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General Committees

Debated on Monday 21 February 2022

Delegated Legislation Committee

Draft North Yorkshire (Structural Changes) Order 2022

The Committee consisted of the following Members:

Chair: Mark Pritchard

† Amesbury, Mike (Weaver Vale) (Lab)

Bacon, Mr Richard (South Norfolk) (Con)

† Badenoch, Kemi (Minister for Levelling Up Communities)

† Baillie, Siobhan (Stroud) (Con)

† Brereton, Jack (Stoke-on-Trent South) (Con)

Burgon, Richard (Leeds East) (Lab)

† Davies, Gareth (Grantham and Stamford) (Con)

† Eagle, Maria (Garston and Halewood) (Lab)

† Fletcher, Colleen (Coventry North East) (Lab)

† Hunt, Tom (Ipswich) (Con)

† Mann, Scott (North Cornwall) (Con)

Nichols, Charlotte (Warrington North) (Lab)

† Offord, Dr Matthew (Hendon) (Con)

† Swayne, Sir Desmond (New Forest West) (Con)

† Vaz, Valerie (Walsall South) (Lab)

† Winter, Beth (Cynon Valley) (Lab)

† Young, Jacob (Redcar) (Con)

Huw Yardley, Committee Clerk

† attended the Committee

First Delegated Legislation Committee

Monday 21 February 2022

[Mark Pritchard in the Chair]

Draft North Yorkshire (Structural Changes) Order 2022

I beg to move,

That the Committee has considered the draft North Yorkshire (Structural Changes) Order 2022.

The order was laid before the House on 24 January 2022. If approved and made, it will implement a proposal submitted by North Yorkshire County Council for a single unitary council for the whole of the North Yorkshire county. The Government believe that strong and dynamic local leadership is critical to levelling up. Such leadership can understand how complex issues come together in a place, tailor policy to local priorities, attract investment, and seize each area’s opportunities.

The order will establish for the people of North Yorkshire a new single unitary council. Implementing the proposal and establishing that unitary authority will enable stronger leadership and far greater engagement, both at the strategic level and with communities at the most local level. It will pave the way, as envisaged in the levelling-up White Paper, for a significant devolution deal involving a directly elected Mayor for North Yorkshire, together with York.

As hon. Members may remember, this is a locally led initiative for reform that formally began on 9 October 2020. On that date, the then Secretary of State, my right hon. Friend the Member for Newark (Robert Jenrick), invited the principal councils in North Yorkshire and the neighbouring unitary council of the City of York to put forward, if they wished, proposals for replacing the current two-tier system of local government with single-tier local government. That invitation set out the criteria for unitarisation. Unitary authorities would be established,

“which are likely to improve local government and service delivery across the area of the proposal, giving greater value for money, generating savings, providing stronger strategic and local leadership, and which are more sustainable structures…which command a good deal of local support as assessed in the round overall across the whole area of the proposal; and…where the area of each unitary authority is a credible geography consisting of one or more existing local government areas with an aggregate population which is either within the range 300,000 to 600,000, or such other figure that, having regard to the circumstances of the authority, including local identity and geography, could be considered substantial.”

Two locally led proposals for local government reorganisation in North Yorkshire were received in December 2020: one for a single unitary and one for two unitary councils. Before we made any decisions on how to move forward, the Government consulted widely. That statutory consultation, which ran from 22 February to 19 April 2021, prompted almost 4,300 responses on the North Yorkshire proposals. Of those responses, some 3,600—84% of the total responses—were from residents living in the area affected, 53% of whom were in favour of a single unitary council. In addition, 52% of business respondents supported the single unitary proposal, along with the majority of public sector partners, including 68% of the health organisations that responded, nine out of 12 education organisations, and police and fire organisations.

My right hon. Friend the former Secretary of State announced his decisions on the proposals on 21 July 2021. He made a balanced judgment, assessing both proposals against the three criteria to which I referred, and that were set out in the invitation on 9 October 2020. He also had regard to all representations received, including responses to the consultation, and to all other relevant information available to him. He concluded that the proposal for two unitaries did not meet the criterion of improving local government and service delivery across the area or the credible geography criterion, but that the single unitary proposal for North Yorkshire met all three criteria.

The Government believe that there is a powerful case for implementing that locally led proposal for change. It will improve local government by enhancing social care and safeguarding services through a closer connection with related services, such as housing, leisure and benefits. It will improve local government by offering opportunities for improved strategic decision making in such areas as housing, planning and transport. It will improve local partnership working with other public sector bodies by aligning with arrangements in existing public sector partnerships and allowing existing relationships and partnership working to be maintained without disruption. It will generate savings, estimated by the county council to be £31.9 million per annum. It will preserve service delivery over a county-wide area that has an established local identity and that is easily understood by residents. It will provide a single point of contact so that residents, businesses and local communities will be able to access all council services from one place. If Parliament approves the draft order, from 1 April 2023 there will be a single unitary council for North Yorkshire, delivering the improvements that I have just outlined.

We prepared the draft order in discussion with all the councils concerned. I take this opportunity to thank everyone involved in the process for their work, which has been undertaken constructively and collaboratively. Our discussions with the councils included the transitional and electoral arrangements, which are key to how the councils will drive forward implementation. Where there has been unanimous agreement between all the councils, we have adopted their preferred approach. There were some differences in views and, where those existed, my right hon. Friend the Secretary of State considered all the differing views and reached a decision accordingly.

On the detail of the draft order, I highlight the key provision. The order provides that on 1 April 2023, the districts of Craven, Hambleton, Harrogate, Richmondshire, Ryedale, Scarborough and Selby will be abolished. The councils of those districts will be wound up and dissolved. In their place, their functions will be transferred to the new unitary North Yorkshire council.

The draft order also provides for appropriate transitional arrangements. In May 2022, there will be elections for the new unitary council, which will assume its full powers from 1 April 2023. The elections will be on the basis of a 90-member authority, with 88 single-member electoral divisions and one two-member division. Subsequent elections to the unitary council will be in May 2027 and every four years thereafter. We expect the Local Government Boundary Commission for England to undertake a full electoral review before the May 2027 elections. Parish council elections due in May 2023 and May 2024 will be brought forward to May 2022, to align with the unitary council electoral cycle. A duty will be placed on all existing councils to co-operate during the transitional period until 1 April 2023.

To support councils in the transitional period to 1 April 2023, if the draft order is approved and made, I intend to use my powers under the Local Government and Public Involvement in Health Act 2007 to issue a direction. The direction will provide statutory support to the voluntary protocol that the North Yorkshire councils have already adopted about entering into contracts and the disposal of land during the transitional period. As one might expect, that is in line with the approach adopted in most previous unitarisations. That will ensure that the new unitary council has appropriate oversight of the commitments that the predecessor councils may enter into during the transitional period and that the new unitary council will take on from 1 April 2023. Before issuing any such direction, I will invite council views on a draft.

Finally, with apologies, I must draw the Committee’s attention to the correction slip that was issued to correct three minor errors in schedule 1 of the draft order. The corrections are: to remove an extra “and” between Harrogate Fairfax and Harrogate Starbeck wards; to the spelling of Byram ward; and to put the Mid Craven electoral division in the correct alphabetical order. We are sorry for those minor errors in the original text of the order.

In conclusion, through the draft order, we seek to replace the existing local government structures in North Yorkshire, which were set up in 1974, with a new council that will be able to deliver high-quality and sustainable local services for the people of North Yorkshire. The council will be able to provide stronger and more effective leadership at the strategic and the local level. It will open up the way, with the City of York, for a significant devolution deal, as is referred to in our levelling-up White Paper. I commend the draft order to the Committee.

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

I thank the Minister for her introduction to the draft statutory instrument and her informative remarks. The SI will create a unitary authority for North Yorkshire in place of several districts. I understand that the Secondary Legislation Scrutiny Committee in the other place marked this and two other draft statutory instruments on the creation of unitary authorities as instruments of interest. Some questions remain on the criteria for the approval of unitarisation, which I will raise with the Minister on those instruments as well.

As I once again have the pleasure of speaking on a statutory instrument with the Minister, I will touch on a number of points and ask some questions. Will the attitude that is taken to unitarisation be taken to devolution deals across the piece, including in areas that respond to the framework in the levelling-up White Paper? I am a committed devolutionist by principle. What I mean by devolution is shifting genuine power and resources to localities. Of course, that is where the levelling-up White Paper falls short—on fiscal devolution.

What assurances can the Minister give about the new unitary authority? She said that it would be sustainable and, indeed, she referred to cost savings over a period of time. Will she expand on that?

Secondly, will the Minister give assurances on the new devolution deals, which areas may decide they want to march forward with? I know that the Merseyside city region will be going for greater devolution powers, and there is certainly consensus in my area of Cheshire and Warrington to go for a deal.

On identity, the Minister mentioned Scarborough and Harrogate. Those are quite distinct areas with which I am familiar. How will we ensure that they have a sense of place and ownership in terms of the locality, the services and the budget? How will those localities have a genuine say to ensure that there is no democratic deficit? Rather than devolving powers upwards to the new body, it is crucial that there is that strong interplay.

I note that in the consultation, 53% of respondents supported the single unitary proposal, as opposed to splitting the area. Will the Minister expand on that point? I will again touch on the criteria and how those are met in our discussions on future SIs.

The Minister referred to the disposal of land, which will be important in the transition to the new unitary. I would be interested to hear if there are any investments that need to be transferred, or any budget surpluses or debts that might need to be consolidated, especially given that local government has been hollowed out by 50% over the past decade, according to the National Audit Office.

I have asked the Minister a number of questions. We do not oppose the order, but I look forward to the answers.

I thank the hon. Gentleman for supporting the proposals and for asking several questions. I should be able to answer them and, if not, I will provide additional detail in our regular meetings.

The hon. Gentleman asked whether the structural changes order will be standard across all devolution deals. That will be the case for those that the former Secretary of State led in 2020, before the levelling-up White Paper.

The hon. Gentleman asked about sustainability and what the deal will look like. The assurance I can give him is that this is just the beginning of the process; it is not the end. Now that we have got to this stage of the process, we will work closely with the new unitary to decide exactly what the devolution deal will consist of. I cannot answer his questions about which investments will move from one set of councils to the final one, but I do know that the process is locally led. All the councils agree that this is what they want and that it will be good for them. I think we can trust in the ability of the people on the ground in North Yorkshire to deliver on that, and the Department will support them as much as possible.

The hon. Gentleman asked about Scarborough and other councils that may feel lost, given the size of the new unitary, and about whether they will fit in with what happens across the wider area. That will always be a risk when we unitarise. Some things will be lost, but the trade-off is that there are more benefits from moving to a single-tier system. I believe that that council specifically is supportive of this change.

Surely there is something in place for the likes of Scarborough, Harrogate and Richmondshire. What new structures will be put in place? Will there be a district committee system?

I am not sure that I understand the hon. Gentleman’s question. I had assumed that he was asking how we will ensure that councils that are different, such as Scarborough, are not lost in this devolution and unitarisation. I cannot provide him with the detail at the moment, but I can write to him with further detail. Officials worked with the councils to do much of this work before I came into post. I am ensuring that the process carries on and that we do not run out of time before the electoral process. If he is happy to wait, I can provide additional detail.

With levelling up, we are trying to ensure that the decisions that are made come not from the top down, but from the people and elected officials on the ground who know what is needed to improve their local areas. That is the approach that we have taken through these structural changes orders, which came before the levelling-up White Paper, and that we will take going forward. We hope that we can get agreement on that across the House in order to do the best for local people across the country.

Question put and agreed to.

Committee rose.

Draft Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022

The Committee consisted of the following Members:

Chair: David Mundell

† Afolami, Bim (Hitchin and Harpenden) (Con)

† Bacon, Gareth (Orpington) (Con)

† Carden, Dan (Liverpool, Walton) (Lab)

† Clarke, Theo (Stafford) (Con)

Daby, Janet (Lewisham East) (Lab)

Hillier, Dame Meg (Hackney South and Shoreditch) (Lab/Co-op)

† Holloway, Adam (Gravesham) (Con)

† Johnson, Gareth (Dartford) (Con)

† Jones, Mr David (Clwyd West) (Con)

† Largan, Robert (High Peak) (Con)

† Latham, Mrs Pauline (Mid Derbyshire) (Con)

† Lewis, Clive (Norwich South) (Lab)

† Mishra, Navendu (Stockport) (Lab)

† Opperman, Guy (Parliamentary Under-Secretary of State for Work and Pensions)

† Qaisar, Ms Anum (Airdrie and Shotts) (SNP)

† Rodda, Matt (Reading East) (Lab)

† Spencer, Dr Ben (Runnymede and Weybridge) (Con)

Kevin Maddison, Committee Clerk

† attended the Committee

Second Delegated Legislation Committee

Monday 21 February 2022

[David Mundell in the Chair]

Draft Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022

Before we begin, I remind Members to observe social distancing and Mr Speaker’s guidance on wearing masks, except when speaking and unless exempt.

