid.
I have some sympathy for all those who travel from England to Scotland and have noted the differences in messaging. I think many noble Lords have made that journey and noted the same thing. However, there have been benefits from the four-nations approach. It is important that the leaders of each country take their country with them. It increases compliance if communities feel connected to the leaders who are trying to inspire and guide them. However, after so many months of the pandemic I think noble Lords are right that more alignment would be convenient and more impactful. We are certainly working hard at a ministerial and a CMO level to try to get more alignment in our policy-making, which then flows through to our message-making.
However, it is not right that, as I think the noble Baroness, Lady Thornton, suggested, we are relying simply on vaccinations. Other important mitigations are in place. Testing, borders and the investment in therapeutics and clinical innovations in the treatment of Covid have all meant that we have massively strengthened our response to the pandemic.
We believe that the spike in infections in Scotland is due in part to the return of schools, which, as noble Lords know, happens earlier in Scotland. We think it is also because the loosening of some regulations in Scotland coincided with the return of schools. We in England loosened a lot of our regulations with the step 4 regulations we have before us, so we hope that there will not be the same spike here.
My noble friend Lady McIntosh asked about tests for travel. Travel is essentially a voluntary business, done by a very tiny proportion of the country. It is therefore our view that it is not reasonable for the broad taxpayer, the vast majority of whom are not travelling, to pay for the tests of those who have the opportunity to travel. However, we are leaning into the test arrangements around foreign travel, and I am aware of the complaints of noble Lords and the public. Since 15 December, when we brought in the day two and day eight testing regime, private industry has come an enormous way to stand up a massive system of testing. It is not perfect but we are leaning in very heavily to make sure that there are improvements. There are currently 500 providers, many of whom deliver an absolutely first-class service, but we have got tough on providers who do not. We are enforcing minimum standards and making daily checks on the pricing arrangements that providers are promising on GOV.UK but not always standing by. For these reasons, we hope that there will be a significant improvement and that travellers will be able to rely on that service for months to come. I commend the regulations to the Committee.
Health Protection (Coronavirus, Restrictions) (Self-Isolation) (England) (Amendment) Regulations 2021
Considered in Grand Committee
My Lords, over the past few months, the Government have made a concerted effort to bring forth a sense of normality across the country with the easing of restrictions, while maintaining caution with regard to this deadly virus, which clearly has a long way to run. These regulations are a key part of this dual-track effort, significantly reducing the burden of self-isolation while protecting society from the threat of contagion. The main focus of the regs is the isolation protocols, so I begin by reflecting on the crucial role that contact tracing and self-isolation play in fighting the virus.
Since it was established in May 2020, NHS Test and Trace has contacted more than 15 million people who have tested positive for Covid-19 or who have been in contact with a positive case. Tracing—the bedrock of any public health intervention—has improved substantially over the last several months. In October 2020, 60% of close contacts were being reached. In comparison, over the period from 26 August to 1 September, 87.3% of positive cases transferred to NHS Test and Trace were reached, as have 89.5% of their contacts where usable contact details were provided. That is a remarkable achievement.
The public realise the importance of isolation. July’s ONS statistics that show 79% of positive cases reported complying with the self-isolation guidance, alongside 89% of close contacts. That is a terrific response from the public and it has proven a vital weapon in our arsenal against the virus.
What is the impact of this massive financial and societal investment? A recent study from PHE, published today and called the Canna model after the idyllic Scottish western isle, which some noble Lords may have visited, shows that from August last year to this April, test, trace and self-isolation activity reduced the transmission of the virus by between 10% and 28%. The PHE research demonstrates that self-isolation helped to bring R below one at crucial times, reducing the duration and impact of lockdown. Over the full period of the study, the Canna model estimates that isolation due to test, trace and isolate policies prevented between 1.2 million and 2 million secondary cases. The NHS Test and Trace service has also enabled us to identify peaks and troughs in case rates, supporting decisions on when restrictions should be tightened or could be eased.
We recognise that none of this has been easy. The requirement to isolate creates enormous challenges for individuals and their families across the country. A study in March 2021 by the BMJ concluded that offering financial and practical support to individuals who needed to self-isolate would likely improve compliance. We support that view. Since September last year, we have provided councils with £280 million to issue support payments to those who may face financial hardships because of self-isolation. We have also made up to £100 million available between March and September this year for councils to offer practical and emotional support to some of the most vulnerable in our communities, covering over 200,000 people. It is right, though, that we sought to reduce the burden of self-isolation at the earliest opportunity.
The amendments to the self-isolation regulations we are debating balance these factors and provide a significant easing of burden from self-isolation requirements while maintaining vital measures to reduce the spread of the virus. These amendments came into effect on 16 August and allow those who are fully vaccinated to be exempt from self-isolation if they are the close contact of a positive case. Based on the data, we know that the vaccines reduce overall symptoms by between 80% and 90%, hospitalisations by between 90% and 95%, and deaths by around 95%. Therefore, we have adapted our approach to self-isolation to reflect this and ensure we balance the need to slow down the transmission of the disease with the need to get back to normal.
As well as fully vaccinated adults, several other groups have also been exempted from the requirement to self-isolate. The amendment provides an exemption to self-isolation for the close contacts who have taken or are taking part in an MHRA-approved trial for a Covid vaccine. This will ensure that they are not disadvantaged as a result of their personal sacrifice. We recognise also that some groups cannot be fully vaccinated on medical grounds. The amendment therefore includes an exemption for those close contacts who can evidence that they are unable to be vaccinated for medical reasons.
Finally, we have carefully considered the impact on those under the age of 18. There are unqualified harms to children’s educational, emotional and social outcomes as a consequence of self-isolation, as well as of the infection itself. The risk of hospitalisation and intensive care admission in children due to Covid is very low—approximately eight per 100,000 population aged under 18 are admitted to hospital. The incidence of mortality in children as a result of Covid is also extremely low. By balancing these factors, the SI provides an exemption for those close contacts under the age of 18 from self-isolation.
Those who are exempt will be advised to take a PCR test as soon as possible to check whether they have the virus. Though not required to self-isolate, they will be advised to consider other precautions, such as wearing a face covering in enclosed spaces, as well as limiting contact with others, particularly those who are clinically extremely vulnerable. However, it remains the case that if any of these groups develop symptoms they should self-isolate immediately and take a PCR test. Anyone, whether fully vaccinated or not, who goes on to test positive will remain under a legal duty to self-isolate.
Although I sympathise with the burden and the challenges that self-isolation creates, it will continue to play an indispensable role in containing the virus. The Secretary of State said more on this in his Statement earlier on the winter strategy for tackling the virus. While restrictions are easing, we must all continue to adhere to the self-isolation regulations and the guidance if we are to continue protecting our friends, families and communities. I commend these regulations to the Committee.
My Lords, I very much agree with what the Minister said about the importance of self-isolation. I note that emphasis is given in the winter plan to the importance of isolation in relation to breaking transmissions. The issue I have is that there is a proportion of the population who find self-isolation very difficult, and there are legitimate reasons for that. I have been studying TUC research, which shows that 24% of low-paid workers say they cannot afford to take time off for sickness, as opposed to 6% of high-paid workers. It reckons that only 35% of low-paid workers get full sick pay, as opposed to 80% of high-paid workers, defined as those earning more than £50,000 per annum. Statutory sick pay is only £96.35, less than any other OECD country. It is reckoned that 72% of low-paid workers cannot work from home, compared with 20% of high-paid workers.
The Minister may respond by saying, “Ah, but we have a self-isolation payment scheme”, and we do, but my understanding is that 34% of applications to councils are being rejected because councils are worried about running out of funds. In areas with a high proportion of low-paid workers who cannot work from home, the approval rate is even lower. Do the Government recognise that we have a serious problem here? If we have to tighten self-isolation rules again—indeed, even under the current, voluntary system—will this be addressed?
