Tuesday 23 February 2021
Withdrawal Agreement Joint Committee Meeting
The next meeting of the Withdrawal Agreement Joint Committee will take place on 24 February 2021, by video conference, hosted by the UK.
The meeting will be co-chaired by the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office, the right hon. Member for Surrey Heath (Michael Gove), and Vice President of the European Commission, Maraš Šefčovič.
The agenda will include four items:
Introduction and opening remarks from co-chairs
Stocktake of specialised Committee activity
Update on withdrawal agreement implementation since the end of the transition period
Ireland/Northern Ireland protocol
The UK delegation will include:
Chancellor of the Duchy of Lancaster, right hon. Michael Gove MP
The Paymaster General, right hon. Penny Mordaunt MP
Representatives from the Northern Ireland Executive have been invited to form part of the UK delegation.
UK-EU Trade and Co-operation Agreement: Provisional Application
Today the UK-EU Partnership Council has agreed to extend the date on which provisional application of the Trade and Co-operation Agreement (TCA) will cease from 28 February 2021 to 30 April 2021.
The decision was taken by written procedure: the EU co-chair of the Partnership Council, Vice- President Maraš Šefčovič, proposed extension by letter on Friday 19 February, and the current UK co-chair, the Chancellor of the Duchy of Lancaster, agreed to this proposal today, 23 February. This exchange of letters formalises the adoption of the decision. Copies of the letters and the draft decision have been published on www.gov.uk.
Provisionally applying the TCA was not the UK’s preferred outcome in the first place, given the uncertainty it creates for businesses, individuals and the parties. The extension of provisional application prolongs that uncertainty and it is disappointing that the EU did not complete its internal procedures in the timeframe set out in the TCA. We expect the EU to meet the new timeline.
Foreign, Commonwealth and Development Office
GuarantCo: Callable Capital Agreement
It is normal practice, when a Government Department proposes to undertake a contingent liability in excess of £300,000 for which there is no specific statutory authority, for the Minister concerned to present a departmental minute to Parliament giving particulars of the liability created and explaining the circumstances; and to refrain from incurring the liability until 14 parliamentary sitting days after the issue of the statement, except in cases of special urgency.
I have today laid a departmental minute outlining details of a new liability of up to £90 million which FCDO has undertaken in respect of the Private Infrastructure Development Group (PIDG). This £90 million increase will be added to the existing liability of £40 million for PIDG which has been in place since 2016, creating a total liability of £130 million.
GuarantCo was established in 2003 as an investment facility of PIDG. PIDG encourages and mobilises private investment in infrastructure in the frontier markets of sub-Saharan Africa and south and south-east Asia. PIDG makes it viable for private investors to participate in infrastructure deals, using limited sums from its publicly funded trust to crowd-in many times that value in private capital. The UK has committed over £1 billion to PIDG since 2002 alongside other donors. This has collectively leveraged over £26 billion in investment from the private sector and partner international and development finance institutions.
PIDG supports private investment throughout the project development cycle from its earliest stages, through a number of separate facilities or companies. GuarantCo supports local currency lending for infrastructure projects in developing countries by providing guarantees to banks and bond investors. This helps to reduce the risks to borrowers of borrowing in hard currency for projects that earn revenues locally, while reducing the risks to lenders to enable them to finance projects in developing countries. In this way, it helps to promote domestic infrastructure financing and self-sustaining capital market development in low and lower-middle income countries.
GuarantCo’s business model requires it to demonstrate the capacity to honour guarantees for transactions it is discussing with counterparties. GuarantCo expects to have only a minimal number of defaulting projects. However, it needs to have a legally solid call on sufficient capital for it to pay out against called guarantees.
Until 2016, the UK supported GuarantCo through paid-in capital. To ensure better value for money for UK taxpayer funding, the UK entered into an arrangement with GuarantCo in 2016 to provide support in the form of unfunded, callable equity—capital. It is this arrangement which FCDO is now proposing to amend, increasing the callable capital to a total of £130 million, and adjusting the terms to better reflect the current operating environment of GuarantCo. This form of support allows cash to remain with HM Government, only releasing funds if and when there is a clear need for the money.
GuarantCo will continue to be able to leverage its increased equity base as it will have a sovereign guarantee of callable capital. Consequently, it will be able to continue its development objectives and significantly expand its pipeline of projects.
FCDO’s total contingent liability for GuarantCo would be increased by £90 million to a total of £130 million under this renewed callable capital agreement. This £90 million increase is part of the overall approved budget for PIDG under its current business case. The sole purpose of this arrangement is to achieve better value for money for taxpayers by providing callable capital instead of cash while achieving the same development outcomes.
