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General Committees

Debated on Tuesday 7 March 2017

Delegated Legislation Committee

Electoral Commission

The Committee consisted of the following Members:

Chair: Geraint Davies

Bryant, Chris (Rhondda) (Lab)

† Campbell, Mr Alan (Tynemouth) (Lab)

† Duddridge, James (Rochford and Southend East) (Con)

† Ellis, Michael (Deputy Leader of the House of Commons)

Flynn, Paul (Newport West) (Lab)

† Graham, Richard (Gloucester) (Con)

† Hall, Luke (Thornbury and Yate) (Con)

† Heappey, James (Wells) (Con)

† Hollinrake, Kevin (Thirsk and Malton) (Con)

† Huddleston, Nigel (Mid Worcestershire) (Con)

Lucas, Ian C. (Wrexham) (Lab)

McFadden, Mr Pat (Wolverhampton South East) (Lab)

† Paterson, Mr Owen (North Shropshire) (Con)

† Smith, Cat (Lancaster and Fleetwood) (Lab)

† Smith, Julian (Vice-Chamberlain of Her Majesty's Household)

† Tredinnick, David (Bosworth) (Con)

Ben Williams, Committee Clerk

† attended the Committee

Ninth Delegated Legislation Committee

Tuesday 7 March 2017

[Geraint Davies in the Chair]

Electoral Commission

I beg to move,

That the Committee has considered the motion, That the Motion in the name of Mr David Lidington relating to the appointment of Professor Elan Closs Stephens as an Electoral Commissioner shall be treated as if it related to an instrument subject to the provisions of Standing Order No. 118 (Delegated Legislation Committees) in respect of which notice of a motion has been given that the instrument be approved.

The motion proposes that a Humble Address be presented to Her Majesty, praying that Her Majesty will appoint Professor Elan Closs Stephens as a member of the Electoral Commission for a period of four years, from 13 March 2017 to 12 March 2021. Professor Stephens will serve on the commission as electoral commissioner with special responsibility for Wales. The Speaker’s Committee on the Electoral Commission has produced a report in relation to the appointment, its first report of 2017.

The vacancy has arisen because the term of office of Gareth Halliwell, the current commissioner with special responsibility for Wales, will come to an end on 12 March 2017, in a few days’ time. Appointments to the Electoral Commission are made under the Political Parties, Elections and Referendums Act 2000. Under the Act, the Speaker’s Committee has a responsibility to oversee the selection of candidates for appointment to the Electoral Commission. Commissioners are appointed for a fixed term and may be reappointed up to a maximum term length of 10 years.

As is normal for such appointments, the Speaker’s Committee established a recruitment panel to oversee the shortlisting and interviewing of candidates. It asked the Commissioner for Public Appointments to appoint a public appointment assessor to chair the recruitment panel; the commissioner nominated Mark Addison, a former civil service commissioner. The committee also agreed that the Presiding Officer of the Welsh Assembly should be invited to nominate a member of the panel, in recognition of the fact that under the Wales Act 2017, the commission is increasingly responsible to the Assembly for its work in Wales; the Presiding Officer nominated Suzy Davies, Assembly Member for South West Wales. The other members of the panel were Sir John Holmes, chair of the Electoral Commission, and the hon. Member for Newport East (Jessica Morden), who is a member of the Speaker’s Committee.

I am pleased to say that the unanimous view of the panel was that Professor Elan Closs Stephens should be appointed as electoral commissioner with special responsibility for Wales. It may interest this Committee to know that Professor Stephens is currently a member of the BBC Trust, serving as the national trustee for Wales and chair of the BBC’s audience council for Wales. She is also currently the senior independent director on the civil service board of the Welsh Government. Her career in academia culminated in her appointment as professor of communications and creative industries at Aberystwyth University, where she is still an emeritus professor.

The Speaker’s Committee received the board’s report in January and agreed to the nomination. Professor Stephens’s name was then put forward for the consultation with the leaders of the political parties represented at Westminster, as is required by statute. The statutory consultation provides an opportunity for the party leaders to comment, but they are not required to do so. The responses received to the consultation are published in the Speaker’s Committee report.

If the motion is approved, Professor Stephens will serve on the Electoral Commission until March 2021. I hope that this Committee, and ultimately the House, will support her appointment and wish her well as she takes on these new responsibilities.

I thank the Minister for introducing the motion about this important appointment. We believe that Professor Stephens appears to be a very good and proper choice for the role, and we are happy to support the motion.

Question put and agreed to.


That the Committee has considered the motion, That the Motion in the name of Mr David Lidington relating to the appointment of Professor Elan Closs Stephens as an Electoral Commissioner shall be treated as if it related to an instrument subject to the provisions of Standing Order No. 118 (Delegated Legislation Committees) in respect of which notice of a motion has been given that the instrument be approved.

Committee rose.

Draft Barnsley, Doncaster, Rotherham and Sheffield Combined Authority (Election of Mayor) (Amendment) Order 2017

The Committee consisted of the following Members:

Chair: Ian Paisley

† Allen, Heidi (South Cambridgeshire) (Con)

† Crabb, Stephen (Preseli Pembrokeshire) (Con)

† Davies, Chris (Brecon and Radnorshire) (Con)

† Doyle-Price, Jackie (Thurrock) (Con)

† Drax, Richard (South Dorset) (Con)

† Foxcroft, Vicky (Lewisham, Deptford) (Lab)

† Harris, Rebecca (Castle Point) (Con)

† Howell, John (Henley) (Con)

† Jarvis, Dan (Barnsley Central) (Lab)

† Jayawardena, Mr Ranil (North East Hampshire) (Con)

Johnson, Alan (Kingston upon Hull West and Hessle) (Lab)

† McMahon, Jim (Oldham West and Royton) (Lab)

Mahmood, Shabana (Birmingham, Ladywood) (Lab)

† Malthouse, Kit (North West Hampshire) (Con)

† Mann, John (Bassetlaw) (Lab)

† Percy, Andrew (Parliamentary Under-Secretary of State for Communities and Local Government)

Juliet Levy, Kenneth Fox, Committee Clerks

† attended the Committee

Second Delegated Legislation Committee

Tuesday 7 March 2017

[Ian Paisley in the Chair]

Draft Barnsley, Doncaster, Rotherham and Sheffield Combined Authority (Election of Mayor) (Amendment) Order 2017

I beg to move,

That the Committee has considered the draft Barnsley, Doncaster, Rotherham and Sheffield Combined Authority (Election of Mayor) (Amendment) Order 2017.

It is a pleasure to serve under your chairmanship, Mr Paisley. The order was laid before the House on 6 February 2017. If approved and made, it will postpone the mayoral election in the Sheffield city region, meaning that the Mayor will first take office in May 2018, rather than May 2017. It also sets the duration of the first mayoral term as four years, with the next election being held in May 2022.

Before I say anything further on the order, I reiterate the Government’s commitment to the devolution deal that we negotiated with the Sheffield city region, which we signed on 15 October 2015. That deal not only transfers significant powers on a range of policy areas from this place to the Sheffield city region, but injects more than £1 billion into the city region to boost growth. That is the only deal on the table for the area, and I trust local leaders are as committed to it as the Government. That is certainly what we wish to hear.

In recent days and weeks, there have been alternative devolution proposals for Yorkshire as a whole, but I make it absolutely clear that the Government are committed to the Sheffield city region and have no interest in negotiating outside that. We hope that local leaders of the four local authorities in South Yorkshire will also confirm their commitment to the deal which, as I said, transfers significant powers and funding from this place to the region.

The Minister knows that there was a discussion just the other day about whether some of the funding might be released to the Sheffield city region ahead of the mayoral election. Will he saying something about that, and what the specific criteria for releasing some of that funding might be?

I am more than happy to respond to that specific point. In previous devolution deals, we have made advance payments on the gain share funding ahead of the mayoral elections. There is no specific requirement around that. In this case, we wish the consultation to take place, on which I will say more in a moment, and for some of the powers and other orders to pass through the House. We also require an absolute, cast-iron guarantee that the leaders of the four South Yorkshire local authorities in the Sheffield city region are fully committed to the deal. It is possible to make gain share payments before the mayoral elections take place, and we would be prepared to look at that—although while having regard to what I have just said.

In bringing the order before Parliament, we are responding to a request from the Sheffield city region’s local leaders. On 11 January this year, those leaders met as a combined authority and concluded that it was no longer possible to achieve a mayoral election in the Sheffield city region in May this year, and they agreed and announced that they will work towards a mayoral election in May 2018. They explained in their announcement that they had reached those decisions because of the need for the combined authority to undertake a further consultation before it was possible for an order to be made that conferred powers on the Mayor and the city region, as envisaged in the devolution deal negotiated with the Government.

The need for an additional consultation arose following a judicial review brought by Derbyshire County Council against the city region’s consultation earlier this year, which it argued was misleading. The case was considered by the court on 9 and 10 November last year, and in December the judgment was given that the consultation did not achieve its lawful purpose. While the court did not quash the consultation as Derbyshire County Council had requested, it said a further consultation was needed before the statutory requirement was satisfied.

The city region’s local leaders have agreed to prepare and carry out that necessary consultation, with a view to its starting after the local elections in May. Hence our meeting today, at which we need to defer the mayoral election until May 2018, by which time we can expect all necessary consultation to be complete, and the devolved powers envisaged in the devolution deal to have been conferred on the combined authority and the Mayor. I could regale the Committee with the details of the devolution deal, but I shall not do so, and thus I shall reduce my speaking notes by exactly two and a half pages.

With regard to the judicial review that took place in December, the court ruled that the consultation did not achieve its lawful purpose, as it did not include a question specifically seeking consultees’ views on Chesterfield’s becoming part of the combined authority. Accordingly, before devolution can be fully implemented, the city region is required to undertake a further consultation and submit a summary of the consultation responses to the Secretary of State.

It will then be for the Secretary of State, having regard to those responses, to decide what provision to include in any further order, which, subject to the approval of Parliament, would confer functions on the combined authority and on the Mayor. The order might also, if the Secretary of State considered it appropriate, provide for an expansion of the city region area, which the city region’s leaders are seeking. Once such an order was made, it would be appropriate for the first mayoral election to be held. That is now envisaged, as I have said, for May 2018.

In conclusion, the draft order changes the date of the mayoral election from 4 May 2017 to 3 May 2018 and also sets the first mayoral term for a duration of four years, with the next election in May 2022. The election is being postponed in the expectation that by May 2018, powers and budgets envisaged in the agreed devolution deal can be devolved to the city region, which will have a Mayor who can deliver for local people and help the area to fulfil its long-term ambitions, in line with the negotiated deal.

It is a pleasure to serve under your chairmanship, Mr Paisley.

I do not propose to speak at length. A series of statutory instruments on combined authorities is now coming through to Committee, and I have put it on record that I welcome the move towards further devolution. I feel obliged to repeat that I am concerned about the lack of a framework for devolution in England. While some areas, as the devolution deal has progressed, have managed to negotiate to some degree impressive devolution and investment deals with the Government, other areas have asked what is in it for them. County areas, in particular, where a directly elected Mayor perhaps does not quite fit with local identity, are right to question how they fit into the vision for the future of devolution in England. I welcome any effort to bring forward a framework for devolution for the whole of England.

There has been a bit of talk about the four leaders. We should bear in mind, of course, that Chesterfield and Bassetlaw are both constituent members of the combined authority and, in the spirit of first among equals, we should welcome the work that they have done in the city region area on the combined authority.

We are beginning to see, I suppose, the contradiction that arises with the drawing of quite artificial boundaries in the spirit of trying to put in place combined authority arrangements, when those do not necessarily mirror local community identity. There has of course been a legal challenge from Derbyshire. Let us be honest: the leader of Derbyshire County Council is pro-devolution and believes strongly in the devolution of powers from Westminster to communities, so the challenge was not a weak political point-scoring exercise but a point of principle about the need for future boundaries to mirror local identity and circumstance. I urge the Minister, rather than holding the axe above devolution if the other local areas do not agree, to make far more effort to engage at a local level, to try to work with councils that have legitimate concerns.

If there were a national framework whereby we could see how different areas come together where boundaries are coterminous, maybe Derbyshire could see how it fitted into the wider proposal for that part of England. However, because devolution is incremental by nature at the moment, it is very hard for areas around combined authority arrangements to see how they fit into them.

In the spirit of brevity, I will leave it there and let Members get on with the rest of the day. However, there are some things that the Minister will probably not want to put on record in Hansard, but that would be helpful context for me to understand, shadow effectively and provide scrutiny, challenge and, where required, support for devolution coming to fruition for the whole of England. I place on record my offer to meet outside Committee to have that conversation in more detail.

It is a delight to see you in the chair, Mr Paisley.

Far be it from me to curtail the desperate attempt at brevity, but there are some serious issues here, and it is right that Parliament scrutinises them. I appreciate that the Minister has been offered a packet of Liquorice Allsorts when it comes to the devolution progress under his predecessors. When I was in Cleethorpes on Saturday watching Grimsby Town, I passed through two constituencies in a district, which is apparently in Yorkshire and the Humber, but in fact is proudly and defiantly in Lincolnshire.

In defining these borders and the reason for bringing forward this draft order, does the Minister agree that he has inherited rather a mess and that there needs to be more certainty in local government structures? Too many people are hung up on boundaries created decades, centuries, almost millenniums ago, that do not necessarily fit the modern era. Mr Paisley, I am sure you will remember when the towns of Bawtry and Finningley were usurped and taken out of Nottinghamshire and put into Yorkshire, from Bassetlaw into Doncaster. Bomber command headquarters shifted its loyalties. That was done in 1973 and never properly explained.