I relate this to work by SAGE in interpreting differential health outcomes among minority-ethnic groups in the first and second waves. As it pointed out,
“all minority ethnic groups … have been at higher risk of mortality”
during the pandemic, but there is
“a particular intensity in this pattern of differential mortality among Bangladeshi and Pakistani groups”.
“suffer severe, debilitating underlying conditions at a younger age and more often than other minority ethnic groups due to health inequalities. They are more likely to have two or more health conditions that interact to produce greater risk of death from Covid”.
A number of factors provide some explanation, including:
“Practical difficulties of access … to … NHS Track and Trace services due to … site locations, difficulties taking time off … for testing”,
and real fear of
“loss of livelihood if required to self-isolate”,
as I have mentioned.
As SAGE said at the time:
“Furlough, self-employment and business support schemes have helped thriving businesses and better-off self-employed people the most, rather than those in the most hard pressed situations”.
“Unaffordability of taking unpaid time off, or concerns about the effect of absences on job security”
will need to be tackled. How is this to be tackled?
I will comment on the removal of the requirement on children to self-isolate when they have had close contact with a person who has tested positive. The Government argue:
“At present those under 18 are unable to be vaccinated”—
that has obviously changed since the regulations were published—
“but have experienced a significant impact on their social and educational development as well as their physical and mental health through having to self-isolate. Removing the requirement to self-isolate will significantly improve a range of outcomes for this cohort.”
I do not disagree with that at all, but have our schools, in particular, been made as safe as possible? Recently, Independent SAGE pointed out that many of the recommendations it made about schools more than a year ago are still “highly relevant” today,
“including advice on bubbles, distancing, ventilation, testing and support for staff and students, particularly students from deprived communities.”
As it says, not enough progress has been made.
I am glad to see that on page 18 of the winter plan there is a section on ventilation where the Government lay out five ways in which they are going to
“support improved ventilation in key settings”.
They refer to the public sector estate and evidence an initiative in 30 Bradford schools. Will they go further? At the moment, my understanding is that many schools are very concerned about the lack of ventilation equipment. They will not always be able to afford the cost of sorting this out, which sometimes can be very high. It goes with the territory: having removed the requirement on children to self-isolate, which I fully understand, surely we need to do more in relation to school ventilation. I know we will come to debate the winter plan later in the week, but one of my questions is whether there will be some resource available to help schools improve ventilation.
I thank the Minister for introducing the regulations as he did, but it does not alter the fact that the current rules around self-isolation and PCR and lateral flow testing are confusing. People who are not stupid and who genuinely want to know what to do and what they should be doing for the best find them difficult. I heard about someone who had contact with a positive case last week trying to work out from GOV.UK if it was okay that they had had a negative PCR test and had no symptoms—what were they then supposed to do? It is imperative that we continue to have very clear and sustained messaging around testing and isolating.
Ministers have made great play of the fact that the front line of defence is double vaccination. Okay, but that is only as strong as it is if you continue to have the second-line defences of testing and isolating in behind it; if you do not, that places a much greater strain on the vaccination process. We know that from other countries. I know that the Minister said that there were other mitigations, and he talked about investment in therapeutic treatments, but they are not yet with us. Therefore, we need to concentrate yet again, albeit with fewer restrictions than there were before, on who is being tested and who is having to isolate.
I go back to one point on which I have asked the Minister questions for more than 12 months. What about people who are not registered with GPs? There are still such people in the country, perhaps people whose first language is not English and who—surprisingly, perhaps—do not know about what to do about going to get vaccinated. I have come across a couple of examples recently. I do not think that there are vast numbers of such people, but there is a significant cohort in some communities who are hesitant not because they have any great ideological disposition against vaccination—they just simply do not know what to do, or they may have language problems, which means that they are concerned about going to vaccination centres.
I want to talk again about schools, because we have the data that has come through from Scotland. I point out to noble Lords that mask-wearing in schools in Scotland is still in place. From talking to epidemiologists, as we did earlier this year, about the whole process of the country coming out of tight restrictions, one thing that they said to my noble friend Lady Brinton and our team is that with enclosed spaces it is not just ventilation that you have to look at—you have to look at air purification as well. The big health risk is when you have stagnant air into which people who are positive are exhaling droplets of the virus. What has been done to enable schools to look at things like carbon dioxide monitors, as a proxy for measuring stagnant air? Again, I do not think that many schools have had the resources to enable them to deal with that.
I want to make one point that my noble friend Lady Brinton would have made had she been here. We are still talking about 1,000 deaths a week and 50,000 deaths per annum. By the Prime Minister’s reckoning, that is an acceptable but very high number of deaths. The reason why these regulations are not helping is that they seem to be part of a high-level message that says, “It’s over.” A lot of people think it is over, but it is not; it will not be for a considerable time and it will continue to be very dangerous if we chip away at the side mitigations that go beyond the vaccine.
Finally, we have always said that local authorities have a key role to play in identifying those people who are in the communities that are most vulnerable, and they are the communities that need the most help to self-isolate. When will the Government produce a comprehensive report on the funding of local authorities for local self-isolation schemes and their effectiveness?
My Lords, my noble friend Lord Hunt made the most pertinent point, which is that, as we have acknowledged, Covid has pointed to the gross inequalities in our society. That can be seen absolutely when we look at the self-isolation regulatory regime and the impossibility of those on low incomes self-isolating because they then have to choose between feeding or not feeding their children; they cannot afford to self-isolate. We still have not solved that problem sufficiently well.
As we move into the winter, as the noble Baroness, Lady Barker, said, this pandemic is not over. If you have 150 to 200 people a day dying, it is not over. If you have half the ICU beds in our hospitals still occupied by people with Covid, it is still not over and we will never catch up with all the NHS waiting lists that have fallen so abysmally behind in the past 18 months. So it is not over.
Self-isolation is part of the toolbox, to use the Prime Minister’s and Secretary of State’s word, that will help to control the spread of this virus. What the old regulations did—do—is amend the self-isolation regulations. With effect from 19 July, they allow a person to leave self-isolation and put an antibody test in the post, and from 16 August certain people were no longer required to self-isolate if they had come into contact with a person who had tested positive for Covid. The Minister listed who those different groups are, including children under 18. I completely agree with my noble friend about the need to include children under 18, but we have to address the issue of what that means for schools.
The Minister said before the summer, when we were hearing Statements about the easing of these regulations, that people were going to have to behave “in a responsible fashion”. I had a particular issue with that last week, when a friend I was supposed to be meeting called me to say that her husband had caught Covid. Both were double vaccinated, he was not very ill—I am pleased to say. They had been at a wedding, and there was a family there who were anti-vaxxers; they did not know and he caught it. She tested negative for the next four or five days.
I was personally quite torn about what to do: should we meet or not? The idea shocked me that somebody who is living with somebody who has Covid did not have to self-isolate. I worked my way through it; I read the regulations, which I must say are complex and not completely clear. She did not say, “I am allowed to go out”; she was being very responsible, but I thought that millions of people must be facing those issues all the time. Just saying that people have to behave “in a responsible fashion” may not be quite the point.
Before I talk about schools, I would like to ask whether there has been monitoring by the JCVI and others on the effect of the decision that was taken in July and became effective in August. Are we fully confident that the spread of the delta variant is sufficiently understood to justify lifting that restriction? If anybody gets Covid these days, it will be the delta variant. Are we sufficiently confident in the science to lift that restriction?