The agreement would be in place for 20 years and capital can be called by GuarantCo only if predefined “trigger” events are met. The trigger events are based on GuarantCo’s liquidity position. If its liquidity falls below the amount of USD $100 million, this would trigger a tranche of the callable capital to be paid out —subsequent tranches would be paid out only if liquidity fell below this amount again, with three tranches in total. For this trigger event to occur, it would require GuarantCo to lose over 60% of its paid-in equity—approximately US $200 million. FCDO considers the risk of this happening to be low but not negligible. Even if called towards the end of the agreement, it would still provide better value for money than FCDO providing cash now.
FCDO will continue to review the financial performance with GuarantCo regularly and GuarantCo will be required to report quarterly on the risk of the capital being called. In the circumstance where the contingent liability is called, provision for any payment will be sought through the normal supply procedure.
The Treasury has approved the proposal in principle. If, during the period of 14 parliamentary sitting days beginning on the date on which this minute was laid before Parliament a Member signifies an objection by giving notice of a parliamentary question or by otherwise raising the matter in Parliament, final approval to proceed with incurring the liability will be withheld pending an examination of the objection.
State Immunity Act 1978: Remedial Order
In 2017, the Supreme Court judgment in the case of Benkharbouche v. Secretary of State for Foreign and Commonwealth Affairs  UKSC 62 held that certain provisions of the State Immunity Act 1978 were incompatible with articles 6 and 14 of the European Convention of Human Rights. The incompatibility related to employment claims brought by individuals employed by diplomatic missions in London. The Government have considered the Supreme Court’s judgment and decided to address the incompatibility by way of a remedial order under section 10 and schedule 2 of the Human Rights Act 1998. The Foreign, Commonwealth and Development Office will lay the draft remedial order before Parliament in due course.
Double Taxation Convention: United Kingdom and Sweden
A protocol to the Double Taxation Convention with Sweden was signed on 23 February. The protocol will give effect to certain OECD/G20 base erosion and profit-shifting recommendations that protect tax treaties against avoidance activities, ensuring that the UK’s double taxation agreement with Sweden meets the minimum OECD/G20 recommended standards. The text of the protocol is available on HM Revenue and Customs’ pages of the www.gov.uk website and will be deposited in the Libraries of both Houses. The text of the protocol will be scheduled to a draft Order in Council and laid before the House of Commons in due course.
Housing, Communities and Local Government
Bailiff Enforcement Regulations: Extension
I wish to update the House on the Government’s continuing commitment to protecting tenants over the national lockdown period, while ensuring landlords can access justice in the most serious cases.
Preventing the enforcement of evictions against residential tenants
The Government laid a statutory instrument on 19 February which extends existing protections for renters by continuing to prevent enforcement agents—bailiffs— from attending residential premises to enforce a writ or warrant of possession except in the most serious circumstances. This measure will continue to protect public health by preventing people being evicted from their homes by enforcement agents, at a time when the risk of virus transmission remains high, and to avoid placing additional burdens on the NHS and local authorities.
Exemptions continue to be in place for the most serious cases that present the most strain on landlords and on local communities. These circumstances are illegal occupation, false statement, antisocial behaviour, perpetrators of domestic abuse in the social sector, where a property is unoccupied following death of a tenant and serious rent arrears of six months’ rent or more. The SI applies to England only and expires on 31 March 2021. Given that 14 days’ notice is required before an eviction can take place, no evictions are expected before 14 April except in the most serious circumstances.
The requirement on landlords to provide tenants with six months’ notice before starting formal possession proceedings continues to apply in all but the most serious cases until at least 31 March 2021. This means that most renters served notice today can stay in their homes until August 2021, with time to find alternative support or accommodation. We will keep these measures under review.
Most tenants are continuing to pay their rent as normal. However, we recognise that a small proportion are experiencing trouble paying their rent. The Government have put in place a significant financial package to support them.
The Coronavirus Job Retention Scheme has offered support for businesses to pay staff salaries, enabling people to continue to pay their rent and has been extended until April 2021. The Self- Employment Income Support Scheme is also available.
In addition, the Government have put in place an unprecedented amount of financial support to ensure tenants can continue to pay their rent. Notably, we have increased the local housing allowance rate (LHA) to the 30th percentile. The increased LHA rates are expected to provide 1.5 million claimants with around £600 per year of housing support more than they would otherwise have received. This measure maintains that significant increase for all rates, by protecting the rates at the current levels in cash terms in 2021-22, even in areas where the 30th percentile of local rents has gone down. This continued investment in LHA will support claimants in the private rented sector to manage housing costs. We have also increased Universal Credit and Working Tax Credit by up to £1,040 for the year. We spend around £30 billion a year on housing benefits—and spend more than any other OECD country as a proportion of GDP on housing support—2018 data.
We have updated our guidance to support landlords and tenants in the social and private rented sectors navigate the possessions process, which can be found at:
We have also recently updated our covid-19 renting guidance for landlords, tenants and local authorities to ensure it reflects the latest information. It can be found at: