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General Committees

Debated on Tuesday 23 April 2024

Delegated Legislation Committee

Draft Economic Growth (Regulatory Functions) (Amendment) Order 2024 Draft Growth Duty: Statutory Guidance Refresh

The Committee consisted of the following Members:

Chair: Ian Paisley

† Ali, Rushanara (Bethnal Green and Bow) (Lab)

† Ali, Tahir (Birmingham, Hall Green) (Lab)

† Elmore, Chris (Ogmore) (Lab)

† Ford, Vicky (Chelmsford) (Con)

† Gibson, Peter (Darlington) (Con)

† Grant, Peter (Glenrothes) (SNP)

† Jones, Mr David (Clwyd West) (Con)

† Long Bailey, Rebecca (Salford and Eccles) (Lab)

† Mangnall, Anthony (Totnes) (Con)

Mearns, Ian (Gateshead) (Lab)

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

† Morrissey, Joy (Lord Commissioner of His Majesty's Treasury)

† Shah, Naz (Bradford West) (Lab)

† Tuckwell, Steve (Uxbridge and South Ruislip) (Con)

† Whittingdale, Sir John (Maldon) (Con)

† Wood, Mike (Lord Commissioner of His Majesty's Treasury)

Kevin Maddison, Committee Clerk

† attended the Committee

First Delegated Legislation Committee

Tuesday 23 April 2024

[Ian Paisley in the Chair]

Draft Economic Growth (Regulatory Functions) (Amendment) Order 2024

With this it will be convenient to consider the draft Growth Duty: Statutory Guidance Refresh.

It is a pleasure to speak with you in the Chair, Mr Paisley. The draft order and the draft guidance issued under section 110(1) of the Deregulation Act 2015 were laid before the House on 6 March 2024.

I am pleased to initiate this debate, and I emphasise the Government’s commitment to upholding rigorous parliamentary scrutiny for statutory instruments that impact the UK’s independent regulators. The draft statutory instrument and guidance we are debating relate to the growth duty, a duty that requires specified regulators to have regard to the desirability of promoting economic growth when exercising certain regulatory functions. Regulators within the scope of this duty need to consider the potential impact of their activities and their decisions on economic growth, and ensure that any regulatory action they take is necessary and proportionate.

The growth duty applies to more than 50 regulators and came into statutory effect on 29 March 2017 under the Deregulation Act 2015. The regulators already covered include the Environment Agency, the Care and Quality Commission and the Gambling Commission. At present, the growth duty does not apply to the utilities regulators, which are the Office of Communications, also known as Ofcom, the Office of Gas and Electricity Markets or Ofgem, and the Water Services Regulation Authority or Ofwat. The draft instrument will extend the growth duty to those regulators, which oversee industry sectors accounting for 13% of annual private UK investment and about 4% of UK GDP. By extending the growth duty, we will ensure that those critical regulators have regard to the need to promote economic growth.

The Department for Business and Trade has also prepared refreshed related statutory guidance to provide greater clarity to support regulators in their application of, and reporting against, the growth duty. The draft refreshed guidance identifies drivers of growth and behaviours of smarter regulation to assist regulators better to ensure proportional regulation and support sustainable economic growth.

Regulators play a vital role in shaping the UK economy through the way in which they regulate. It is therefore critical that regulation is cognisant of the requirements of growth. A good regulatory environment emerging from the attentive and responsive stewardship of an effective regulator can create the conditions for business confidence and investment, sensible risk taking, and innovation. Together, the extension of the growth duty and the revised guidance will support a positive shift in how regulation is delivered, driving growth and paving the way for businesses to start and grow.

We have discussed the actions of other regulators under the Minister’s remit on a number of occasion. Can he give us some examples of when actions of the water or energy regulators under the existing system have been detrimental to economic growth? The views I get from the public are that that is not where the biggest failing in the regulatory system is.

I think it is about ensuring that regulators are proportionate in their decision making and take into account the needs for economic growth. For example, speed of decision making is pretty important to someone who is investing in our economy—they want to ensure that there is a consistent framework and that, where changes are made, they are done quickly and with the input of businesses. The feedback we are hearing is that that is not always the case. As I said, from 2017 this regime was implemented for 50 other regulators, and the sky has not fallen in yet on those sectors when any changes have been made to the system.

I understand there is a perception that the growth duty may conflict with environmental duties or enforcement of protections. That is absolutely not the case. The draft refreshed growth duty statutory guidance sets out in the opening paragraph the importance of ensuring

“adequate protections for consumers and the environment.”

The growth duty does not and will not legitimise non-compliance with other duties or objectives, and its purpose is not to achieve or pursue economic growth at the expense of necessary protections. The guidance also identifies environmental sustainability as one of the seven drivers of economic growth. We set out in the guidance that natural capital and the ecosystems in which we live are fundamental to economic growth and therefore need to be safeguarded for economic growth to be sustained.

The draft SI will ensure that economic growth can form part of regulators’ decision making and purpose, thus supporting the change in behaviour being sought. By requiring the regulators to consider the growth duty, they will be empowered to consider areas that may not be reflected or may be only partly reflected in their duties, such as promoting innovation or trade growth.

The growth duty is not prescriptive and does not mandate particular actions, nor does it create a hierarchy over existing regulatory duties. The draft refreshed guidance is clear that regulators, as independent and experienced bodies, are best placed to balance their own decision making in that regard. The Government have also committed to review the impact of the extension of the SI within the related impact assessment, and will consider the impact and effectiveness of the growth duty on investment, growth, the environment and other factors in detail at the committed review point.

