Delegated Legislation Committee
Draft Double Taxation Relief and International Tax Enforcement (Belarus) Order 2018 Draft Double Taxation Relief and International Tax Enforcement (Ukraine) Order 2018
The Committee consisted of the following Members:
Chair: Mr Laurence Robertson
† Afriyie, Adam (Windsor) (Con)
† Blunt, Crispin (Reigate) (Con)
Bryant, Chris (Rhondda) (Lab)
† Dodds, Anneliese (Oxford East) (Lab/Co-op)
Lammy, Mr David (Tottenham) (Lab)
† Lamont, John (Berwickshire, Roxburgh and Selkirk) (Con)
Mahmood, Shabana (Birmingham, Ladywood) (Lab)
† Mann, Scott (North Cornwall) (Con)
† Morris, Anne Marie (Newton Abbot) (Con)
† Sheerman, Mr Barry (Huddersfield) (Lab/Co-op)
† Smith, Jeff (Manchester, Withington) (Lab)
† Stride, Mel (Financial Secretary to the Treasury)
† Thewliss, Alison (Glasgow Central) (SNP)
† Vickers, Martin (Cleethorpes) (Con)
† Walker, Thelma (Colne Valley) (Lab)
† Whittaker, Craig (Lord Commissioner of Her Majesty's Treasury)
† Whittingdale, Mr John (Maldon) (Con)
Laura-Jane Tiley, Committee Clerk
† attended the Committee
First Delegated Legislation Committee
Monday 4 June 2018
[Mr Laurence Robertson in the Chair]
Draft Double Taxation Relief and International Tax Enforcement (Belarus) Order 2018
I call the Minister to move the first motion and to speak to both orders. At the end of the debate, I will ask him to move the second motion formally.
I beg to move,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Belarus) Order 2018.
With this it will be convenient to consider the draft Double Taxation Relief and International Tax Enforcement (Ukraine) Order 2018.
Mr Robertson, it is a pleasure to serve under your chairmanship for, I think, the first time. It is nice to be able to do that, and it is also nice to be in the presence of my right hon. Friend the Member for Maldon, who is the chair of the all-party parliamentary groups on Belarus and on Ukraine. I know he has important matters that he wants to discuss with the Committee imminently.
I will speak to both orders before the Committee. The first gives effect to a first-time double taxation agreement with Belarus, and the second contains a protocol amending our existing agreement with Ukraine. DTAs remove barriers to international trade and investment and provide a clear and fair framework for taxing businesses that trade across borders. In doing so, they benefit business and the economies of the countries signed up to them.
I will briefly say a few words about each agreement. Belarus is the last country still applying the UK’s 1985 double taxation agreement with the former Soviet Union. When it enters into force, the new DTA will effectively terminate that old agreement. The new DTA with Belarus will mean that the UK has bilateral DTAs with all the countries that once made up the USSR. The USSR agreement provided for broad exemptions from source-state taxation. Belarus takes a different approach to its bilateral DTAs, seeking to preserve taxing rights in respect of dividends, interest and royalty payments that arise there. While the UK takes a different approach, we recognise that states will want to renegotiate treaties to reflect their own circumstances, and nothing would be gained by refusing to engage with Belarus’s wish to replace the USSR DTA.
The new agreement compares favourably with those that Belarus has agreed with other countries since its independence. For example, we have agreed a withholding tax rate of 5% on dividends, while preserving our right to tax dividends from real estate investment trusts at 15%. We have agreed a 5% withholding tax rate on interest, but with an important exemption for lending by banks. The agreement also contains the most up-to-date provisions to guard against treaty abuse, the latest OECD exchange of information article, and a provision for mutual assistance in the collection of tax debts. Those features strengthen both countries’ defences against taxation avoidance and evasion.