I beg to move,

That the Committee has considered the draft Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022.

What an honour and privilege it is to appear under your chairmanship for the first time, Mr Mundell. I am sure there will be many more illustrious occasions, but as you know, today we are here to discuss the draft Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022, which were laid before the House on 17 January.

These are groundbreaking and game-changing regulations that take forward the nuts and bolts of sections 1 to 102 of the Pension Schemes Act 2021, which is a transformational Act of this Parliament and one of the key changes brought forward by this Conservative Government. It is the product of many years of work by a huge number of people, from the Royal Society of Arts to Department for Work and Pensions officials, who have worked tremendously hard on it, to our dearly departed friend Jack Dromey and many others who have seen this measure as a potential third way of providing pensions on an ongoing basis.

The UK pensions market currently has a defined-benefit and a defined-contribution basis. These regulations provide a middle ground—a third way. We are providing an alternative approach, whereby member and employer contributions are pooled and then invested with a view to delivering benefits at the level to which the scheme aspires. Such schemes offer potential benefits in economies of scale and the opportunity for greater investment in higher-returning assets and better contribution schemes on a long-term basis. The Government believe that this is the right way forward for many different organisations. Self-evidently, Royal Mail and the Communication Workers Union have been at the forefront and have driven forward an agreement such that they will be the first in line to take this forward, but we believe that there is potential for other schemes—on a large or smaller basis—to embrace collective defined contributions.

It is only right that employees and employers have confidence in a CDC scheme, as it is a new type of pension scheme. The regulations, which I accept are detailed, set out requirements for the process of applying for authorisation and further detail on the criteria that such schemes need to meet in order to be authorised. The criteria include that the design of the scheme must be sound, that it must have sufficient financial resources to operate, and that it must have the capacity to deal with particular issues that arise. Fit and proper persons are also required to take these matters forward. If the Pensions Regulator is not so satisfied, it cannot authorise the scheme. The regulations set out requirements relating to the regulator’s supervisory role and, in more detail, the need for a code of practice, which is currently being consulted on by the Pensions Regulator.

There was considerable interest in these matters during the passage of the Pension Schemes Act 2021, and I am happy to answer any questions that are raised. The key point of intergenerational fairness and communication to members is addressed in the regulations and in the code of practice. I commend the regulations to the Committee.

It is a pleasure to serve under your chairmanship, Mr Mundell. I refer colleagues to my declaration in the Register of Members’ Financial Interests. I thank all those who have contributed to the development of these important regulations, including the Minister, the Department, the Royal Society of Arts, the pensions industry, employers and trade unions. I pay particular tribute to our late colleague Jack Dromey. It was through his enormous efforts that this work was developed, and he worked exceedingly closely with the Minister. I am grateful for the cross-party working on this matter; pensions are an important and long-term public policy issue, so it is right that we work on them together wherever possible.

As the official Opposition, we do not oppose these regulations, as they will begin the process of allowing some employers to take advantage of a new system that, as the Minister mentioned, has huge benefits. If we act with care and diligence, it could help employees in certain sectors to retire with more security and comfort. When done properly, CDCs offer a cost-effective way of saving for retirement by making pension saving a shared process, as we heard earlier. However, we should be prudent, and I would like to place on record a number of issues that we hope the Minister and the Department will address in the fullness of time.

First, it is important to make the intentions of the CDC process as clear as possible. Colleagues will know that, in the pensions world, uncertainty can be compounded over time and lead to costs or unnecessary risk. That will mean ensuring that the further regulations that the Government hope to bring through in March are watertight.