The draft refreshed guidance outlines drivers of sustainable economic growth supported by case studies, examples to provide clarity to regulators within scope of the duty and to help them promote growth. The guidance also identifies behaviours that contribute to good regulatory decision making and smarter regulation. The purpose of the guidance is to assist regulators to give appropriate consideration to the potential impact of their decisions on economic growth. The revised guidance encourages transparency and accountability for growth across regulators, with the aim of attracting investment and creating jobs.

The proposals are necessary to ensure that the energy, water and communications sectors strive for maximum efficiency over a sustained period. The draft refreshed guidance makes it clear that regulators should work with businesses on, among other things, the environment, trade, investment and skills to ensure sustainable medium to long-term economic growth. That will ensure that current-day economic growth can be achieved without undermining the ability of future growth. The refreshed growth duty guidance will support regulators in their application of, and reporting against, the growth duty. The Secretary of State’s overarching priority is to support businesses and grow the economy, which is what this draft instrument and supporting guidance seek to achieve today. I commend them to the Committee.

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

I thank the Minister for introducing the draft proposals, which will cover three of the UK’s regulators, Ofwat, Ofgem and Ofcom. As the Minister set out, the regulations we are considering concern the growth duty under section 108 of the Deregulation Act 2015, which requires particular regulators to consider how best to promote economic growth as they exercise their core functions. We recently saw the growth duty expanded to the financial services regulators, the Financial Conduct Authority and the Prudential Regulation Authority, as part of the Financial Services and Markets Act 2023, and there are now more than 50 regulators bound by the growth duty.

This draft legislation will see the growth duty expanded to Ofgem, Ofwat and Ofcom, and will therefore mean that those regulators will also have to consider how their functions can promote economic growth. I would be grateful if the Minister could set out some of the lessons learned from the experience of the regulators that already have the growth duty built into their objectives.

Labour recognises the importance of the water, energy and communications sectors to our economy and the vital role that the three regulators under discussion play in shaping those sectors. We agree in principle with the need for those regulators to formally recognise their role in contributing to economic growth where viable. However, as I am sure many colleagues will agree—the Minister has already alluded to this point—such a move has the potential to create frictions or opposing and competing demands on regulators as they carry out their core regulatory functions. We must make sure that we strive for sustainable economic growth that is forward looking, inclusive and based on strong and secure foundations.

As the Minister will be aware, where the competitiveness duty was introduced in the regulation of financial services, there were extensive discussions, which as members of the Treasury Committee he and I were a part of, about making sure that the regulator’s primary objective of stability did not conflict with that of competitiveness. Much work has been done and lessons have been learned about how to make sure those things happen appropriately and do not cause confusion within the regulatory system, as well as out there in the market.

I am sure it has not escaped Members’ attention that, of the three regulators under consideration, Ofwat is already under significant scrutiny and pressure. Last year saw the highest number of sewage discharges on record. There will, rightly, be public concern that additional duties, while welcome, should not create an additional set of pressures that are hard to deliver on. I hope the Minister can shed more light today on how the regulators can fulfil existing duties as well as the new duty.

After 14 years of this Government being in power, the sewage scandal has resulted in waters and open spaces across the country being polluted with filthy raw sewage. Not one English river is classified as being in a healthy condition. None meet good chemical standards and few meet good ecological standards. Environment Agency data shows that sewage has been dumped every 2.5 minutes since 2016. Not only have the Government allowed the water companies to dump sewage and neglect our vital water infrastructure, some of the companies responsible have been rewarded, through allowing shareholders to receive dividends and water bosses to pocket bonuses. I know this is not the Minister’s direct responsibility, but I hope he will take note of the public concerns about the need for strict regulation to make sure standards are met and people do not suffer the consequences of neglect.

Given the pressures on Ofwat, can the Minister tell us how confident he is that it has the appropriate resources to not only fulfil its current duties but also respond to the growth duty? Does it and the other regulators have the expertise within their institutions to be able to focus on the growth duty? If we want the growth duty to be effective and successful, it is important that the people within those institutions are able to work with the industry and with Government to make sure that it is meaningful.

The economic impact assessment estimated that the familiarisation costs of the growth duty would have some resource implications. Will the Minister make those resource implications clear? Can they be met within existing budgets or are additional resources needed? Will they be provided?

I also seek assurances from the Minister that the regulator’s core consumer and environmental responsibilities will not be jeopardised by this move. I am assured by some of the points that he has already made, but could he say more about precisely how his Department and other relevant Departments will work with the regulators to make sure that they have a clear understanding of the need to meet their respective commitments and obligations?

Understandably, many respondents to the Government’s consultation shared concerns, with 25% opposing the changes. To that end, while we welcome the Government updating the statutory guidance, as the Minister has referred to, to clarify how the growth duty should fit within the regulators’ existing obligations, it would be helpful to have more information on precisely how that will be done. Given the delicacy and importance of regulators’ roles in policing their various sectors, how do the Government intend to closely monitor the impact of these changes in a timely manner?

As an example related to Ofcom, could the Minister imagine a situation where the expanded growth mandate could result in the green light being given to a takeover that could compromise our national security and a free and fair media, or lead to one provider dominating the media landscape? He will be aware of examples where foreign Governments have sought to buy stakes in our media, and so on. Are there provisions in place that cover those concerns and that he is comfortable with? If not, what further steps can be made to reassure the public that the growth duty, while welcome, necessary and helpful, needs to be applied appropriately to protect our free media and national interest?