The protocol with Ukraine amends our existing 1993 DTA. We entered into negotiations at Ukraine’s request, as part of an exercise it is undertaking to amend its treaties with a number of European partners. The agreements that Ukraine entered into shortly after independence provided for broad exemptions from source-state taxation. It wishes to change that to enable it to tax interest and royalties arising in Ukraine and to raise the rate at which portfolio dividends can be taxed. Ukraine has chosen to do that on a consistent basis across its network as it seeks to reset its position. As such, United Kingdom businesses will not be disadvantaged as compared to their competitors in other jurisdictions.
The new protocol also improves the position of UK businesses in receipt of dividends from Ukrainian subsidiaries. Currently, the provision requires a company to be subject to tax on dividends it receives, while dividends in the United Kingdom are no longer taxable following the introduction of a corporate dividend exemption regime in 2009. The protocol also provides for a more general modernisation of the DTA to reflect changes in the domestic laws of the two states and the OECD model, including substantially all the provisions included in the multilateral convention to implement tax treaty-related measures to prevent base erosion and profit shifting, or the MLI.
In summary, these are agreements that the UK, Belarus and Ukraine should be happy with. They will provide a stable framework in which trade and investment between the UK and Belarus, and the UK and Ukraine, can continue to flourish.
It is a pleasure to serve with you in the Chair, Mr Robertson. It was very helpful to have the Minister’s explanation of the two orders. It would also be helpful if we could have some of this information in advance—in the notes that are produced alongside orders—because the Minister just answered some of the questions that came to my mind when I looked at the orders. It would be useful if the Government were a little fuller in their introductions to these kinds of order when they are presented to the House.
My first question relates to the overall structure for these kinds of protocol. I expect a number of other protocols will come now that we have agreement on the model tax convention—the OECD instrument that we discussed at length in the House. In November 2015, Her Majesty’s Revenue and Customs published its programme for future negotiations on double tax agreements. That mentioned some of the tax agreements that we have had the pleasure of discussing, but not all of them. It would be helpful to know when HMRC will produce its forward plan, so that the whole House, or at least the Members interested in this area, can scrutinise it.
It was helpful to have the Minister’s explanation on some aspects of the Belarusian agreement. The Belarus economy is quite different from that of neighbouring countries, because of the larger extent of state ownership than in many other nations, and that is reflected in the character of the agreement. However, I have a question about the rules on permanent establishment—a topic that comes up frequently in double tax agreements. Different nations and their companies have often attempted to ensure that profit is taxed in their jurisdiction or not taxed at all, rather than in the area where it is generated. In the Belarus agreement there is a temporal threshold of 12 months to determine the permanent establishment for construction sites. Why was that inserted? I cannot remember that exact threshold from previous discussions, but perhaps the Minister will enlighten us.
Again, I am grateful for the Minister’s explanatory remarks on the Ukraine agreement. The amending protocol was signed by both nations on 9 October. It has been quite a long time between it being signed and it coming in front of the House. It would be helpful to know why it has taken more than six months for it to come to Parliament. There may be legitimate reasons for that, but the process of making these agreements is something of a black box for many parliamentarians. Perhaps that issue is not for this moment, but in future the Government could be open about what the process is between an amending protocol being signed and it coming in front of us. It would be useful to have that information.
The Minister stated that most of the changes in the amending protocol are consistent with the OECD’s model approach. They seem to simplify a situation where, from what I could see, many transactions were exempted from withholding tax. Instead, a reduced rate of tax is now applied more generically across different activities—royalties, for example—which seems sensible.
The Minister answered my question about why withholding tax rates have gone up to 15%, having previously been 10% for dividends where there is not a very large beneficial holding in the paying entity. However, again, it would be useful if, with these agreements, we could have a little more information about these topics so that, as a House, we are not scrabbling around before we come to these Committees, trying to work out why certain decisions have been taken.
Many of my questions have already been asked by the hon. Member for Oxford East, which is great. Obviously, the Scottish National party welcomes both treaties. I very much echo the point the hon. Lady made about getting more information on the process behind them ahead of time. I asked in the Library, but it was not able to provide something at such short notice. It would be useful to have more narrative information in advance of these Committees so that we are well versed on what is happening.
It would be useful to get a better understanding, as the hon. Member for Oxford East mentioned, of the forward plan and of the timescale of these treaties. As she mentioned, it was October for Ukraine, and it was September for Belarus—the agreement was signed on 26 September—so it would be useful to know the Government’s timescale for future agreements. Where are they at the moment? When are they likely to be signed off and to come to the House? We want a clear idea of when they are coming, so that we can prepare adequately for them and engage with all-party groups that may have interest in talking about such things, so that they, too, are well prepared.
That is about all the information that I was seeking. It is interesting that it has taken this long to get to a treaty to replace the USSR one—it must have been an interesting, as well as long, process to get from that point to now—so it would be useful to know the Government’s timescales. Some of the African double taxation treaties have issues as well, because of references to countries that have not existed for quite some time. It would be useful to see the detail of anything that the Government are preparing, so that we can see who the agreements are with and perhaps prioritise those that might be overdue for being looked at.
I apologise to colleagues for delaying our proceedings, but I promise not to do so for too long. As the Minister pointed out, I am honoured to be chair of the all-party parliamentary groups on Belarus and on Ukraine, so I wanted to say a brief word about both those countries.
Last week, as it happens, I led a cross-party delegation to Minsk, in Belarus. I thank the Government of Belarus for their invitation and their hospitality during that time. Belarus is of course close to Russia. It is a member of the Eurasian customs union, and we should be under no illusion that it is likely to continue to be a close ally of Russia’s. Nevertheless, there are signs that it wishes to improve its relationship with the west, and one of the areas in which it can certainly do so is trade.
In 2015, according to the Foreign Office, the value of UK trade to Belarus was $214 million. The value of Belarusian exports to the UK was $3.2 million, making the UK the country’s second largest export market after Russia. Belarus has considerable potential, though both Belarus and Ukraine have considerable challenges as countries. Both offer us potential as trading partners. Politically, Belarus has a long way to go—in essence, it is a one-party state still—but it enjoys considerable growth and has major economic opportunities for us.
I shall not go through the list of all the various enterprises that my colleagues and I visited, but I shall highlight two. We visited Belaz, the biggest dump truck manufacturer in the world—the biggest in terms of not just numbers, but the size of the trucks, which were about the size of a house. The hon. Member for Oxford East talked about most—indeed, almost all—of the major enterprises being state owned. That is correct, but it was interesting to discover that the Belaz plant is considering an initial public offering to sell about 25% of the shares in the near future. A privatisation programme is under way.
The other enterprises that we visited were in the Hi Tech Park, which is the home of Viber, which many Members will know but may not realise is a Belarusian invention, and World of Tanks, which is one of the biggest electronic games in the world. Furthermore, by coincidence, I have a constituent in the IT industry who employs software engineers from Belarus to develop his products, so there are considerable opportunities for us in that country. I therefore welcome the agreement as a small measure that will, as the explanatory memorandum states, strengthen and
“promote international trade and investment.”
I shall say a few words about Ukraine too. Ukraine is different from Belarus; Ukraine is much more westward-looking. It has signed the association agreement with the European Union, and a deep and comprehensive free trade agreement. Plainly, therefore, it has a considerable wish to develop economic relations with the west and particularly with the UK.
Ukraine is beset with different problems. Part of the country is under Russian occupation, and that includes the major industrial areas in Donbass, which I visited last year with three of my parliamentary colleagues. Corruption is also is endemic from top to bottom. However, Ukraine is making progress towards reform. The anti-corruption court will—I hope—be established soon, and if we can gain greater confidence in the justice and enforcement system in that country, that, too, should promote economic opportunity.
The great potential in Ukraine is agriculture. The west of Ukraine has something like a third of the world’s black soil reserves. It used to be known as the breadbasket of the Soviet Union and, if it receives the support it needs in terms of modern technology and farming practices, it could become the breadbasket for most of Europe. Again, I hope that these arrangements to counter double taxation will provide businesses with greater confidence to invest in Ukraine and indeed Belarus.