Secondly—I believe the Minister may wish to respond on this point—some experts have raised concerns with me about the use of master trusts as a model or template for CDCs, when they might not be appropriate in all circumstances. Some of the tests to measure a scheme’s viability, for example, might not apply in the same way. While this is a deeply technical issue, it is important to get it right, so I am sure the Minister may have more to say, or will wish to write to me about this matter in more detail.

Thirdly, I hope the Minister will provide assurances today that there will be enough time and opportunity for experts, stakeholders, politicians and the Department to review CDCs as they develop and to tackle any issues with what are significant changes.

Finally, I thank everybody concerned in the process once again, because this is an important step forward, as the Minister mentioned. There is an element of consensus about this, and I hope that these changes provide worthwhile opportunities for pension savers and pensions in the future.

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

While we in the SNP welcome the creation of CDC schemes, consumer protection will be key. Far too many will not benefit from these measures if they do not qualify for automatic enrolment. We need strong consumer protection to ensure that people are getting the most out of their savings. The SNP supports the creation of CDC schemes and recognises their benefits. We are also clear that members’ best interests must be placed at the very heart of the process. While CDC schemes are welcome, they cannot be seen as the right solution for everybody. It is important that people are given access to as much impartial information about their pensions as possible, to give them the confidence to make informed decisions about their savings. Far too many are still excluded from automatic enrolment and occupational pension schemes, and this is doing nothing to alleviate the sizeable gender pension gap.

To conclude, we in the SNP demand that the UK Government lower the age threshold for auto-enrolment from 22 to 16 and remove the lower limit of the qualifying earnings band, so that contributions are payable from the first pound earned.

I thank colleagues for their responses and their support for these regulations. This is very much an iterative process, so I accept the point about needing to review CDCs. I am often criticised on the one hand for not bringing this forward quickly enough and on the other for going too slowly. In this case, I think the Government are doing the perfect thing of trying to navigate a course that progresses the main form of CDCs. We will move to multi-employer CDCs in the latter part of this year, going into next year, and will move at a sufficient pace that we feel is appropriate. There will definitely be an opportunity to respond to these regulations and the draft code, which I strongly urge colleagues and the industry to read.

We are inventing a brand-new way of providing pensions that is genuinely of assistance to businesses, big employers and, crucially, employees—it is very much supported by unions, for example, and gives unions a real role in supporting businesses and employees—but it will also work for multi-employer schemes on an ongoing basis.

We used master trusts as a broad base of what we were trying to do, and while that has always been the case, there is no question whatever but that this is different from master trusts. I am happy to write to the hon. Member for Reading East with a bit more detail on that, but this is certainly not a like-for-like model in any way whatever.

The hon. Member for Airdrie and Shotts rightly raised consumer protection, which is a challenge that I accept entirely. We have made great efforts to ensure proper communications. I have met repeatedly with Royal Mail and the CWU, for example, and there is no question in my mind but that Royal Mail employees, who are heavily unionised, are the most informed about this potential pension change of any employees up and down the country, because the engagement around Royal Mail post offices and postal centres around the country has been outstanding. I have been everywhere, from Norwich sorting office to Barrhead, all over the country, to meet with people, talk with them and see the work being done. However, I accept that this is an ongoing challenge.

Automatic enrolment, a wonderful Conservative/coalition Government invention that we very much continue to laud and applaud, is a transformation that has benefited 10.5 million people across all our constituencies. The hon. Lady rightly raised the 2017 review of automatic enrolment review; the Government will bring that in in the fullness of time. I also make the simple point that automatic enrolment is there to expand and enhance access to savings to so many people. Among young people and women, for example, less than 40% had an occupational pension; the figure is now well above 80%. That is a transformation since 2012, with a total of 10.5 million people benefiting.

Perhaps the Minister would also like to thank the previous Labour Government for its work on auto-enrolment, as it was an idea developed by Gordon Brown originally and implemented, as he said, by later Governments.

There is no question but that this idea started with the Turner commission and the Brown-Blair Government—not a Government, I feel, that is very supported by the present Labour party—but we are very much behind this innovative change, and obviously we welcome all converts to innovative pension change. I totally accept that this is a 20-year policy. It has a stage to go, which we will be responsible for, but it is also, like so many things in pensions policy, something that transcends parties and Governments, because we make policy for 30 to 40 years, and this a good example of that.

Question put and agreed to.

Committee rose.