We on the Labour Benches recognise the importance of a long-term plan to grow the UK economy, particularly after such a long period of sluggish growth. That is why we have made securing the highest sustained growth in the G7 the central mission of a future Labour Government. However, it seems that this has only recently come to the fore for the Government. Why have the three regulators been added on now, rather than at the time the growth duty was introduced? There may be very good reasons. It would be helpful to understand better. Is it because the Government wanted to do further preparatory work with the regulators before introducing the growth duty? Were those regulators considered earlier on, when the others were first introduced?

In summary, we support this instrument, but urge the Government to meticulously monitor its impact and effectiveness in delivering long-term growth, and to ensure that the safeguards are in place to make sure that the regulators fulfil their primary objectives, although those are not framed in the same way. Is there a differentiation between primary and secondary objectives, as was the case for the example I mentioned earlier, or are they parallel objectives? Are there issues about competing demands on the regulators?

I do not want to detain the Committee for long, but since I led for the Opposition in the debates on the Communications Act 2003, which established Ofcom, I want to draw on that experience to raise a couple of questions for the Minister. We spoke about some of the issues we are debating this morning at some length when Ofcom was set up. The Minister will be aware that Ofcom has a principal duty, which is to further the interests of citizens and consumers, where appropriate by promoting competition. I share some of the wishes, if not concerns, of the Opposition spokesman to explore a little further what happens if that primary duty of promoting competition comes into conflict with the objective of promoting growth. I can think of a few examples where that is possible.

Ofcom has a duty to examine wholesale prices in the telecoms markets, where the Minister will be aware that the biggest player argues very strongly that if it is to have the investment to roll out the broadband network, it needs to be able to raise prices to fund it, which potentially comes into conflict with the competition priority. Equally, as the hon. Member for Bethnal Green and Bow indicated, competition has been Ofcom’s driving objective in the mobile telephony market, but potentially that could come into conflict. Some may argue that allowing a small reduction in competition will promote growth.

I do not share the hon. Lady’s concern about national security, because I think that that is covered separately, by the National Security and Investment Act 2021. I hope that the Minister can confirm that that is a separate set of procedures that examines potential mergers and acquisitions to establish whether there is any risk to national security, and I hope that the draft order will not impinge on that. However, I see the possibility, at least in theory, that competition and growth might be conflicting objectives; given that competition is described as the Ofcom’s principal objective, I wonder whether the Minister could say a bit more about how Ofcom will deal with cases in which there is a potential conflict.

It is a pleasure to serve on the Committee under your chairmanship, Mr Paisley. I will ask the Committee to divide on the motion, because I do not see that it will solve the apparent problem, and I think it could create much worse problems for economic growth and, in particular, hard-pressed consumers.

The Minister gave an example of the kind of problem that we are trying to address: the fact that decisions sometimes take too long. I struggle to see how putting extra barriers and hurdles in a regulator’s way will make its decisions quicker. We all know the response of big business to a regulator that wants to make any significant changes to regulations. Big business does not complain that regulations have been brought in too slowly; it always complains that regulations have been brought in too quickly.

The failures in the regulation of the energy market over the last few years—the complete failure to protect hard-pressed consumers from massive money-grabbing, profit-making energy companies—occurred not because the regulator does not have any duty, or sufficient duty, regarding economic growth, but because the regulator is either unable or unwilling to carry out its primary purpose, which is to protect consumers. As the hon. Member for Bethnal Green and Bow mentioned, the failure of the water companies to literally clean up their act occurred not because the regulator has too much freedom to regulate, but because it does not have sufficient powers or is not exercising those powers sufficiently. Putting extra barriers in its way, and creating extra excuses for billion-pound businesses to take legal action to slow down the regulatory process, will not speed up the cleaning up of Britain’s beaches and watercourses.

If we want companies such as Thames Water to contribute to the United Kingdom’s economic growth, why do we allow the Chinese Communist party to skim off almost 10% of the profits as dividends in years when the company makes a profit and in years when it makes a loss? Why have we allowed a situation in which, when the water and electricity companies appear to have a good year and make profits, those profits belong to somebody else, but as soon as the companies are in financial difficulty and need investment, that is suddenly the responsibility of taxpayers and customers? How does it contribute to economic growth that energy companies are allowed to bleed tens of millions of household budgets dry by hiking up prices, not because doing so was necessary but because they could get away with it?

The Government stepped in with a very expensive package of support, but that was not enough and has left future generations with a massive mortgage bill to pay. We will pay the debt from that intervention for years to come. The Chinese Government, who own a chunk of the UK’s water industry, and the French Government, who own a chunk of the electricity supply industry, are collecting dividends while UK taxpayers are subsidising customers who cannot afford their bills. How does that support economic growth? Why not require the energy regulator not to allow domestic bills to get higher than most consumers can afford, so that Government handouts are not needed to make up the difference? Bills increased not because doing so was necessary to keep energy companies sustainable, but because it was desirable for owners to keep energy companies profitable.

We should not forget that regulators were introduced, in some cases reluctantly, when these major public services were privatised, because even the Governments of Margaret Thatcher and John Major were forced to accept that unregulated market economics would not work in a situation where there is effectively a natural monopoly on a basic requirement of life. There are few things in life more necessary than energy to keep warm and water to keep hydrated and clean, and turning them over to an unregulated market was not going to work. The regulators were given the powers to protect consumers from exploitation and abuse of market power, and that is where they should be focusing. Anything that puts barriers in the way of regulation on that is very likely to damage the interests of consumers.