This statutory instrument relaxes the bubble rules that would require entire groups of students to self-isolate following positive cases and leaves the decisions to schools themselves. The Minister will be aware that a handful of schools in England have had to close classrooms just days into the new year, following Covid outbreaks among students and staff. This puts schools in a difficult position. First, school leaders need quick, clear and unequivocal guidance about how to respond if they see a rise in case numbers and not to be left on their own to make those decisions. The lack of investment to enable our schools to have clean air in their classrooms is unfortunate.
All our local secondary schools opened last week and one had anti-vax parents demonstrating outside it. I do not know whether this is happening elsewhere. They were demonstrating about 12 to 15 year-olds being vaccinated, and that is very worrying. I will leave that with the Minister. It is shocking, but what on earth can we do about it?
My Lords, I am enormously grateful for this rich debate. The reflections of noble Lords are shared by the Government in many ways. I will start with the poignant remarks made by the noble Lord, Lord Hunt, on support. We agree that financial support is an important part of the isolation process. It would be inhumane to suggest that someone can somehow live off the generosity of others to support themselves over this difficult period. We have actively promoted the financial support available to people who need to self-isolate, are working with local organisations to extend our reach and continue to improve those arrangements.
Please do not forget that we have already invested £280 million in the test and trace support payment scheme, which has been specifically designed to encourage more people to get tested and to ensure they self-isolate if they are positive. From March this year, we increased the funding available to local authorities to make discretionary payments under the scheme to £20 million a month. This enables a wider range of people to be supported and addresses some of the points made, not unreasonably, by the noble Lord, Lord Hunt, about the availability of funding and how it might touch local authorities’ provision of those payments.
In May, the Government launched nine trail-blazing pilots in England to try different, creative ways to ensure that people stick to self-isolation rules in areas with a higher prevalence. Some individuals have had concerns about their practical ability to self-isolate, either because they did not think they would get support with food delivery or dog walking, or perhaps because of the impact on their mental well-being. Interventions, such as one-to-one buddy support and the provision of practical assistance, aim to support self-isolation.
The programme has provided funding for areas such as Greater Manchester to pilot ways to reach, support and engage with households within 24 hours of a positive test to develop a personalised plan for their self-isolation. In Peterborough, those living in houses of multiple occupancy or in larger multigenerational environments, who are unable to effectively self-isolate and are more likely to increase transmission through household contact, if they have nowhere to go, have had specific projects of support. Our Local-O initiative means that we are improving local tracing techniques to reach those who need to self-isolate quicker. The support payment itself is around £500 a month.
These are the kinds of measures that we have put in place to improve the reach and effect of our support. Of the £280 million we have spent so far, £114 million has covered the cost of the main test and trace support programme, £116 million has been in discretionary payments and £50 million has been in administrative costs. This, in addition to the medicine delivery service launched on 16 March 2021, which has delivered £17.8 million-worth of medicines, has made a huge impact and supported those in isolation, but we continue to review this area.
Many noble Lords made extremely pertinent points on schools. I completely agree that schools and potential infection from them are critical. That is why we brought in twice-weekly asymptomatic testing in secondary schools and colleges, which will continue during September. That programme includes two tests specifically at an asymptomatic testing site three to four days apart for students at schools and colleges on their return. Most of them have just happened and there is a review point at the end of September when we will assess the levels of infection in schools. We are encouraging schools to continue with twice-weekly asymptomatic testing. We very much hope that staff and pupils in secondary schools and further education providers, and staff in primary schools and early years settings, will continue to do testing and we will assess compliance at the end of September.
I hear loud and clear the concerns about ventilation. We have in fact brought in plans in the winter plan on this matter. Changing the ventilation arrangements of our estate of 25,000 schools is itself a mega generational project of hundreds of billions of pounds, so this is not one that we can turn around overnight. The vaccine will certainly have a lot more impact in its immediate efficacy, but we are investing £25 million in around 300,000 CO2 monitors for schools. That in itself is a terrific initiative and I hope will not only make an impact on the schools involved but give us the learnings to understand how ventilation can be used to stop the spread of the virus.
We will also have trials of high-efficiency particulate-absorbing filter and ultra-violet C air cleaners in 30 Bradford schools, as well as working with stakeholders such as the Rail Delivery Group and the Rail Safety and Standards Board to trial the use of upgraded air filtration devices on passenger rolling stock. I will not pretend to understand the full technicalities of those arrangements, but I am extremely impressed by how quickly officials have moved to address these concerns.
As I said, we are committed to testing in schools and will review it in September. Social distancing remains in place wherever it can, but I am relieved to say that the bubbling arrangements, which were so disruptive in the first half of this year, are now largely in the past.
I know that the noble Baroness, Lady Barker, is extremely concerned about those not registered with GPs. I assure her that I have a regular meeting with the vaccination team to address this specific point. The outreach we do is to marginal groups of all kinds, ranging from Traveller groups who might not be registered with GPs and have a suspicion of the vaccination programme, through to those who may have religious, language or other distinctive qualities that mean they would not normally be captured in a vaccination programme. We have done an enormous amount to reach out to these groups. Vaccination can now happen without being registered. We have turn-up sites and a vaccination can happen at any of our main vaccination centres without full registration. If the noble Baroness would like to know more details of this part of our vaccination programme, I would be very glad to arrange a briefing. I know that it is very much on her mind.
I do not accept the premise that the Government are running an “it’s all over” programme in their communications. The winter programme that we have announced today is extremely proportionate. It relies on the responsibility of individuals. We cannot legislate for every sneeze and splutter in the country for years to come. We have to rely on people. I think the story that the noble Baroness, Lady Thornton, told of her friend and the wedding and the very detailed judgments that we all as individuals have to make is exactly what we all have to live with. The Government do not seek to intervene in those judgments—they are for the noble Baroness and her friend to work out for themselves. That is a proportionate climate for us to proceed in. Of course, should the worst happen, and should we need to, we have a back-up plan—described in the winter plan that we have announced today—where we bring back the awful measures that tied this country down so heavily earlier this year. We are seeking to avoid that.
Lastly, on the local authority funding settlement, there is more work to be done with local authorities—the noble Baroness, Lady Barker, is right. The funding settlement is not finalised yet. Local authorities will continue to play a critical role in public health protection, emergency response and infectious disease control. They will have support through the contain framework, which continues, and through the enhanced support that we offer through test and trace. I think noble Lords are aware of the surge testing, vaccination logistics support and national funding that we have in place in areas where there are major outbreaks. There is also the education contingency framework, which provides schools with additional support. We are totally engaged with local authorities in discussing the practical and financial support that we can offer them.
I think the place we are in has a huge sense of relief, because the vaccination programme is largely working, but also enormous uncertainty. If the CMO were here today and we were to press him to tell us how exactly things are going to play out, he would say that he could not be sure and that he has never faced a moment of such uncertainty in his life. I am sure he speaks with his normal integrity and discretion on that. As a result, we have put in place a proportionate plan for the near future but are ready to bring in other measures if necessary. I think that is the right approach. I beg to move.
Health Protection (Coronavirus, Restrictions) (Self-Isolation) (England) (Amendment) (No. 2) Regulations 2021
Considered in Grand Committee
Merchant Shipping (Prevention of Air Pollution from Ships) (Amendment) Regulations 2021
Considered in Grand Committee
My Lords, these draft regulations are necessary because of the ongoing need to reduce pollutant emissions from the maritime sector, to protect public health and the environment. The regulations do this by amending regulations in the Merchant Shipping (Prevention of Air Pollution from Ships) Regulations 2008, which I will refer to as the 2008 regulation, in order that our domestic legislation is aligned with the latest international limits and standards for sulphur and nitrogen dioxide emissions.