Order. This is fascinating, but before we get to the dropping of the bombs, the scope of today’s legislation is the change of date from one year to another and the intervals for subsequent elections. Let us keep to the scope, or we could be here for months.

Mr Paisley, I am doing nothing more than simply outlining logically why the order has had to be brought before us, so that Members can democratically consider whether it is appropriate to pass it or not.

We have had a mishmash of borders. The counties of Derbyshire and Nottinghamshire have two cricket teams and two identities, but are not necessarily economic units. They clash, with the D2N2 local enterprise partnership based primarily in Derby and Nottingham, and they compete—that is the term—with the authorities of South Yorkshire on what the structures should be.

Here is the nub of the issue. We have councillors being asked to give up their powers but we do not have clarity from the Government on what powers ultimately—and “ultimately” may mean before 2020—are going to be handed over. Will the Minister confirm whether health powers, for example, are intended under this Parliament to be given to the combined authority, should it become a city region? If so, does he agree with my proposal that should Bassetlaw and Chesterfield join next year, social care and public health should transfer from local government to the national health service, to be the first place in the country to allow the integration of health services in the way in which, on a cross-party basis, Parliament appears to demand?

Will minerals planning be transferred? In the next three years that will undoubtedly mean decisions on fracking and, indeed, on where the wealth that the Government are adamant comes from fracking will go. Those are not minor issues; they are fundamental to today’s decision, because all the proposals for fracked gas in Nottinghamshire are in Bassetlaw. Should there be a Sheffield city region incorporating Bassetlaw and minerals planning was to transfer to one planning authority, that would be coherent. Has the Minister had an opportunity to read what the city region is saying? Does he agree that its case would be strengthened if it was to incorporate properly the A1 into its transport infrastructure? Currently, it is mysteriously missing.

Finally, Will the Minister confirm that in other parts of the country there are legal disputes over the levels of consultation? Will he outline, with a bit of detail, how we got into this mess whereby Chesterfield appeared to think that it was following instructions from the Government but ended up being judicially reviewed, challenged and defeated in the courts, so progress has been unfortunately and unnecessarily delayed? Will there be other such problems elsewhere in the country? How will he ensure that others do not face that kind of dilemma in the next year?

I am sure that the hon. Gentleman will want to relate all those matters to 2018.

I will start with the comments of the shadow Minister before addressing the many questions from my friend and constituency neighbour, the hon. Member for Bassetlaw, who raised quite a few issues. In answer to the shadow Minister, the reason I did not mention Chesterfield and Bassetlaw when I talked about the four authorities is that they are presently non-constituent members of the city region, so they are not among the four that will make the decisions. That is the same for North East Derbyshire, Derbyshire Dales and, I think, the county, which are also non-constituent members. The purpose of the consultation was to bring Bassetlaw and Chesterfield in as fully constituent members of the Sheffield city region.

The shadow Minister talked a lot about local government boundaries. I think that misses the purpose of devolution. Of course we need the buy-in of the local authorities, but it is not about creating structures based around local government boundaries; the statutory test is whether the geography formed by a devolution deal is a functional economic area, which I think is the point the hon. Member for Bassetlaw made. We need to think not so much in terms of local government boundaries.

The shadow Minister asked for a meeting. I am more than happy to meet to discuss this general area of policy if he so wishes. It is important to have both Front Bench teams in discussions and engaged outside of the back-and-forth of debate in this place. He also mentioned bringing down the axe on the deal. It is not a case of bringing down an axe on any deal. If an area negotiates in good faith with the Government and then walks away from the deal, which is what happened in the case of the north-east, we would have to take that deal off the table and carry on our negotiations and discussions with areas that are engaging with us positively. This is a deal that the Sheffield city region asked for, the four leaders of the constituent councils agreed to it and we plan to take it forward. If leaders in the region walk away from it or look elsewhere, the deal will have to be taken off the table and that would be the end of the matter, which would be very sad for the people of the region, given the nature and scale of the devolution deal agreed.

Turning to the hon. Member for Bassetlaw, I will not talk about an inheritance. Government policy is obviously all conducted through a fair and full process in which there is consistency and absolute clarity at all times. I think that I have dealt with the matter of boundaries. I am always happy to hear about Yorkshire expanding its boundaries, as he made reference to, but the important thing, as he rightly points out in connection with his recent visit passing through the Humber, or northern Lincolnshire, is that the devolution deals are about creating structures around functional economic areas rather than on the old boundaries.

It is also important to place on the record—without prejudging because there is a whole process to go through, regardless of whether Bassetlaw and Chesterfield ultimately join the city region as full constituent members and take part in the elections for the Mayor—that the counties of Derbyshire and Nottinghamshire remain intact. The counties do not disappear and no one is pulling out of a county. The devolution area simply sits above that.

The hon. Gentleman also asked some questions about what is in the devolution deals. That is a matter for the city region. The deal those in the region negotiated with us had provisions to do with transport and planning, but not with health, social care or any other requests. It would be for them to come forward for future iterations of devolution deals to ask for and seek other provisions. We have always made it clear that we have an open mind, but the tests are clear: any devolution must improve the administration of the powers across that geography. We could not agree to anything outside those statutory tests.

The hon. Gentleman asked whether there were other legal disputes about boundaries, and I am not aware of any judicial review proceedings on the boundaries involved in other deals. We are progressing all the other deals through this House at the moment—the shadow Minister and I have sat on many such Committees in recent weeks, with another tomorrow on the Liverpool city region—but with none is there any judicial review of the boundaries. We have made it clear, too, that we remain committed to trying to do a deal for the rest of Yorkshire and for the authorities north of the Tyne, which were pulled out of their deal through no fault of their own but through the behaviour of councils south of the Tyne that resulted in us having to take the deal off the table.

I think that I have responded to the points made. I hope that we can move forward and agree this important order to delay the election.

Question put and agreed to.

Committee rose.

Air Weapons and Licensing (Scotland) Act 2015 (Consequential Provisions) Order 2017

The Committee consisted of the following Members:

Chair: Phil Wilson

† Anderson, Mr David (Blaydon) (Lab)

† Arkless, Richard (Dumfries and Galloway) (SNP)

† Borwick, Victoria (Kensington) (Con)

† Burt, Alistair (North East Bedfordshire) (Con)

† Coyle, Neil (Bermondsey and Old Southwark) (Lab)

Cunningham, Mr Jim (Coventry South) (Lab)

† Dakin, Nic (Scunthorpe) (Lab)

† Ellis, Michael (Deputy Leader of the House of Commons)

Jones, Mr Kevan (North Durham) (Lab)

† Liddell-Grainger, Mr Ian (Bridgwater and West Somerset) (Con)

Lord, Jonathan (Woking) (Con)

† Mak, Mr Alan (Havant) (Con)

† Morris, David (Morecambe and Lunesdale) (Con)

† Opperman, Guy (Lord Commissioner of Her Majesty's Treasury)

† Oswald, Kirsten (East Renfrewshire) (SNP)

Reynolds, Emma (Wolverhampton North East) (Lab)

† Robertson, Mr Laurence (Tewkesbury) (Con)

† Warburton, David (Somerton and Frome) (Con)

Jonathan Whiffing, Lauren Boyer, Committee Clerks

† attended the Committee

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

Raab, Mr Dominic (Esher and Walton) (Con)

Third Delegated Legislation Committee

Tuesday 7 March 2017

[Phil Wilson in the Chair]

Draft Air Weapons and Licensing (Scotland) Act 2015 (Consequential Provisions) Order 2017

I beg to move,

That the Committee has considered the draft Air Weapons and Licensing (Scotland) Act 2015 (Consequential Provisions) Order 2017.

The draft order, which was laid before on the House on 6 February 2017, is made under section 104 of the Scotland Act 1998, which allows for legislative provision that is

“necessary or expedient in consequence of…any Act of the Scottish Parliament”.

The draft order is made in consequence of part 1 of the Air Weapons and Licensing (Scotland) Act 2015, which received Her Majesty’s Assent on 4 August 2015, having been passed by the Scottish Parliament on 25 June 2015.

The 2015 Act gives effect to a provision in section 10 of the Scotland Act 2012 that devolves the power to regulate air weapons in Scotland, within certain limits, to the Scottish Parliament. It introduces a new licensing regime for air weapons to maintain controls over the use, possession, purchase and acquisition of such weapons in Scotland, broadly following the principles and practices of existing firearms legislation across Great Britain. It sets out the air weapons that need to be licensed; allows a fit person to obtain and use an air weapon in a regulated way, without compromising public safety; and sets out appropriate enforcement powers and penalties to deal with any person who contravenes the new regime. It is notable that in advance of the regime coming into force on 31 December 2016, almost 19,000 unwanted air weapons were voluntarily surrendered to the Police Service of Scotland for secure destruction.

The draft order will enable part 1 of the 2015 Act to be implemented in full by making the following consequential amendments to reserved Great Britain legislation, namely the Firearms Act 1968. First, it will make it

“an offence for a pawnbroker to take in pawn an air weapon”

in Scotland and will impose penalties for pawnbrokers who do so. Secondly, it will allow a court in England and Wales, under certain circumstances, to

“cancel any air weapon certificate granted to the person under…the Air Weapons and Licensing (Scotland) Act 2015”,

which will have the effect of extending the court’s existing powers to cancel a firearm certificate or shot gun certificate held by a person who appears before it. Thirdly, it will allow a court in Scotland to

“order…the forfeiture or disposal of any firearm…other than an air weapon…or ammunition found in the…possession”

of a person convicted of an air weapon offence.

Ministers and officials of the UK and Scottish Governments have worked and continue to work together closely to ensure that the draft order will make the necessary amendments to Great Britain legislation in consequence of part 1 of the 2015 Act. It represents the final piece of the jigsaw in the implementation of the new Scottish air weapons licensing regime, which will tighten controls of the use, possession, purchase and acquisition of such weapons in Scotland.

I hope the Committee agrees that the draft order is a sensible and positive use of the powers in the 1998 Act. I commend it to the Committee.

It is a great pleasure to see you in the Chair today, Mr Wilson. I had not realised that you had been elevated to such heights. It is long overdue.

I will not delay the Committee for very long, as we obviously support the order, but I will ask for a couple of clarifications. The maximum penalty for a pawnbroker who takes in an air weapon when they should not is three months’ imprisonment or a level 3 fine. On what basis have the Government come to that decision? Is that sentence enough to be a real deterrent? In my ignorance, I have not got a clue what level 3 means. Will the Minister give us some idea of that?

I welcome the fact that 19,000 weapons have been handed in, but they are obviously the people we should not be worried about. Can the Minister reassure us? When people are ordered to forfeit or dispose of weapons, how is it policed to ensure that that actually happens? Is it possible that, because the pawnbroker is no longer there, there is more chance of an underground black market in air weapons developing? Clearly none of us wants that, so what will be done to ensure that that does not happen? I guess that nobody in this room would argue with the order, but we should remind ourselves that only 12 years ago, a two-year-old was killed in Scotland. That is worth mentioning, because this is serious stuff.

I reiterate what a pleasure it is to appear before you, Mr Wilson, and opposite the hon. Member for Blaydon. In response to his question, a level 3 fine on the standard scale is a maximum of £1,000. The court system operates fines on a scale of 1 to 5, to take account of inflation.

The sentence of three months’ imprisonment would be a maximum. Officials and the relevant parties have considered that that would meet the merits of the offence because it is simply about possession, and there will always be the possibility of other offences in the case of misuse of a weapon.

The destruction of confiscated weapons would be a matter for the courts. I think the normal practice would be for the court to order the forfeiture or confiscation of the weapon, which would be securely destroyed by the authorities in a way that would put the weapon out of use, but if there is any difference in the process, I will write to the hon. Gentleman.

Question put and agreed to.

Committee rose.

Draft Deregulation Act 2015, the Small Business, Enterprise and Employment Act 2015 and the Insolvency (amendment) Act (Northern Ireland) 2016 (Consequential Amendments and Transitional Provisions) Regulations 2017

The Committee consisted of the following Members:

Chair: Mark Pritchard

Austin, Ian (Dudley North) (Lab)

† Barclay, Stephen (Lord Commissioner of Her Majesty's Treasury)

† Benyon, Richard (Newbury) (Con)

† Blackman, Kirsty (Aberdeen North) (SNP)

† Cox, Mr Geoffrey (Torridge and West Devon) (Con)

† Esterson, Bill (Sefton Central) (Lab)

† Field, Mark (Cities of London and Westminster) (Con)

Flello, Robert (Stoke-on-Trent South) (Lab)

† Fysh, Marcus (Yeovil) (Con)

† Ghani, Nusrat (Wealden) (Con)

James, Margot (Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy)

† Kerevan, George (East Lothian) (SNP)

† Leslie, Chris (Nottingham East) (Lab/Co-op)

Lewis, Mr Ivan (Bury South) (Lab)

† Morton, Wendy (Aldridge-Brownhills) (Con)

Raab, Mr Dominic (Esher and Walton) (Con)

† Robinson, Mary (Cheadle) (Con)

† Smith, Jeff (Manchester, Withington) (Lab)

Peter Stam, Committee Clerk

† attended the Committee

Fourth Delegated Legislation Committee

Tuesday 7 March 2017

[Mark Pritchard in the Chair]

Draft Deregulation Act 2015, the Small Business, Enterprise and Employment Act 2015 and the Insolvency (Amendment) Act (Northern Ireland) 2016 (Consequential Amendments and Transitional Provisions) Regulations 2017

I beg to move,

That the Committee has considered the draft Deregulation Act 2015, the Small Business, Enterprise and Employment Act 2015 and the Insolvency (Amendment) Act (Northern Ireland) 2016 (Consequential Amendments and Transitional Provisions) Regulations 2017.