The only other point I will leave the Minister with is not for his Department, but perhaps he can pass it on. The Department for International Trade is rightly looking to develop our trade with countries outside the European Union, and as a supporter of Brexit I strongly believe in the opportunities that exist. However, we seem to be devoting a lot of effort to signing trade agreements with small Commonwealth islands. Important as they may be, they are small in potential compared with two big countries such as Ukraine and Belarus, and very little attention is being given to those two countries. I have talked to the ambassadors in both countries, and there is a view that we could be doing much more to develop trade relations. I certainly intend to take that thought up with the Minister’s colleagues in the Department for International Trade. He is playing his part through these international agreements on taxation, but we could be doing much more now to assist those countries to reform and develop their economies, and also to benefit our own businesses. On that note, I shall say no more.
I thank the three contributors to this important debate. I turn to the matters raised by the hon. Member for Oxford East, some of which were in unison with those raised by the hon. Member for Glasgow Central. First, on the information provided in advance, I would be happy to take a representation from the hon. Ladies on the specific points that it might have been useful to have had included and perhaps use that as the starting point for considering the more general point they both made. It is probably worth pointing out that when we know that such legislation is coming forward, I am always happy to take any questions by way of letter or to meet and discuss the legislation in advance.
I will certainly look into HMRC and its forward programme, as it was described. I am not aware, certainly within my part of the Treasury, of there being a particular list of such matters that are coming forward. Of course, such things are always subject to the timetabling of the business of the House of Commons, as Members will know.
In the context of Belarus, the hon. Member for Oxford East raised the permanent establishment arrangements around the temporal threshold—the 12 months—in respect of construction sites, and she asked the perfectly reasonable question of why that was the case. I am informed that it is a standard OECD-based rule. [Interruption.] She is looking at me slightly quizzically, which is perfectly in order. If she would like some more information, I am very happy to dig a little deeper on her behalf outside the Committee.
There are a couple of points on the timing of the orders and why it has taken quite a considerable time for them to come before the Committee. We have now negotiated DTAs with all of the Soviet successor states. We negotiated with Belarus in 1995 and in 2011, but the political situation and EU sanctions meant that things stalled. The situation has now improved, so we have successfully renewed our efforts. Ukraine has not yet ratified the treaty, so the fact that there may have been a delay between the protocol and the order—hopefully—going through this afternoon should not have any impact.
I turn to the valuable contribution from my right hon. Friend the Member for Maldon, who shared with us his detailed experience of both Belarus and Ukraine. I entirely agree with him about the importance of developing relationships with Belarus for the reasons he gave—the geopolitical reason of its particular leaning towards Russia, and the value of trade with our country in building relationships and encouraging things such as privatisation. I also agree with the important points he made about Ukraine. On corruption, one of the benefits of double taxation agreements is that there are specific measures in place to ensure that we can exchange information on tax matters, wherein a lot of corruption often lies. That is a positive aspect to his point.
My right hon. Friend finished by rightly raising the need, post Brexit, to increase trade with Ukraine and Belarus, and with other, similar countries. Thankfully, as he suggested, that is not a matter for me but for Ministers in the Department for International Trade, where I know he will make representations.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Belarus) Order 2018.
DRAFT DOUBLE TAXATION RELIEF AND INTERNATIONAL TAX ENFORCEMENT (UKRAINE) ORDER 2018
Resolved,
That the Committee has considered the draft Double Taxation Relief and International Tax Enforcement (Ukraine) Order 2018.—(Mel Stride.)
Committee rose.