In the explanatory memorandum that accompanies the draft order, I notice that almost the first comment is that a lot of those services now need massive investment— I wonder why. What is it about a massive profit-grabbing, internationally owned company that means that it failed to invest profits when times were good and is now looking for taxpayer handouts to invest when there is a need to update infrastructure? Why was it not forced to update that infrastructure as time went on? Why has it been allowed to get to the stage where the water supply system is barely fit for purpose?

Why do all those other countries have sovereign wealth funds that are able to buy up our water and energy supplies? Why does Britain not have a sovereign wealth fund? Britain has a sovereign wealth black hole, which at the end of 2023 was deepening to the tune of £10 billion a month. What are all those other countries doing right that Britain has been doing wrong for the last 50 years, which means that they have money to invest in other people’s essential services while the UK has an ever-expanding sovereign debt?

Why have we created a system where many of our life essential services now rely on investment from overseas pension funds, at the same time as the UK Government are trying to make it harder for British pension funds to invest in similar utilities overseas? What are Governments of other countries going to do if they feel that their interests are affected by UK pension funds not investing overseas? I will tell you, Mr Paisley: they are going to start making it harder for their pension funds to invest in our utilities. That is what is going to happen next.

I understand that the Conservative party, and to a large extent the Labour party, have a very different philosophy from mine. I think that the answer to a failing water supply system and energy market is to put them in the hands of the people who understand them best, which means bringing them back into public ownership. If the water companies claim that they are bust and have no money, what better time to take them off the hands of the Chinese and other foreign Governments? If they claim that the companies are not making money and are worth nothing, why do we not just offer them nothing to take them back into public ownership?

There has also been discussion about the communications regulator, where the issues are different. A lot of the challenges there tend to be technological, and how regulation keeps up with technology. By the time we have made regulations that come into force the day after tomorrow, technology will have changed. The Government must be well aware of the dangers of allowing particularly broadcast media to become too unregulated, as we are seeing in countries that are not too different from ours in many ways.

Ultimately, unregulated or inadequately regulated broadcast media is taking away people’s right to a fair trial if they are accused of a criminal offence. It is also taking away people’s right to a fair and free election, because there is insufficient regulation of the misinformation that can be put out on media channels in countries that are not politically, socially or historically far away from the United Kingdom.

I will press the Committee to a Division today, but I will not be surprised if only one person votes against the draft order. I am not convinced that the legislation will address the desperate problems that are facing our water supply, our energy supply and the different needs of the communications market. The draft order may make things worse, and it is unlikely to make things better, so I therefore ask the Committee to reject it.

I thank hon. Members for their contributions. The shadow Minister raised a number of important points about environmental protections. The new duty does not override the requirements of water companies or the regulator to ensure that environmental protections are put in place.

I would gently point out that there are two reasons why we are seeing such difficulties with our water suppliers now compared with the progressive change we have seen over recent years. First, we increased the monitoring of those dangerous parts of our system from 7% to 100% in 2010 so that we can see what is actually happening on the ground. We are also experiencing much higher rainfall, which is adding problems. To tackle this, the water companies have committed £96 billion for the period of 2025 to 2030. That is a 63% uplift on previous levels. Even before that, they were investing £6 billion annually, which is double the amount invested in capital infrastructure prior to privatisation. Work is being undertaken, but we accept that more needs to be done.

The hon. Member for Bethnal Green and Bow raised concerns about takeovers. Clearly we have a number of different vehicles we can use to mitigate those concerns, whatever sector they may relate to. We have the National Security and Investment Act 2021 and, for issues on public interest grounds, the Enterprise Act 2002. She also spoke about sluggish growth. I suggest that she checks the figures on GDP growth since 2010 or 2016 or pre-pandemic levels. We are third in the G7 and are growing faster than anywhere else except—[Interruption.] Well these are the facts. The hon. Lady can choose her own opinion, but she cannot choose her own facts. The only countries that have grown faster than us since then are the US and Canada. That is an absolute fact, so she should check the figures before saying that there has been sluggish growth.

On the question of “Why now?”, when we included the 50 regulators in 2017, we thought that the growth duty to be applied to Ofgem, Ofwat and Ofcom required further consideration, because they are economic regulators responsible for markets where operators are deemed to have monopoly or near-monopoly market power. More recently, we decided to include them within the various requirements of the growth duty.

My right hon. Friend the Member for Maldon asked about conflict. To reiterate, there is no hierarchy here. The requirements for the environment remain and are not replaced by this measure. In terms of prices, the regulator has an affordability duty as one of the requirements, so that should not override the price-setting role that is naturally played by a regulator in what is pretty much a monopoly sector.

The hon. Member for Glenrothes talked about the requirements and why we are introducing this measure. I point him to some very important stakeholders, including the Federation of Small Businesses, that have welcomed this new duty. He asks about a sovereign wealth fund, which is one of the Government’s plans—we have already announced a plan to introduce one. I would say to him that this is about growth, and point to the facts about growth in the UK, particularly in Scotland. Over the 10 years from 2011 to 2021, England’s GDP growth was 14.9%. The UK’s as a whole was 12.9% and Scotland’s was 7.2%. Growth is important. We cannot deliver the revenue that allows us to set up something like a sovereign wealth fund without economic growth. That is what this is about, so he should welcome it.

The Minister’s statistics are very interesting. Can he give us the equivalent figure for England without the City of London?

The hon. Gentleman can easily find the figures through the House of Commons Library, as I did. Is he envious of the City of London? We should be proud of this great city. Scotland has great cities too. I am a big fan of Edinburgh, Glasgow and other cities. What I am saying is that growth is important. The hon. Gentleman seems to think that it is not. I would ask him to think again about that perspective.