It is a pleasure to serve under your chairmanship, Mr Pritchard.

In 2015, the Government introduced a series of reforms to modernise and streamline the insolvency process. The regulations will amend the relevant special insolvency procedures for financial sector firms to take account of those reforms. The Deregulation Act 2015 separated out the authorisation of insolvency practitioners for personal and corporate insolvency to reduce the cost of training for applicants who wish to specialise. The Small Business, Enterprise and Employment Act 2015 introduced a series of changes to streamline the insolvency process, including allowing liquidators to exercise powers without court permissions and extending the maximum term for an administration. The Insolvency (Amendment) Act (Northern Ireland) 2016 made similar reforms to the insolvency legislation in Northern Ireland.

The purpose of the reforms was to reduce unnecessary regulation and therefore cost, to improve public confidence in insolvency legislation and to make the legislation clearer. The Government carried out extensive consultations before introducing the reforms to the insolvency regime, and there was broad support from the industry.

The regulations will make consequential amendments to the existing modified insolvency regimes for the financial sector. Modified insolvency regimes for the financial sector exist because general insolvency procedure is not always suitable for failed financial institutions. Such regimes apply general insolvency law with modifications designed to address the special nature of some financial institutions. For example, a bespoke bank insolvency procedure tackles the impact of insolvency on financial stability.

The special insolvency procedures for the financial sector are built on general insolvency law, so they now need to be amended to reflect the reforms. The regulations are therefore important to ensure that the benefits of the reforms to general insolvency law are extended to the financial sector. They will also ensure that the modified insolvency regimes for the financial sector are compatible with general insolvency law, thus reducing legal uncertainty. The proposal of the consequential amendments follows discussions with the regulatory authorities and the banking liaison panel.

It is a pleasure to serve under your chairmanship, Mr Pritchard.

I welcome the Whip, who I understand is taking the place of the Under-Secretary of State for Business, Energy and Industrial Strategy, the hon. Member for Stourbridge because she is unable to join us for family reasons in what are sad circumstances. I am sure that he will deputise for her extremely well. He was certainly very brief in his comments. I suspect that I shall be slightly less brief, but here goes.

The Government made some significant changes to insolvency law in 2015 through the Deregulation Act and the Small Business, Enterprise and Employment Act, and in 2016 through the Insolvency (Amendment) Act (Northern Ireland). The Government’s intention in making the changes was to decrease undue regulation and reduce cost. However, the primary legislation that enacted the changes was not applicable to all kinds of financial services, as the Minister said, because such organisations tend to have special insolvency regimes, given their unique position.

The Opposition will not oppose the statutory instrument today, but we have some specific concerns about the provisions, which I hope the Minister will be able to address. The regulations extend section 17 of the Deregulation Act 2015, which made changes to the licensing regime for insolvency practitioners, to financial services. Previously, practitioners were granted an insolvency licence that allowed them to act in relation to both corporate and personal insolvency cases.

My concern is that bankruptcy is very different from corporate insolvency. As some insolvency practitioners have pointed out, if someone acts only on bankruptcy, how can they understand corporate insolvency? Likewise, if someone has been doing corporate insolvencies all their life, how can they understand adequately what is involved for a sole trader or a partnership, or for personal bankruptcy as a whole? I would be interested to hear the Minister’s analysis of that point.

A question was asked in the Deregulation Public Bill Committee about the impact on the quality of professional work of requiring practitioners to pass only one part of the insolvency exams. It is an extremely rigorous set of qualifications. I worked for an insolvency practitioner a very long time ago, and the qualified insolvency practitioners in the firm generally came from a cohort of which only 2% passed the professional exams, such are the high standards in the profession. There has been great concern about the impact of these changes on the profession.