Draft Scotland Act 2016 and Wales Act 2017 (Onshore Petroleum) (Consequential Amendments) Regulations 2018
The Committee consisted of the following Members:
Chair: Sir Henry Bellingham
† Allan, Lucy (Telford) (Con)
† Blackman, Bob (Harrow East) (Con)
† Charalambous, Bambos (Enfield, Southgate) (Lab)
Clwyd, Ann (Cynon Valley) (Lab)
† Crabb, Stephen (Preseli Pembrokeshire) (Con)
† Doughty, Stephen (Cardiff South and Penarth) (Lab/Co-op)
† Duguid, David (Banff and Buchan) (Con)
Gaffney, Hugh (Coatbridge, Chryston and Bellshill) (Lab)
† Grady, Patrick (Glasgow North) (SNP)
† Harris, Rebecca (Lord Commissioner of Her Majesty's Treasury)
† Jack, Mr Alister (Dumfries and Galloway) (Con)
† Lucas, Ian C. (Wrexham) (Lab)
† Perry, Claire (Minister for Energy and Clean Growth)
† Robinson, Mary (Cheadle) (Con)
† Smith, Nick (Blaenau Gwent) (Lab)
† Thomas, Derek (St Ives) (Con)
† Whitehead, Dr Alan (Southampton, Test) (Lab)
Sarah Rees, Committee Clerk
† attended the Committee
Second Delegated Legislation Committee
Monday 4 June 2018
[Sir Henry Bellingham in the Chair]
Draft Scotland Act 2016 and Wales Act 2017 (Onshore Petroleum) (Consequential Amendments) Regulations 2018
I beg to move,
That the Committee has considered the draft Scotland Act 2016 and Wales Act 2017 (Onshore Petroleum) (Consequential Amendments) Regulations 2018.
It is a genuine pleasure to serve under your chairmanship, Sir Henry. The draft regulations, which are part of a series of regulations that we have been bringing forward to fulfil commitments under the Smith and Silk commissions agreements, the Scotland Act 2016 and the Wales Act 2017, provide for the devolution of onshore oil and gas licensing to the Scottish and Welsh Governments.
This debate focuses on the devolution of section 45A of the Petroleum Act 1998 to the Governments of Scotland and Wales. That section provides assurances to the relevant authority that the relevant person will be able to plug and abandon a well or otherwise provide the funds necessary for that to be done. As such, the section is a key part of the licensing regime and needs to be devolved so that Ministers in the devolved Administrations can ensure that all licence obligations can be met as appropriate when wells are decommissioned.
When they have been fully commenced, the Scotland Act 2016 and the Wales Act 2017 will transfer legislative competence for onshore petroleum to the Scottish and Welsh Governments, with the exception of matters relating to the setting and collecting of licence rentals. The Acts also include provisions for Scottish and Welsh Ministers to exercise powers currently held by the Secretary of State or the Oil and Gas Authority in relation to onshore licensing in Scotland and Wales.
In February, we commenced sections 47 and 48 of the Scotland Act 2016, which transferred the existing UK onshore licensing regime as it applied in Scotland to Scottish Ministers. That provided Scottish Ministers with powers to administer the existing onshore oil and gas licensing regime in Scotland and to create a bespoke licensing regime if they wish. We have laid two statutory instruments to implement the relevant powers in the Scotland Act—affirmative regulations to make consequential amendments to taxation legislation, and negative regulations to make consequential amendments to the licensing regime.
Welsh Ministers and the Secretary of State for Wales have agreed that provisions that enable Welsh Ministers to administer the existing onshore oil and gas licensing regime in Wales, or to create a bespoke regime if they desire, will commence on 1 October. We intend to lay the negative regulations necessary to deliver that in early September.
I turn to the detail of these affirmative regulations. As I said, the draft SI will make amendments to section 45A of the Petroleum Act 1998 consequential to the devolution of onshore petroleum licensing functions to Scottish Ministers under section 48 of the Scotland Act 2016, and to Welsh Ministers under section 23 of the Wales Act 2017. We are debating not the ins and outs of onshore shale gas extraction, for example, but simply a set of consequential amendments to Acts of Parliament that we have already consulted on and passed. Those consequential amendments reflect the role of Scottish Ministers as the licensing authority in Scotland, and allow the licensing regime to work as intended in relation to onshore areas in Scotland. They also provide for the position both before and after commencement of the Wales Act 2017, which makes equivalent provision for devolution of onshore oil and gas licensing to Wales.