I thank hon. Members for their contributions. To conclude, by extending the growth duty to Ofgem, Ofcom and Ofwat, we will ensure that the regulators have regard to the need to promote economic growth. An economy that promotes growth is an economy that is better able to attract businesses to our shores, innovate, serve households and deliver prosperity across our nations.

I asked the Minister about the primary and secondary objectives, and whether he sees any parallels in how these changes are thought of—I know this is about having due

“regard to the desirability of promoting economic growth”.

Does he think there is a parallel with the way that the competitive duty has been applied?

There is a potential tension to be managed in how regulators think about the importance of sector regulation and the Government imperative to promote growth. When regulatory officials think about our priorities, they might err on one side or the other, and that tension could be a problem. Does he feel that more work is needed to emphasise how the measures are applied, so that consumers do not suffer while we try to promote growth?

We need to do these things in tandem, so that we do not end up with a false economy, where damage is done to the economy through protections and standards that then cost the taxpayer a significant amount. That would leave us in the worst of all worlds, and is surely something that all different parties want to avoid.

I do not disagree with anything the hon. Lady says. This is a parallel objective, not one that should replace the current objectives. It is a consideration for regulators. It is about not just obviating the risk, but looking at other factors. Investment is hugely important for our consumers and our citizens. This draft order is not about one thing or the other—for example, it will not replace the environmental duties of Ofwat. Indeed, the Environment Agency, which has had this duty since 2017, has issued about £150 million in fines to 60 different companies, so this is not about backing off on environmental protections. The hon. Lady raises an important point, however, and we have committed to reviewing how these measures will affect the general regulatory regime to ensure that there are no unintended consequences, although we do not feel that there will be, as long as the right balance is struck.

Of course, regulation must be used only where absolutely necessary, and must be implemented in a way that provides the right foundations for our economy to thrive. The purpose of the duty is to ensure that the specified regulators give appropriate consideration to the potential impact of their activities and decisions on economic growth, alongside their consideration of other statutory duties. It does not create a hierarchy over existing protections.

With that, I believe I have addressed all the questions posed by right hon. and hon. Members, and look forward to the Committee’s support and commendation of the order.

Resolved,

That the Committee has considered the draft Economic Growth (Regulatory Functions) (Amendment) Order 2024.

Draft Growth Duty: Statutory Guidance Refresh

Resolved,

That the Committee has considered the draft Growth Duty: Statutory Guidance Refresh.—(Kevin Hollinrake.)

Committee rose.

Draft Criminal Justice Act 1988 (Offensive Weapons) (Amendment, Surrender and Compensation) Order 2024

The Committee consisted of the following Members:

Chair: Christina Rees

† Baillie, Siobhan (Stroud) (Con)

Firth, Anna (Southend West) (Con)

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

† Henderson, Gordon (Sittingbourne and Sheppey) (Con)

† Hodgson, Mrs Sharon (Washington and Sunderland West) (Lab)

† Hughes, Eddie (Walsall North) (Con)

† Johnson, Dame Diana (Kingston upon Hull North) (Lab)

† Mann, Scott (Lord Commissioner of His Majesty's Treasury)

† Morris, Anne Marie (Newton Abbot) (Con)

† Morris, James (Halesowen and Rowley Regis) (Con)

† Norris, Alex (Nottingham North) (Lab/Co-op)

† Spellar, John (Warley) (Lab)

† Stuart, Graham (Beverley and Holderness) (Con)

† Tarry, Sam (Ilford South) (Lab)

† Tugendhat, Tom (Minister for Security)

Winter, Beth (Cynon Valley) (Lab)

† Wright, Sir Jeremy (Kenilworth and Southam) (Con)

Chloe Smith, Committee Clerk

† attended the Committee

Second Delegated Legislation Committee

Tuesday 23 April 2024

[Christina Rees in the Chair]

Draft Criminal Justice Act 1988 (Offensive Weapons) (Amendment, Surrender and Compensation) Order 2024

I beg to move,

That the Committee has considered the draft Criminal Justice Act 1988 (Offensive Weapons) (Amendment, Surrender and Compensation) Order 2024.

As always, it is a very great pleasure to serve under your chairmanship, Ms Rees. The order before us today amends the Criminal Justice Act 1988 (Offensive Weapons) Order 1988 and adds “zombie-style knives” and “zombie-style machetes” to the list of prohibited offensive weapons. I will briefly set out the context. The Government have already taken robust action to address the menace of knife crime. Zombie knives were banned in England and Wales in 2016, followed by cyclone knives in 2019. Our legislation is stronger thanks to the Offensive Weapons Act 2019 and the Online Safety Act 2023, with further new measures contained in the Criminal Justice Bill currently going through Parliament. We have taken lots of measures in the non-legislative space too, not least the bolstering of our police forces with the recruitment of 20,000 officers. The numbers in London have not quite matched that target, but I hope the new Mayor, Susan Hall, will achieve it.

Nevertheless, as the public would expect, we keep our approach under review and will not hesitate when there is a clear and compelling case for further action. That brings me to the details of the order before us today. This legislation responds to concerns expressed by the police about the availability of certain types of machetes and large outdoor knives that do not seem to have a practical use and instead appear to be designed to look menacing. While zombie-style knives and machetes are fortunately used in a relatively low number of crimes, the police tell us that they are favoured by those who want to get hold of weapons for violent crime and to glamorise violence. Their appearance also creates fear in communities affected by knife crime. These weapons, which are advertised as collection items or as tools, can be purchased for as little as £10.