The international requirements are set out in annexe VI of the International Convention for the Prevention of Pollution from Ships 1973, also known as the MARPOL Convention. These changes limit the amount of sulphur in marine fuels that are used or intended for use by ships to 0.5% by mass or less. They also require that new ships and new engines be certified to meet the latest NOx emission standards, both globally and when ships operate inside waters which have been designated as an emission control area by the International Maritime Organization.
At this stage, the MARPOL Convention refers to four regions which have enhanced ECA protection status: the North Sea, including the English Channel; the Baltic Sea; North America, which includes both the east and west coasts of the United States and Canada; and the US Caribbean. Ships operating in an ECA must not use fuel which exceeds 0.1% sulphur unless they are using an abatement technology. New ships must also comply with a stricter NOx tier 3 standard. New ECAs could be introduced in future. The Mediterranean is being considered for one and the Government have agreed to consult on a possible ECA for the Irish Sea.
The regulations also enable UK ship inspectors to enforce these new limits more effectively on foreign-flagged vessels calling at UK ports. Currently, under port state control regulations, ship inspectors from the Maritime and Coastguard Agency can apply limited sanctions on ships calling at UK ports for an offence. These include recording a deficiency against the ship, temporarily detaining the vessel or ordering the ship to debunker—empty its fuel tanks—if the ship is using non-compliant fuel, after which access to UK ports and anchorages may be denied if there is evidence of significant non-compliance. These sanctions can be applied to ships only when in port or at anchor.
The new instrument will allow ship inspectors to use the criminal justice system to impose fines on offenders. This is in line with our current approach to other marine pollution offences. The ability to impose fines would be an important deterrent for all foreign-registered vessels within UK waters, whether in transit, in port or at anchor, particularly those that would consider risking non-compliance to reduce costs without the threat of financial penalties. However, I stress that compliance with maritime environmental rules is the norm. Enforcement action by the MCA through the courts is extremely rare and would be funded through existing resources if it were to occur.
The regulations also include an ambulatory reference provision, which will automatically update references in the 2008 regulations to provisions of the convention and its annexes. This implements a key industry request from the Red Tape Challenge, which enables some amendments to international requirements to be transposed into domestic law more rapidly and efficiently than was possible previously. An amendment that is accepted will be publicised in advance of its coming-into-force date by means of a Statement to both Houses of Parliament. However, the ambulatory reference provision is limited. Substantial changes, such as implementing a new chapter into MARPOL annexe VI, would still need to be implemented by statutory instrument.
The regulations also amend obsolete sulphur limits for marine fuels used by ships, which were made under Section 2(2) of the European Communities Act 1972. Specifically, the new regulations remove references to the 1% sulphur limit for ships operating inside an ECA and the 3.5% sulphur limit for ships operating outside an ECA. Of course, these have been superseded by the stricter 0.1% and 0.5% sulphur limits respectively. The new regulations also remove references in the 2008 regulations to a 1.5% sulphur limit which applied to passenger ships operating outside an ECA. Again, this has been superseded because, like all vessels, passenger ships outside an ECA are now subject to the stricter 0.5% sulphur limit.
While it is important to remove obsolete requirements from our domestic legislation that were introduced under Section 2(2) of the European Communities Act, the draft regulations retain others which are still pertinent. For example, they do not amend the requirement for ships to use 0.1% sulphur fuel when at berth in a UK port, which was introduced using Section 2(2) powers in the European Communities Act.
I am sure noble Lords would agree that maintaining the highest standards of environmental protection is vital for public health. It is therefore important that we continue to implement the latest international standards to control ship emissions and have an effective enforcement regime in place. The Government have made it clear that air quality is one of our top priorities. These regulations help deliver on the commitments made in Maritime 2050, published in 2019, and our route map for sustainable maritime transport, the clean maritime plan. It is important for the health of our coastal communities and port cities that we reduce emissions from the shipping industry, and that we ensure we can strongly and visibly enforce the standards we agree at the International Maritime Organization. I commend these regulations to the Committee.
My Lords, I thank the Minister for her very clear introduction. I have no criticism of the regulations themselves, but I want to concentrate on the backlog of maritime legislation within the department and its impact on the sector. I am very grateful to the Secondary Legislation Scrutiny Committee. It has repeatedly drawn attention to this problem, which has existed since 2016. Since then there have been five separate updates to MARPOL, to which the Minister referred. I believe the department still needs to implement over 40 changes to maritime legislation. These regulations, although very welcome, are very late as well.
The Department for Transport says that it has not prioritised this raft of legislation because operators tend to comply with IMO regulatory requirements as ships cross international boundaries all the time. That statement is contradicted by the Government’s own Explanatory Memorandum, which states that the ability of inspectors to sanction non-compliant ships will be very limited until these regulations come into force.
My real concern is the vagueness of all this, so can the Minister provide us with a lot more detail? First, on the simple numbers, the SLSC was told that, of the 40-plus backlog, 10 have now been made, 10—including this one—are in the final stages, and another eight are in the very final stages of preparation and anticipated to be introduced in the 2022-23 Session. The remainder are at an earlier stage of development and are anticipated to be complete by the end of 2023. This is far too slow and could mean that some legislation has been delayed for seven years.
Can the Minister explain exactly how many pieces of legislation are in that final slow lane and why they have been placed there? I realise it is far too much to ask for this to be done here, but could she write to us with a list of all the pieces of legislation in this backlog and say which pieces are in which category? The original DfT target to deal with this backlog was 2020, so why has it lapsed so badly?
I realise that the pandemic has affected everything, but in itself that is not a sufficient excuse, because the pandemic goes back only some 18 months and this backlog goes back to 2016. It must be seen in the context of other delays in DfT legislation. We are in a position where we need more legislation on EVs, driverless cars and other key areas of transport development. A major question must be why the department does not devote more resource to keeping up with modern transport developments. I agree with the committee, which labels the number of delayed pieces of legislation “highly disturbing”.
This is not just a numbers game. Let us look at the implication of these pieces of legislation. Many of them, like this one, have environmental implications. This one concerns sulphur oxide and nitrogen oxide and is about reducing air pollution; it is another example of a Government who talk tough on pollution but fail to deliver on the crucial detail. We must remember that this is about the health and working conditions of sailors as well as the overall state of our planet. Working conditions for many in the maritime sector are often very poor. Many are subject to exploitation and they are certainly often overlooked. We owe it to them to ensure that the UK upholds the highest standards.
This is London International Shipping Week, and I note that the industry has committed itself this week to zero carbon by 2050. It certainly needs the Government to do a great deal more to support it in achieving that. So although these regulations are welcome as far as they go, I would like to see much more from the Government to demonstrate that they are serious about tackling emissions from ships because of the impact on ships’ crews, cruise passengers and dockyard workers, as well as on our planet.
My Lords, I agree very much with what the noble Baroness, Lady Randerson, just said about these regulations. I have no problem with them, as she has already said, but I regret very much the considerable delay that has occurred in bringing them forward, and I hope that we will hear some sort of explanation from the Minister when she comes to sum up.
These regulations are not a great surprise. Our shipping industry has been well aware of what is going on for quite some time now, and it has been forced to act by the introduction of these emission control areas, which stole a march on the International Maritime Organization’s regulations by bringing in things that applied not to the whole world but merely to the specific areas that the Minister mentioned. By and large, our own ships have already made the necessary adjustments to be able to operate in these low-sulphur areas.
I have been in this House for 45 years—I am horrified to say it—and in that period I have seen our merchant fleet reduced from a fairly large standing in the world to something that is almost pathetic compared with what it was. We are not the force in international shipping that we were and that is a huge regret, but this country still has great expertise in the maritime field. The Government have set up a new committee to look into things such as finding a new means of propulsion, in effect to try to replace the internal combustion engine. I do not know how that is going, and the Minister probably cannot help me on that, but we still have a part to play in international shipping.
I am afraid we are no longer involved in the mainstream container business, where P&O was the last company with a large part in that industry. That moved over to Holland, to the Dutch company Nedlloyd, and is now part of the giant Maersk corporation, the Danish giant. There is a company that is entirely committed to reducing marine pollution. The noble Baroness mentioned that at London International Shipping Week, the aim is to have a carbon-neutral industry by 2050. Maersk is very much committed to that and has the first sizeable ship that will use carbon-neutral fuel coming into service in 2023. That will be, by container standards, a fairly small ship—2,000 20-foot equivalent units—but it will be powered by e-methanol, or green methanol, and also able to use standard low-sulphur oil. In a way, the company is hedging its bets, because nobody yet knows how much of the new fuel can be produced, so it must have an alternative. I understand that it aims to produce that e-methanol by using wind power.
On top of that new ship coming on stream, the company has also ordered eight much larger ships—16,000 containers—which will all be in service by 2024. Those ships are quite a bit more expensive than normal ships —10% to 15% more expensive—and cost $175 million. The eight ships are costing $1.4 billion. That has been the problem for the shipping industry: there have been few alternatives to using normal fuel and it has been expensive to make any changes.
What Maersk is aiming to do is a great step forward. It is the bigger ships that cause the problem. I have seen it mentioned that one large container ship with a 100,000 horsepower engine produces more rubbish out of its exhaust than millions of cars. That is probably true, but we must remember that ships provide more than 80% of the world’s trade and, if we are to find any means of solving this problem, it must be one that works well.
There is hope for the future, certainly in terms of smaller ships. There are fuels such as liquified natural gas, biofuels, green hydrogen—even electricity, because one company that operates on the Dover Strait has been looking at the possibility of an electric ferry running between Dover and Calais. All sorts of encouraging work is going on. As I said, the shipping industry has been fairly slow to react, but it is very much getting its act together now, and I hope we will see enormous improvements in future. In the meantime, I support the regulations.
My Lords, I welcome the introduction of these regulations to implement the standards of the International Maritime Organization to limit air pollution emissions from ships. The specific provisions relating to sulphur and nitrogen oxide have been in place globally for some time, and the decision to transfer them to domestic statute should benefit our natural environment and health. With that said, these regulations must be paired with an overarching approach to air pollution that recognises the value of making maritime cleaner but also includes steps to limit emissions from other modes of transport.
I turn to the specific regulations, which relate to an international agreement from 2008. Why has it taken 13 years for that agreement to be implemented? Given that the Explanatory Memorandum suggests that consultation took place only during the drafting of the international agreement, can the Minister explain what steps the Government have taken to ensure that the maritime industry is aware of these regulations now being implemented? On a related note, can the Minister confirm whether the Government have made an estimate of how many ships in UK waters do not currently meet the provisions of this legislation?
Regarding the Government’s broader approach to maritime pollution, and given that it is now more than two years since the Government’s clean maritime plan, can the Minister confirm whether the UK is on track to zero-emissions shipping by 2050? What steps are the Government taking to meet the ambition for all new vessels to have zero-emissions capabilities by 2025?
Finally, on the wider question of air quality, the Government’s transport decarbonisation plan published in July showed that they are still stalling when it comes to the tough decisions on transport emissions. There have been no sectoral deals with conditions on climate action. There have been deep cuts to electric vehicle grants. No serious steps have been taken to encourage people on to rail through cheaper fares. I welcome the legislation and any other steps that would improve air quality, but if the Government are committed to this principle they need to do much more to support cleaner transport.
I thank all noble Lords for their contributions to this short debate. I appreciate their support—if occasional qualification thereof—for these regulations. The problems really lie in matters beyond these regulations, which I think make sense to the Committee. I shall cover a few things that were mentioned, and I shall start off by outlining a bit more of the context. Air quality is one of our top priorities. That is what these draft regulations do, although to a certain extent they are belt and braces; they fill in some of the gaps in the regulatory framework and enforcement regime that exist in a more global fashion for the shipping industry as a whole.
Maritime pollution emissions are very important. As noted by the noble Lord, Lord Greenway, in 2016 domestic shipping—shipping specifically within the UK—accounted for 11% of the UK’s domestic NOx emissions, 2% of PM2.5 and 7% of sulphur dioxide. That is quite a significant proportion for an industry that is fairly small—but, as the noble Lord, Lord Greenway, pointed out, incredibly important. The department is working closely with Defra to develop more detailed information on emissions from shipping in order to assess the impact of air pollution prevention measures implemented since the comprehensive study carried out in 2016. In addition, international shipping emissions are significantly greater and have a significant impact on air quality in the UK, from ships both in shipping lanes and while they are at UK ports.
The Government recognise that pollutant emissions from international shipping have an impact on public health and the local environment. Our national targets for air quality include this impact. We work incredibly closely with the International Maritime Organization to address pollutant emissions by UK-flagged vessels and those within UK waters, as well as globally.
Reductions in air pollutant levels are closely linked to reductions in levels of greenhouse gases, as noted by the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Randerson. As they will both know, the Government remain fully committed to our 2050 net-zero target for domestic shipping. This is designed to address both greenhouse gases and pollutant emissions from shipping. Just earlier this week, we announced that we will push for zero-emissions targets for international shipping, to challenge the international community collectively to deliver a Paris-compliant outcome when the IMO renegotiates its strategy for climate change in 2023.
Furthermore, we have continued to make good progress on the commitments we set out in the clean maritime plan, which was published in 2019, that by 2025 all new vessels for use in UK waters are going to be designed with zero-emissions capabilities and that by 2035 zero-emission maritime fuel infrastructure, known as bunkering, is widely available across the UK. We are doing this by providing £1.4 million-worth of funding for a competition for innovation in clean maritime. We have established the marine emissions reduction advisory service as a function of the MCA’s future technologies team, undertaking research, considering the role of maritime clusters in delivering clean innovation and growth and exploring the inclusion of the maritime elements in the renewable transport fuel obligation as part of a public consultation.
Building on the clean maritime plan, the Prime Minister’s 10-point plan in November 2020 announced up to £20 million for a clean maritime demonstration competition to develop clean maritime technologies. If we know one thing from the excellent speech from the noble Lord, Lord Greenway, it is that at the moment we are not quite sure what technology will win out in shipping. It is one of those areas that would be harder to reach by battery electric and therefore we need to look at other alternatives, whether that be low-carbon fuels or hydrogen combustion engines. It could be all sorts of different things, and that is why the Government are very much focused on what we can do to support the market to develop the solutions and then be able to support those which are most appropriate for commercialisation.
Turning to some of the issues in the regulations themselves, I think it was the noble Lord, Lord Tunnicliffe, who asked how many ships this would cover in the UK—the UK-owned ships. I do not have that information, but I can say that the additional cost to UK-owned ships that operate only domestically is estimated to be around £2 million a year following the introduction of these regulations. I will see if I can find out more information as to what that would mean per vessel.
In terms of engagement with the industry, the department discussed the draft regulations with the UK Chamber of Shipping and fuel suppliers to consider the impact. We did not carry out a formal consultation on the draft regulations. As the noble Lord, Lord Greenway, pointed out, the measures were well-known within the maritime and fuel supply sectors so there is nothing novel about the implementation of international requirements. It should also be noted, of course, that these regulations were published in draft back at the end of May because they are part of the enhanced security arrangements relating to amendments made to legislation under Section 22 of the European Communities Act. We had no feedback at all from industry stakeholders on the documents following publication, therefore we were reassured that industry fully understood what was coming down the track.
Turning to the point raised by the noble Baroness, Lady Randerson, we will take this on the chin. We recognise that there is an issue here and we will work very closely with the Secondary Legislation Scrutiny Committee to keep it updated with our backlog of legislation. We thank it for its work and for working with us on this. Minister Courts, the Maritime Minister, wrote to the committee on 5 July. I am sure the noble Baroness will have seen the letter. I have various lists of Sis, but I do not think it will be helpful if I read them all out. I might try to put it all in a letter afterwards. The latest stats I have are that there are 43 maritime statutory instruments to be delivered. We are prioritising those that are safety critical or that implement the IMO standards. We have done 13 to date. We have another nine for completion between now and early 2022 and then 21 instruments in 2022 and 2023. I think we can probably do better than that. I also happen to know that the SLSC has been back in touch with the DfT—and rightly so—to have yet another conversation with us about our legislative programme. We will, of course, be as open as we can. We are doing our best to prioritise legal resources. I am going to be honest with noble Lords that legal resources are stretched across government at the moment. It is not just a DfT issue, and we obviously have to work within what we have.
I will not say more on enforcement now; I would rather write, because what I have pretty much says what I said in my opening speech, and I am not entirely sure about this. However, I will go back and look at Hansard to see whether we can provide more information about specific things relating to enforcement and the gaps we are filling in.
It has been a pleasure to be back in real life discussing SIs in the Moses Room—I have missed it. It is also apt that we are having this debate during London International Shipping Week. I know that the noble Lord was a bit of a Debbie Downer on the role of the UK in international shipping, but I have to say that London International Shipping Week is an amazing event. We are able to bring together some of the leading people from the sector. I, for one, feel that the last one I was at, two years ago, was a great success, and I am sure that this one will be too. However, back on the regulations for the time being, once again, I commend them to the Committee.
Money Laundering and Terrorist Financing (Amendment) (No. 2) (High-Risk Countries) Regulations 2021
Considered in Grand Committee
My Lords, the Government are committed to combatting money laundering and terrorist financing and recognise the threat that economic crime poses to our country. Illicit finance causes significant social and economic costs through its links to serious and organised crime, it is a threat to our national security, and it risks damaging our international reputation as a fair, open, rules-based economy. Illicit finance undermines the integrity and stability of our financial sector and can reduce opportunities for legitimate business in the UK. That is why the Government are focused on making the UK a hostile environment for illicit finance. As part of this work, we have taken significant action to tackle money laundering and terrorist financing, and to strengthen the whole-system response to economic crime.
Underpinning these efforts are the money laundering regulations, a key part of our legislative framework which set out a number of measures that certain businesses must take to combat money laundering and terrorist financing. These requirements include the need for businesses to identify and verify the people and organisations with whom they have a business relationship or for whom they facilitate transactions.
In addition, the regulations require that financial institutions and other regulated businesses conduct additional checks, or “enhanced due diligence”, on business relationships and transactions involving “high-risk third countries”. These are countries that have been identified as having strategic deficiencies in their anti-money laundering and counterterrorism financing regimes and which pose a significant threat to the UK’s financial system. The statutory instrument under discussion today updates the list of countries specified as high risk in the money laundering regulations.
I will explain the background to this instrument. At present, the UK’s list of high-risk third countries, specified in the money laundering regulations, mirrors those identified by the Financial Action Task Force, the global standard-setter for anti-money laundering and counterterrorist financing. The Financial Action Task Force updates its public lists of jurisdictions with strategic deficiencies following the conclusion of each Financial Action Task Force plenary to reflect changing risks and circumstances in these jurisdictions and in the global economy.
This instrument will therefore amend the money laundering regulations to update the UK’s list of high-risk third countries to mirror the Financial Action Task Force’s public lists. This will ensure that the UK’s list is responsive to the latest threats emanating from high-risk countries with inadequate counterillicit finance systems, and that the UK remains at the forefront of global standards on money laundering and terrorist financing. This update will therefore help to protect our national security and the UK’s reputation, and will protect businesses and the financial system from money launderers and terrorist financiers.
In summary, the instrument will update the UK’s high-risk third countries list. Businesses that fall under the scope of the money laundering regulations and which deal with these countries will be required to take extra scrutiny measures. This amendment will enable the money laundering regulations to continue to work as effectively as possible to protect the UK financial system and it will allow the UK to continue playing its full part in the fight against economic crime. I hope that noble Lords will join me in supporting this legislation. I beg to move.
My Lords, I welcome the Minister to what is for me the first Treasury SI to be held physically since the pandemic began. There is also a sense of nostalgia that predates the Minister: namely, this SI is being conducted by only the Minister, myself and the Government Whip. It is a matter of “never mind the width, feel the quality”.
I am grateful to the Minister for introducing the latest iteration of these regulations. As he outlined, they enact the latest changes to the Financial Action Task Force’s list of high-risk countries for illicit finance, which come three times a year. The last time we debated this topic, towards the end of April, we also covered the logistics involved in defining key terms and ensuring that the UK can mirror the FATF’s list, now that we are outside the EU. Thankfully, the relevant corrections to domestic law have been made, which means that we do not need to revisit that topic in any detail. However, we find ourselves giving retrospective approval to a made affirmative instrument, when the Government’s stated ambition in April was to use the regular process.
Of course, we understand that the work of the FATF may not directly align with the sitting dates of our Parliament. We also accept that delays in bringing forward these regulations introduce a necessary and undesirable risk. While these occasions allow noble Lords to raise a series of related issues with Ministers, it seems unlikely that the Government or Parliament would wish not to enact these regulations when they appear every few months. With that in mind, and given the huge volume of secondary legislation that we now deal with, could the Minister and his department examine whether and how the process giving effect to changes in the FATF list might be streamlined or otherwise improved?
Speaking of peripheral issues, could the Minister also provide a brief update on the Government’s broader efforts in this area? In April, the noble Lord spoke of 52 joint actions being undertaken by the Government and private sector to tackle economic crime. He also referenced 17 extra staff being recruited to the UK Financial Intelligence Unit. How are those exercises progressing? I would be happy for him to write with the details, if necessary.
My Lords, I thank the noble Lord for his participation in the debate today and for his normal, thorough consideration of the instrument under question.
I shall go to his query about the progress on the 52 actions that we have committed to in this area: 20 of those 52 have now been completed, and we are at a key point in the economic crime plan timeline. The Government recently published the Statement of Progress, which details progress made against the plan; it sets out the UK’s future priorities and outlines seven new priority actions that build on the original actions in the plan. It increases our level of ambition to combatting economic crime, supporting our growth and prosperity and enhancing our global reputation as a clean financial centre and a safe place to do business.
As the noble Lord requested, I shall write to him with further details on the work; there is a great deal going on, covering a number of departments—for example, reforms to Companies House to prevent the misuse of companies, which was set out in September last year. We are looking to introduce reforms to limited partnerships and how they operate, and a register of overseas beneficial owners. Likewise, the Home Office is shortly to consult on a number of economic crime-focused legislative changes to ensure that we have the right powers to share information and seize assets. However, as requested by the noble Lord, I shall put that into a letter so he has a full update.
On the pressure on bringing instruments forward, which will be reasonably frequent, I absolutely accept the noble Lord’s challenge. It is always a difficult balancing act to subject government to proper scrutiny in the parliamentary process but also not to clutter up the timetable. We will take back his comments and see whether there is a better way of doing it.
I hope that noble Lords have found the debate informative, albeit short, and that they will join me in supporting this instrument.
Capital Requirements Regulation (Amendment) Regulations 2021
Considered in Grand Committee
My Lords, among other things, these regulations support the implementation of the Basel III standards in the UK. I will begin by reminding the Committee of the background to this issue.
I am sure that noble Lords agree that strong prudential regulation is vital if we are to ensure that firms have enough capital and liquidity to operate effectively through periods of economic stress. However, the 2008 financial crisis highlighted major deficiencies in international financial regulation. Following the crisis, the international community came together to remedy this situation by developing updated standards known as the Basel III accords.
The UK, as a member of the G20, is committed to the implementation of the Basel III standards, given their positive benefits to financial stability. Now that the UK has left the EU, we must implement many of these standards domestically for the first time. This includes rules on subjects equivalent to those contained in the EU’s second capital requirements regulation, known as CRR2. Many of these rules do not yet apply in the UK due to the EU’s implementation date falling after the end of the transition period.
The Financial Services Act 2021 enables the Prudential Regulation Authority to make rules updating the existing provision in the UK’s capital requirements regulation for Basel III standards—the CRR—where the Treasury has or will revoke the relevant provision of the CRR. The devolution of responsibility to the PRA for updating these rules reflects its expertise in prudential matters. This is combined with a more flexible and tailored approach that comes with having these regimes set out in regulator rules rather than in statute.
On some of the detail of the instrument, to enable the PRA to update the prudential regime to account for these new Basel III standards, this instrument exercises the powers contained in Section 3 of the Financial Services Act to revoke elements of the CRR and make consequential amendments. These revocations must be within the limits imposed by Section 3(2), which limits the provision to only revoking those parts of the CRR which need to be updated to reflect the new Basel standards, and anything that is connected to, or consequential to, those standards.
When it makes CRR rules, the PRA is subject to an accountability framework, under which it must consider the impact of its rules on a number of areas; the relative standing of the UK compared to other jurisdictions; lending to the real economy; and the Basel standards themselves. For rules made after 1 January 2022, the PRA will also need to have regard to the net-zero carbon target. Additionally, the PRA must consult the Treasury on the potential impacts of any rule changes on equivalence.
This instrument contains additional EU exit-related amendments to the CRR. These are required to ensure that the prudential regime continues to function as intended now that the UK has left the EU. This instrument makes an amendment to Article 497 of the CRR. This allows for the Treasury to extend a transitional provision for certain foreign central counterparties to retain temporary qualifying status. Qualifying status allows UK firms to use these CCPs without being subject to higher capital requirements. Were these CCPs to lose this status, they would become substantially more expensive, thereby reducing the likelihood of their use by banks. This amendment will allow for the transitional period to be extended by regulation one year at a time.
These extensions are required as there may be non-UK CCPs that are unable to receive qualifying status through recognition for a prolonged period. However, the Treasury still considers it beneficial that they retain qualifying status. This allows the Treasury to maintain the status quo and avoid disruption were any UK firms to have exposures to those CCPs. It will keep these arrangements under review to ensure that they are fit for purpose; however, we do not expect this transitional regime to be used on a permanent basis.
Under Article 391 of the CRR, the Treasury may determine that an overseas jurisdiction applies prudential requirements to same standard as those applied in the UK and grant it equivalence. Smaller UK banks, in particular, benefit from this article as it allows them to lend more as a single loan to overseas firms. At present, more than 50 banks take advantage of this.
However, the UK’s only equivalence decision in this area is for EEA member states. This is because the EU, and therefore the UK, had not, at the end of the transition period, awarded Article 391 equivalence to any other jurisdiction. To get around this, the European Banking Authority issued guidance allowing EU, including UK, firms to use equivalence decisions under a different article, Article 107, as a proxy for Article 391 equivalence. However, this is in effect regulatory guidance overruling primary legislation. The Government and the UK’s regulators consider this guidance inappropriate and therefore do not intend to replicate it in the UK. It is also impractical to undertake the equivalence assessments in such short timescales.
Through this SI, therefore, the Treasury is using Section 8 powers under the European Union (Withdrawal) Act to put in place transitional arrangements. These will maintain the positive effects of Article 391 equivalence for UK firms. In parallel, the Treasury will seek a legislative opportunity to streamline the system by linking the equivalence regime in Article 391 to that in Article 107, such that a 107 decision will also result in these firms being able to lend more as a single loan to entities in that jurisdiction.
The Treasury has worked closely with the PRA in drafting this instrument. We have engaged with industry throughout the process, including in a public consultation. The responses received from this largely agreed with the Government’s proposed approach, but requested that the equivalence provision be removed for equity investments in overseas funds. The Government agree that this is a disproportionate method for addressing the prudential risks arising from UK banks’ investments in overseas funds, which the PRA could address.
The consultation responses requested that some reporting requirements for market risk—risk arising from movements in market prices—that the EU had introduced ahead of the capital requirements themselves should be delayed until those requirements are introduced. The Government have updated our approach in line with these points, recognising the costs outweighed the benefits of adopting the reporting requirements.
I hope I have given Members a comprehensive overview of this measure. I urge noble Lords to join me in supporting these regulations. In short, this measure enables the implementation of Basel III regulation that is key to the UK’s international standing. In addition, it irons out some of the wrinkles of existing EU regulation. Together, these measures will give UK firms certainty and therefore help them to flourish. I beg to move.
My Lords, as ever, I am grateful to the Minister for introducing this statutory instrument. Unlike the last item of business, which was largely a formality, these regulations represent a significant shift in how the Government and bodies such as the Prudential Regulation Authority ensure that domestic financial regulation is fit for purpose.
During the passage of the Financial Services Act 2021, we spent many hours debating the proposed shift away from the capital requirements regulations to the contents of regulatory rules made by one or more of the Treasury, the PRA and the Financial Conduct Authority. We were told that this was the most efficient way for the UK to implement the new Basel standards, given that the EU no longer does most of the work on our behalf.
Many colleagues were nervous about the new process. This is not because it was an inherently bad idea to set rules domestically, rather than to rely on and continue to amend bits of retained EU law; nor was our concern around giving the PRA and FCA further powers, even if that warranted a higher degree of parliamentary oversight. Rather, there was a legitimate concern about the potential for unintended consequences when large parts of the existing capital requirements framework are revoked at the stroke of a ministerial pen. Indeed, some parts of retained EU law are being swept away entirely, with no requirements for certain revoked provisions to be replaced.
I got to that point in my thinking and was seized by the fact that these are incredibly important regulations. In a sense, the presence in the Room is completely disproportionate to the importance of these regulations. As far as I understand it—I am not an expert in this issue—they are the regulations that secure the safety and stability of the financial systems. Therefore, I thought I had better give it a little more thought. I turned to a letter from John Glen. It was not sent to me; in simple terms, it was sent to my colleague in the Commons, Pat McFadden MP, but it includes me at the end. He sent me a copy of this letter, and therefore I take account of it. I quote the opening paragraph: “I am writing regarding the Capital Requirements Regulation (Amendment) Regulations 2021, which were laid on 12 July. This statutory instrument revokes elements of the UK’s capital requirement regulations to allow the Prudential Regulation Authority to make rules implementing the outstanding Basel standards.” That sentence seems to go to the essence not only of the SI but of the Financial Services Act we laboured over some months ago.
I read on. His next paragraph is all about taking away the rules relating to this area that were in statute, which is what we did with the Financial Services Act, and introducing the rules made by the PRA. It says: “The PRA near-final rules, which fill the space, have been published and you will be able to find them here.” The word “here” is a little blue thing with a line under it. By now I should have learnt that you do not press those, but I did, and I got to a six-page document, which had two parts. One was from 9 July, PS17/21, Implementation of Basel Standards. The other was from 12 February, CP5/21, Implementation of Basel Standards. As I understand it, the first is the current PRA policy and the other document was the invitation to consultation. Tantalisingly, having been introduced to this idea of near-complete rules, I found that the first appendix was:
“Near-final CRR RULES INSTRUMENT 2021”.