As I set out, section 45A gives the relevant authority the power to issue a notice requiring a responsible person, once they have begun drilling a well, to provide information regarding their financial affairs. If the relevant authority is not satisfied with the financial information that is submitted, section 45A allows it to issue a notice requiring the relevant person to take the action set out in the notice. Such a notice may include, for example, a requirement to provide security to the relevant authority to ensure that the costs of plugging and abandoning the well are covered. Although that power has not to date been used onshore, we consider that it can apply onshore and therefore that section 45A forms part of the regime that should be transferred. We intend to transfer the section 45A powers to Ministers in Scotland and Wales for their respective territories, using powers to make consequential amendments under the aforesaid Scotland Act and Wales Act.
There might be a question about timing. This affirmative SI could be laid in Parliament only after the Wales Bill received Royal Assent in January 2017, as it makes amendments that anticipate amendments made by the Wales Act 2017. A negative SI will follow these affirmative regulations to make consequential amendments to the onshore licensing regime in Wales.
Transferring powers from the UK Administration to a devolved Administration does not count as a regulatory provision, and therefore—in case hon. Members are wondering—there is no requirement for a regulatory impact assessment. Also, as these are consequential amendments to the Scotland Act and the Wales Act, which were consulted on separately, no specific consultation is required on these technical amendments.
The regulations are part of the transfer of competencies for onshore oil and gas resources to the devolved Administrations, complementing the provisions of the Scotland Act and the Wales Act. They simply make minor amendments to legislation governing the oil and gas licensing regime to ensure that there is a smooth devolution of powers for licensing. They are an important step towards delivering a recommendation of the Smith and Silk commissions agreements.
It is a pleasure to serve under your chairmanship, Sir Henry. For the purposes of our debate, the Minister has done all the heavy lifting and explained in some detail and with great clarity what the statutory instrument before us concerns. As she set out, essentially it concerns the completion—I think it is fair to say—of a number of steps to devolve authority to the Scottish Government in particular for licensing onshore petroleum activities. Of course, it also completes the process of devolving such responsibility to the Welsh Government in principle, except we have not done the first bit: undertaking the devolution of authority to the Welsh Government. Presumably we will have to catch up with that at some stage. I see there is a provision in the regulations for those two elements to come together at the point at which it has been agreed that the Welsh Government will have responsibility for licensing onshore within Wales, as defined by the legislation.
The process is admirably straightforward, following from what was in legislation previously and trying to bring all the processes together. The notes are all there. However, as Morecambe and Wise once said, they are
“not necessarily in the right order.”
There is an issue about what happens now with the Welsh provisions. The Minister might want to say a few words about her Department’s intentions on laying provisions for Wales to complete the picture—albeit in the wrong order.
As far as Scotland is concerned, the provisions are in the right order. Essentially we are discussing the process, following the devolution of licensing authority, to ensure that the Scottish Government have the ability, currently in the purview of the Oil and Gas Authority, to require financial assurances to be given about the ability of a company engaged in onshore petroleum activities to clear up after itself: to cap and decommission wells that it may have drilled. As the Minister says, tempting though it is to think about the Scottish Government and onshore gas and oil exploration, fracking and so on, that is not, essentially, what the statutory instrument is about. It is about putting into order what is done, as far as the Scottish Government in particular are concerned.
There may, however, be a need to clarify one area of the statutory instrument, in addition to what the Minister has mentioned this afternoon: the extent to which the devolution to the Scottish Government really means onshore petroleum. The draft regulations include a provision that the competence of the devolved Administration will relate to the Scottish onshore area, which the explanatory memorandum states is
“the area of Scotland that is within the baselines established by any Order in Council under section 1(1)(b) of the Territorial Sea Act 1987 (c.49) and The Wales Act 2017”
which
“devolved onshore petroleum licensing to Welsh Ministers in respect of the Welsh onshore area (the area of Wales that is within such baselines).”
The Territorial Sea Act 1987 states that
“the breadth of the territorial sea adjacent to the United Kingdom shall for all purposes be 12 nautical miles”.