In 2023, I joined the campaign run by the Express & Star to ensure that these types of knives were banned. Surely, just these weapons being on sale, regardless of their described purpose, speaks volumes to the fact that we should not allow them to be available to anybody?

My hon. Friend makes it absolutely clear why his campaign is right and has been taken up by the Government. He has made the case so forcefully not just on behalf of his own constituents, but on behalf of the whole country. I am delighted to be here speaking on behalf of the Minister for Crime, Policing and Fire, my right hon. Friend the Member for Croydon South (Chris Philp), who would be championing this, but sadly has been otherwise detained.

Unlike more conventional knives and machetes, these weapons have no legitimate purpose. In our conversations with manufacturers and retailers, they have been clear that in their view, these articles are not designed as tools, but as weapons. Under section 141 of the Criminal Justice Act 1988, it is an offence to possess, import, manufacture, sell, hire, offer for sale or hire, expose or possess for the purposes of sale or hire, a weapon specified in an order made under that section. A number of descriptions of weapons have been specified under section 141 and are therefore prohibited, including butterfly knives, knuckledusters, telescopic truncheons and certain types of swords with curved blades, commonly known as samurai swords.

Using the order-making powers in section 141(2) of the Criminal Justice Act 1988, the Government wish to add “zombie-style knives” and “zombie-style machetes” to the list of offensive weapons to which section 141 applies. These weapons are defined as being a bladed article with a plain cutting edge, a sharp pointed end and a blade of over eight inches in length. The length was chosen in order to exclude knives designed for legitimate purposes such as many kitchen and outdoors knives. In order to be within the scope of the ban, the article should also have one or more of the features specified in new paragraph 1A, namely: a serrated cutting edge, more than one hole in the blade, spikes, or more than two sharp points in the blade.

Although it is right that we take the firmest possible action to prevent violence and stop dangerous weapons getting into the wrong hands, we are not seeking to criminalise law-abiding citizens. We are confident that the description of

“zombie-style knife or zombie-style machete”

does not include tools traditionally used in agriculture, farming, gardening or outdoor activities, nor indeed does it include my infantry sword.

We have included in the legislation defences to cover a range of circumstances, including where the article in question is of historical importance; made by hand; possessed, sold or imported for religious purposes; or was given as a gift by a Sikh to another person at a religious ceremony or other ceremonial event. Antiques are already exempt from section 141 of the Criminal Justice Act 1988. We are also providing a defence for blunt items to protect the legitimate fantasy knives market, and we have taken the opportunity to extend this defence to curved swords.

There are a couple of further points to mention before I finish. First, parts 3 and 4 of the instrument provide for a surrender and compensation scheme through which owners of weapons in scope of the ban will be able to surrender them. Secondly, regarding territorial scope, the statutory instrument will apply only to England and Wales. We very much hope that the devolved Administrations in Northern Ireland and Scotland will take similar action to ensure that these dangerous knives are prohibited across the United Kingdom. To this effect, officials have engaged the Governments in Northern Ireland and Scotland.

If these dangerous knives remain available, there is a risk that they will be used in violent crime or to intimidate or cause fear. That is not a risk this Government are prepared to tolerate, nor is it one that my hon. Friend the Member for Walsall North would accept. As we have shown again and again, we will always act to protect our communities and keep the public safe. That is why we are introducing this order, which I commend to the Committee.

As ever, it is a pleasure to serve with you in the Chair, Ms Rees.

Knife crime is a scourge on our communities. In 2022, we saw the highest number of people killed with a knife for over 70 years, and the biggest increase was among young boys aged 16 to 17. Compared with 2015, total knife crime was up 70%, and that included record levels of knife-enabled rape and threats to kill. Last year, 75% of teenage homicides involved a knife or sharp instrument.

As a result, we are now in a situation where it is thought that more than 200,000 children are vulnerable to serious violence. In 2021-22, a record number of children were victims of crime. Those numbers can blur into one, but behind every one is a family, broken hearts and an empty place at the table at Christmas. Many people do not recover from the trauma of that. It is therefore right that we want to act in this space.

Seemingly frequently, we see horrific attacks and threats by people using such weapons as zombie-style knives and machetes in the media. These weapons trade on their supposed aesthetic appeal and the harm they can inflict. It is chilling to see how these weapons are advertised and, frankly, how easy they are to purchase. Any member of this Committee could have bought one, probably a couple, during the length of the Minister’s speech; that is how available and well advertised they are. The intent to cause serious harm is abundantly clear there.

Campaigners have pushed hard to get the Government to act on this, and I pay tribute to those incredibly brave families who have turned their experience of dreadful personal loss into heroic campaigning. This is their day. It ought to be recognised that this is a ban that has been announced 16 times by the Government in some form or other. It should have been introduced sooner, but it is welcome and we certainly will support it in this Committee. We have long called for such a ban, and we now want to see it as swiftly as possible.

The Minister may be able to help me with a technical point. Like colleagues, perhaps, I always find compensation for the surrender of such weapons to be a jarring concept. However, as they were legal products at the point of purchase, it is probably fair, as well as being in line with the Offensive Weapons Act 2019. Article 5 of the draft order sets the compensation at £10, but the surrender and compensation scheme claim form set out in the schedule states that an individual must be owed

“£30 or over to be eligible for compensation.”

Am I right in my understanding that a person would therefore need to return three items in order to be eligible for compensation? Does the Minister have any concerns that that may impair surrender rates? I wonder what modelling has been done.