Similarly, the Opposition had serious concerns about section 118 of the Small Business, Enterprise and Employment Act 2015, which is also extended to financial services through this statutory instrument. That section amended the Insolvency Act 1986 to allow a liquidator or administrator to assign causes of action that arise on a company going into liquidation or administration. Opposition Members said of the section:

“This clause would allow the office holder to assign not only the right of action but the proceeds of such action. By ensuring that the purchaser would stand to gain fully from potential benefits arising from the action, alongside bearing all the risk and cost of pursuing the claim, the Government are assuming that a clear incentive will be created to pursue more wrongdoers. The clause may well deliver in that regard. However, there may be other, unintended consequences.”––[Official Report, Small Business, Enterprise and Employment Public Bill Committee, 4 November 2014; c. 445.]

I would be grateful if the Minister gave us examples of how the section has been implemented thus far to help us understand its extension to financial services.

The statutory instrument includes measures to support unsecured creditors, but may I ask about the impact on staff? Staff are ring-fenced in insolvency proceedings and have been for some time, but there is a limit to how much money is recovered for redundancy payments during insolvencies. We have seen that in high-profile examples, such as BHS and Comet. I had a Comet store in my constituency, so I know how much money staff members were still owed after the Government-backed scheme was exhausted. Will the changes to the support for unsecured creditors make any difference in helping staff to recover the excess amounts not covered by the Government schemes, or is this just a more general set of changes for unsecured creditors?

Similarly, there is the opportunity for administrators to take action against directors for fraudulent or wrongful trading. Will the Minister give us examples of where the provisions that have already been approved outside financial services have been applied? That will indicate whether there will be successful additional action when they apply to financial services.

I mentioned two high-profile cases, but there are a number of others. There is great concern inside and outside Parliament about the actions of some directors. Philip Green is a notable example; we are all familiar with his having agreed a sum of £363 million out of a £571 million pension shortfall. Is that an example, or are there other examples, of where the changes in regulations will enable action to be taken against directors to ensure that they act in the way that most people would expect them to? Do the terms “fraudulent or wrongful trading” cover those sorts of examples? Can we be given some assurance that the changes, which the Opposition broadly welcomed when the original legislation was passed, have started to create the intended improvements and have been helpful in supporting creditors and ensuring that directors take a more responsible attitude to business?

With those remarks and questions, I am happy to say that we broadly support the changes that have been introduced. We were pleased that the Government introduced them at the time. Having put our concerns on record, I look forward to the answers. We will not oppose the regulations.

Of course, this is Parliament and I want to encourage as full a debate as possible, but for the guidance of Members, we are expecting a series of votes in about nine or 10 minutes.

I am grateful to the hon. Member for Sefton Central for his broad support for the regulations, which essentially focus on tidying up measures relating to the financial services sector. He referred to Philip Green. The focus of the regulations is to target not the retail sector as a whole, but the financial sector specifically.

The hon. Gentleman raised a number of points. In the absence of the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend the Member for Stourbridge, I will answer them as best I can. First, he referred to section 17 of the Deregulation Act 2015 and the difference between bankruptcy and corporate insolvency. He asked whether those who are trained to act on one will understand the other. The key point is that we intend that there will be a general paper, and that people can specialise within that. We are separating out the authorisations to allow insolvency practitioners to specialise in one or the other, but there will still be an initial general paper covering both.

I am happy to write to the hon. Gentleman to provide clarification and further detail on his points about fraudulent or wrongful activity and the extension to financial services. The key point to make to the Committee is that we have had a much wider debate on the changes that are being made to insolvency, and I do not want to revisit that wider debate today. We are here to debate the specific impact on financial stability and how we amend the legislation to fit with those wider reforms.

The hon. Gentleman asked about the impact on staff and the extent to which we ring-fence for insolvency procedures. He mentioned the Comet case specifically, which I know caused numerous concerns. The reforms are intended to benefit creditors by removing red tape. Therefore, as far as insolvency procedures are concerned, staff are often creditors and will benefit from the reforms. I hope that that reassures him that where instances like Comet arise in future, there will be some benefits from this exercise.

I am grateful to the Committee for its consideration—

The Minister kindly offered to write to me on one matter. Perhaps when he does, he could flesh out some of the other points a little more. In particular, can he give details of how staff will benefit, rather than the more general point that he just made? I appreciate that he is probably not in a position to tell me that in detail now, so perhaps that will be an opportunity to address the point more fully.

I am happy to provide the hon. Gentleman with a much fuller example, and I commit to writing to him on that basis.

Subject to there being no further comments from Members, I am very grateful to the Committee for its consideration of the regulations today and for the points that have been made. In summary, the regulations make consequential amendments to the special insolvency procedures for financial sector firms to take account of the reforms that we have discussed. I ask the Committee to support the changes.

Question put and agreed to.

Committee rose.