Therefore, a regime would be in place that devolved not only onshore petroleum activity but, to a limited extent, offshore petroleum activity, to the Scottish Government. What happens outside the 12-mile zone and up to the 200-mile limit of course remains a reserved matter, and is the responsibility of the Oil and Gas Authority, but there could be circumstances in which a proposal for what is essentially offshore activity would be taken under onshore petroleum legislation.
There might be something 11.5 miles offshore. By the way, the 1987 Act handily defines a nautical mile as 1,852 metres, so an offshore installation could be 12 times 1,800 metres offshore and be the responsibility of the Scottish Government. Slightly outside that, it would be the responsibility of the OGA. How will those two authorities work together in the circumstances to ensure that what is done is done properly, with respect to something that to all intents and purposes is offshore, but which the legislation effectively defines as onshore? Does the Minister have any reflections on that point, or are there legislative provisions that I have not seen, specifying that the shoreline and not the territorial sea limit is meant?
Finally, I would like brief clarification on one point. I assume that the draft regulations are the final brick in the arch and that there is nothing more to come, other than to put right the devolution to Wales to match the regulations before the Committee. I assume that the Minister will be able to confirm that. I want that clarification to make sure we have really finished the business that we set out to do under previous measures and the measure before the Committee today.
It is a pleasure to serve under your chairmanship, Sir Henry.
The Scottish National party is happy to support the statutory instrument. We are always happy to support the devolution of more powers to the Scottish Parliament. As the Minister said, the draft regulations help to implement the agreement undertaken as part of the Smith commission, which some saw as the fulfilment of the vow that was made during the independence referendum, although we read in the papers today that not everyone thought the vow was such a good idea. They relate to onshore oil and gas extraction and, although they are not explicitly related to unconventional extraction, it is worth putting on the record that both the Scottish Government and the Scottish Parliament have made their position very clear. We oppose the development of unconventional oil and gas in Scotland. If any of the consequences of these draft regulations help to deliver that, that will be well received by the Government, the Parliament and the population as a whole.
I appreciate, as the Minister says, that they are largely technical and consequential amendments. We welcome the moves to bring them forward. I echo the Labour spokesperson’s comments about when and how they will be applied to Wales. We are always very happy to support enhanced powers for the Welsh Assembly. It is nice to find a bit of consensus for once.
As always, we have managed to have an interesting canter even through what looks like the driest of technical amendments. I want to try to answer some of the questions. I also thank Committee members for their support.
The hon. Member for Southampton, Test asked when the transfer to Welsh Ministers will be complete. That was a point of negotiation and agreement. The Wales Act 2017 provisions will commence on 1 October 2018. He asked if this was the final brick in the wall of the legislation; it is the last piece for Scotland, but there will be one additional statutory instrument for Wales.
I am sorry, but I thought the Minister was finishing her comments about bringing together the various pieces of secondary legislation relating to Wales with the commencement of the Act, but I assume she has something to say about an additional negative instrument that is to come.
I am happy to clarify. The Wales Act 2017 provisions overall commence on 1 October 2018. I have been informed that there is one additional statutory instrument for Wales. I assume we will have to detain our colleagues one more time to ensure we have all the relevant pieces of legislation in order for the Wales Act to commence. I am looking forward to a final conversation about that. Clearly, it is right to ensure that we have the correct licensing provision flowing to the devolved Administrations, to fulfil the commitments made with our various commissions.
The hon. Gentleman asked a series of questions about what was on and offshore. I am happy to write to him to clarify further. I am told that the Territorial Sea Act sets baselines and that within 12 nautical miles is regarded as onshore.[Official Report, 19 June 2018, Vol. 643,c. 1MC.] Outside that is territorial sea. We are transferring functions only in the onshore areas. He will ask what happens if there is a field that straddles both; I assume that there will be joint responsibility. We may have to debate that at a later date. If he is not satisfied with that answer, I am happy to go away and see if there is more information that I might be able to give him.
I cannot read what has been passed to me by my officials, so we will have to leave it there, unless the hon. Gentleman has any further questions. If not, I commend the regulations to the Committee.
Question put and agreed to.
Committee rose.