Once again I was daft enough to press this. While I had been shocked before, this really took my breath away, because the first page—I had the wit to print only one page at a time—said, in very light grey at the bottom, “Page 1 of 307”. I lost the will to live at that point. I thought: how do you scrutinise 307 pages?
I returned for inspiration to John Glen’s letter, in which he said: “I would encourage parliamentarians”—he is very optimistic using the “s”, I think, but still—“to consider these rules as part of scrutinising this SI. As we discussed during the passage of the Financial Services Act 2021, the PRA ran a consultation on its draft CRR rules from 15 February 2021 to 3 May 2021, which was open to all—businesses, public and parliamentarians—to respond.”
Those two paragraphs seemed to invite us to condition our approval of this instrument on the basis of what was to replace it. Once again, I felt that burden to see whether I could get any way to understand this document better. I am not sure how I got there, but I found a Prudential Regulation Authority document, policy statement PS17/21, Implementation of Basel Standards from July 2021. I thought: let us try that. I turned over the next page, and it has 84 pages. That has to be progress.
At this point, I ran out of time and energy. I thought, “We’re not going to turn this down. Four times since the Second World War, I think, has the House of Lords turned down a statutory instrument. What’s the point?” I thought, “A good compromise is just to read the overview.
I do not know how well the Minister copes with this stuff, but you have only to read the overview to realise that you need a degree in this language to understand it. I did flog through it and, in my ignorance, virtually everything I came across seemed reasonable until I came to paragraph 124. This disturbed me, because this SI is very important—the Minister may say that I have misunderstood its importance, but I think it is important. That paragraph refers to climate change. The world feels a bit rough at the moment—in everything from Afghanistan to the pandemic, it is not in a good place—but the problems we have now pale into absolute insignificance compared with what happens if we do not get climate change right. The odds are stacked against us, let us be realistic. In the UK, we are trying hard, but to get the big powers involved and get them to agree? It is pretty worrying.
I was greeted in paragraph 124 with the words:
“The PRA must also have regard to the target in section 1 of the Climate Change Act 2008 (carbon target for 2050) for rules made after Saturday 1 January 2022. As these rules will be final before that date, they are out of the scope of that requirement. In addition, during the consultation period for CP5/21, the Prudential Regulation Committee’s … remit letter was revised to recommend that the PRC should, where relevant and practical, have regard to the Government’s commitment to achieve a net-zero economy by 2050. As consultation was underway at the point the PRC’s remit letter was revised, the PRA could not consider this new have regard for these particular rules, as to do so would have caused an impractical delay to their implementation.”
That struck me as a real Sir Humphrey kick into the long grass. I was very worried that about the only paragraph I felt I could understand did not have the right feel about it. What is more, I was confused because at this point, for reasons I do not quite understand, I was inspired to read the de minimis instrument which is called for to prove that it is under £5 million per year. All it took account of was the time people took to read the document. It did not take into account the fact that if you get these things wrong, the impact on the financial system can be profound.
That document seemed to say that the requirement to have regard to the target was relevant to this SI, so I was left very uncomfortable with the way this extraordinarily important issue was handled. I would like to know from the Minister when and how the net-zero commitment will be considered in the PRA rules. Is there some future iteration? I know there is this grid or something that says, “we are going to do this, that and the other”, but is that going to be considered at some point?
I then went on to worry, as we did at length when the Act was going through the House, about how we scrutinise PRA rules. In many ways, John Glen’s letter illustrated that if it became an affirmative resolution or something like that, it would be too difficult. But one has to remember that when we were in the EU—I am not talking now about whether Brexit was a good or bad idea—these equivalent rules were considered by the EU Parliament. It took them very seriously indeed and would flog through these rules so that when they came to the member nations they had been examined by a democratic process.
In a sense, all we get here is an invitation to consultation which sits entirely within the PRA and which Parliament can have a hand or an involvement in only if it takes the consultation. It seems to me that you have a situation which all too frequently develops in large organisations and their regulators. When I ran a large organisation, I tried to do the same thing: you try to get your regulator to go native so that you can do things your way. The consultation, as far as I can tell, was among the suppliers of services. There was no way in which the needs of society or customers could be considered.
I recognise that this is a very big question and the Minister might want to write me an essay and not answer today, but is this situation, in which future rules will have no formal parliamentary scrutiny, satisfactory? Should parliamentarians not be more involved in an issue of this importance? If they should have more involvement, how?
My Lords, I thank the noble Lord again for his very thorough analysis of an immensely complicated subject. I will try to address his two substantive questions. The first was on the scrutiny of PRA rules and regulations by Parliament. I assure the noble Lord that Parliament ultimately sets the regulators’ objectives, and it is right that Parliament has the appropriate opportunity to scrutinise the work of the regulators and their effectiveness in delivering the objectives that Parliament has set them. The letter the noble Lord referred to was clear that we set out a reasonably long consultation period earlier this year and had substantive responses from the key players in the sector, and we have responded to those.
The regulator committed to sending these consultations and draft rules to Parliament during the passage of the Financial Services Act earlier this year. Consultation began in February so there has been a decent period to review and report on them. The PRA published its final rules in July—again, well in advance of this SI. The FSMA requires regulators to undertake these consultations and to consider and to respond to representations from Parliament as well as other stakeholders. Mechanisms for accountability, scrutiny and engagement are considered further through the further regulatory framework review. We should not rush to prejudge the outcome of the FRF review. The Government will bring forward proposals through a second consultation later this year.
On the noble Lord’s question about climate change, the Financial Services Act 2021 was amended to include a “have regard to” the net zero carbon target but its application was delayed until 1 January 2022. This means that the PRA does not need to have regard to climate change considerations in making the rules as a consequence of this specific SI. This delay will ensure that there is no unnecessary and impractical delay in implementing the Basel 3 reforms for 1 January next year, otherwise we would be in the unfortunate position where the regulators would have to reopen or restart their consultations which were first published, as I said, in February this year.
I assure the Committee that the PRA will still need to make rules to implement substantive reforms contained in Basel 3.1. I expect the regulators to use the powers again in future to update their rules: for example, to take account of new international standards or developments in the market. The PRA will need to have regard to the net carbon target in setting those rules.
I hope noble Lords will agree that these amendments strike the right balance between taking action on climate change quickly and taking swift action to reform our prudential regimes that aims to prevent a future crisis. I suggest that we write to the noble Lord to update him on the timetable for his specific concern on the net-zero targets.
Before the noble Lord sits down, I recognise that what I have said is perhaps complex so I would be grateful if he would also write to me on whether he has any further reflections on how Parliament might be involved. The formal position, as I understand it, is that the PRA can now make regulations without seeking any formal authority from Parliament; indeed, that is almost the essence of it. I sense some degree of sympathy that somehow Parliament ought to be involved, so if he and the Treasury have further thoughts on that, it would be valuable if they could share them with me.
Of course we will write to the noble Lord to provide a bit more clarity on that. Again, it is that difficult balancing act with incredibly complex regulations—as the noble Lord has so ably demonstrated as he has fought his way through layers of hyperlinks—and I recognise that.
The Prudential Regulation Authority has consulted on these rules. As I mentioned, in July it published the near-final version of the proposed rules, along with an accompanying policy statement. This set out how the regulator has taken into account the public policy factors in the Financial Services Act.
I hope that the noble Lord has found today’s debate informative. I will write to him on the specific items we have discussed. I hope he will join me in supporting this instrument and I beg to move.
Committee adjourned at 6.39 pm.