I want to put on the record my frustration that this measure appears in secondary rather than primary legislation. The Government consulted on knife crime last year and then set out a welcome series of changes that they intended to implement in response to it. The draft order makes one such change, but there are others; those that require legislation have tended to be contained in the Criminal Justice Bill. A Bill is amendable: hon. Members and Members of the other place have a chance to table amendments to it and debate them at length in a Committee Room on this corridor. Today, however, we have been deprived of that chance and have been given a yes or no question. The answer must be yes, but we still feel that there are gaps, particularly in relation to ninja swords.

Ninja swords are very much in the same spirit as a zombie knife: they are sold and marketed to young people for their aesthetic appeal and their threat. We know that they are being used to cause serious harm; the dreadful case of the murder of Ronan Kanda with a ninja sword in Wolverhampton springs to mind. I always apply the Ronan Kanda test: would the action that the Government are taking have taken that weapon off the street? It would not have, and it still would not. That result is a shortfall. Can the Minister say why ninja swords have not been included in the ban and why the strategy is being implemented in a two-tier way via primary and secondary legislation? We might be missing an opportunity here.

Can the Minister tell us where the Criminal Justice Bill is? It contains hugely significant provisions relating to knife crime and organised crime, and it is the pledged vehicle for the stand-alone offence of violence against retail workers. However, we read online, seemingly every weekend, that perhaps it will not be coming back. Can the Minister confirm that it will?

We need a broader approach to tackling knife crime. Bans like this one are a really good start, but when the Minister talks about the policing approach, he knows as well as I do that there are 10,000 fewer neighbourhood police deterring and detecting on our streets than in 2015. That means that there are weaknesses in our attempts to tackle knife crime. Similarly, education and youth services have been denuded in the past 14 years, which has weakened our approach.

The draft order is welcome, but there is much more to do. I hope that the Minister will address the issues that I have raised and that we can go a little further in the remaining stages of the Criminal Justice Bill, if not today.

I thank the hon. Member for Nottingham North for his speech and for the tone with which he has approached the debate. He has been a good friend for many years and has championed many aspects of this work. It has been very much a cross-party effort, and I am grateful for his approach.

I am also grateful that the hon. Gentleman highlighted the pain that, sadly, families face in so many areas. I am sure he welcomes, as I do, the fall in violent crime in the United Kingdom over the past year: it is down 14%, which is a huge achievement not just for the Home Office, but for police forces across our country. That fall in England and Wales is a tremendous achievement that we should welcome.

The hon. Gentleman asked a fair question about ninja swords. While concerns have been raised, and while those types of swords have been used in crime, we have looked carefully at whether to extend the ban to a wider range of swords. Ninja swords that have the features set out in legislation will of course be banned, but those that do not have such features will not be. We have focused our action to date on the types of weapon that the National Police Chiefs’ Council has raised as being of particular concern, namely zombie-style weapons. However, we will keep the legislation under review and will be looking at what more we can do in the area if the police tell us that they have evidence that such swords are increasingly being used in crime.

We need to strike the right balance. Large sections of the public own modern swords as collectable items, and many of my former comrades own their regimental swords and keep them at home. They are not bladed weapons in the usual sense, but blunt ceremonial items. They are prized by members of the family, and many of them have been in the family for generations. We need to ensure that we craft the law in the right way to prevent harm and remove the danger that too many families have sadly faced, but that at the same time we respect people’s right to keep ceremonial or public items that are not of concern to the police. That is an important balance to strike, and we are listening very carefully to the police.

The hon. Gentleman is right that the compensation is £10 per item. A person claiming that the value of their item is higher will have to provide evidence, and the Home Office will assess their claim. That is why there may be a slight discrepancy. I am happy to write to the hon. Gentleman if he would like me to go through the details.

Question put and agreed to.

Committee rose.

Draft Veterinary Medicines (Amendment etc.) Regulations 2024

The Committee consisted of the following Members:

Chair: Dame Maria Miller

† Blake, Olivia (Sheffield, Hallam) (Lab)

Bonnar, Steven (Coatbridge, Chryston and Bellshill) (SNP)

† Bradshaw, Mr Ben (Exeter) (Lab)

De Cordova, Marsha (Battersea) (Lab)

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

† Fuller, Richard (North East Bedfordshire) (Con)

† Garnier, Mark (Wyre Forest) (Con)

† Hamilton, Mrs Paulette (Birmingham, Erdington) (Lab)

† Hayes, Sir John (South Holland and The Deepings) (Con)

† Hunt, Jane (Loughborough) (Con)

† Knight, Sir Greg (East Yorkshire) (Con)

† Loder, Chris (West Dorset) (Con)

Menzies, Mark (Fylde) (Ind)

† Morrissey, Joy (Lord Commissioner of His Majestys Treasury)

† Spencer, Sir Mark (Minister for Food, Farming and Fisheries)

† Tolhurst, Kelly (Rochester and Strood) (Con)

† Zeichner, Daniel (Cambridge) (Lab)

Abi Samuels, Francis Morse, Committee Clerks

† attended the Committee

Third Delegated Legislation Committee

Tuesday 23 April 2024

[Dame Maria Miller in the Chair]

Draft Veterinary Medicines (Amendment etc.) Regulations 2024

I beg to move,

That this Committee has considered the draft Veterinary Medicines (Amendment etc.) Regulations 2024.

It is a pleasure to serve under your chairmanship, Dame Maria. The draft regulations, which were laid before the House on 4 March, will amend the Veterinary Medicines Regulations 2013 in respect of Great Britain to ensure that our legislative regime for veterinary medicines is fit for purpose to protect animal health, the environment and public health, including the people handling the medicines or the treated animal and those consuming produce from treated animals.

It is estimated that more than half of our households have companion animals. Many of those households will rely at some point on veterinary medicines to keep their pets healthy and well. Farmers also rely on veterinary medicines, including vaccines, to prevent disease and protect the health and welfare of, for example, more than 9 million cattle and 21 million sheep. That, in turn, helps to protect our food chain.

Veterinary medicines are necessarily highly regulated goods. The 2013 regulations set out controls on their marketing and manufacture, as well as their supply, prescription and use. Those regulations, which have not had a major update since 2013, now require amendment to reflect advances and developments in the industry. The draft instrument will make the biggest change to them in a decade. We received strong support from our stakeholders across the supply chain in response to our public consultation in 2023 on the proposed changes to the 2013 regulations.

Given the length and the technical nature of the draft regulations, I will focus on the key changes in them. They will ensure that safe and effective veterinary medicines of high quality continue to be available to treat our animals. They will also encourage the appropriate and responsible use of veterinary medicines, which is especially important for medicines to which bacteria and parasites can develop resistance, making them harder to treat.

The draft regulations will modernise the regulatory requirements for veterinary medicines and ensure that they are fit for purpose by reflecting technological advancements and developments, for example by allowing electronic package leaflets or QR codes on packaging and by adopting a flexible approach to novel therapies. The latter will make it possible to deal with their novel nature, in respect of the data required for the technical dossier supporting an application to market such a medicine.

With these amendments, we can ensure that the most innovative veterinary medicines can be brought to our market without unnecessary regulatory barriers and without compromising our assurance of their quality, safety or effectiveness. We will maintain the UK as an attractive market for companies by removing the renewal requirements for marketing authorisations, increasing certain data protection periods and harmonising across the UK the requirements for post-authorisation monitoring of adverse events related to the medicines, such as side effects.

In respect of the supply of veterinary medicines, paragraph 7.8(d) of the explanatory memorandum notes the requirement for

“online retailers to register with the regulator.”

Will a registration fee be payable?

My right hon. Friend asks an interesting question. There is no fee to register, but it is important that those who are selling these medicines into the UK market take the trouble to register so that we can guarantee the safety of our pets, our farm animals and our consumers.

When we were part of the EU, officials in my Department contributed to the development of new EU laws on veterinary medicines, with the main aim being to reduce the regulatory burden. It has always been the expectation that the requirements will also apply in the UK. We are making changes to the regulations in respect of Great Britain, which will, for example, make it easier for businesses to apply for licences for medicines on a UK-wide basis, reducing the regulatory burden for pharmaceutical companies. These companies, which are often global companies, are set up largely to serve the European market as a whole. Changes will also enable common labelling and packaging to be used across the UK. Altogether, this will encourage companies to continue marketing much-needed veterinary medicines here in the United Kingdom.

We are maximising our ability to take appropriate action in the case that a safety concern arises about a product or an active substance—the ingredient that gives a medicine its therapeutic activity. We are doing so by introducing simple registration schemes for manufacturers, importers and distributors of active substances, for online retailers of veterinary medicines, and for manufacturers of exempted medicines for small pet animals. That will improve our regulatory oversight in those areas, without creating an unnecessary burden.

This draft regulations will require pharmaceutical companies and wholesale dealers to report information on supply shortages, which will help us to secure the supply chain and maximise our ability to take action when there is a shortage and maintain the availability of treatment options for our animals.

We are progressing the Government’s plan to tackle antimicrobial resistance through a further reduction in the unnecessary use of antibiotics in animals. The draft regulations make it clear that antibiotics must not be used routinely or to compensate for poor farming practice, while still allowing for preventive use of antibiotics in critical cases in which animal welfare is at risk.

I admire the ambition in the Minister’s statement, but does he share my view that antifungal resistance is not taken seriously enough in this country and that more could be done on prevention, especially in relation to agents that help to get rid of fungal infections, which are dangerous to animal and human health? It is just as serious an issue as antibiotic resistance.

The hon. Lady is right to highlight that point. We pay a lot of attention to antimicrobial resistance, but she is right to say that we do not always take antifungal resistance as seriously. We need to be aware that nature has the ability to mutate and change, and we need to meet the challenges head on. That is why the regulatory regime is so important: to prevent the overuse of some of these treatments, which could lead to resistance forming.

Making changes to farm infrastructure and practices takes time. The changes that we are making will allow for that, while putting trust in our farmers, who have voluntarily reduced their antibiotic use by 59% since 2014.

Finally, the draft regulations will update the fees for the regulatory services provided under the 2013 regulations, in line with the cost recovery principles in the “Managing Public Money” guidelines. They will allow us to continue the effective regulation of the veterinary medicines sector, protecting animal health, human health and the environment. I commend them to the Committee.

It is a pleasure to see you in the Chair, Dame Maria. I thank the Minister for his customarily thorough introduction to this substantial and weighty 209-paragraph instrument on an important subject.

The Opposition support the primary objectives and the key components of this legislation, and we will not be opposing it. Many stakeholders have pointed out that it is long overdue and much needed, as the 2013 regulations are no longer fit for purpose. I thank the National Office of Animal Health, the National Farmers Union and the British Veterinary Association in particular for the information and observations that they have provided. We have also had the benefit of a very well-informed discussion of the draft regulations in the other place.

Fundamentally, we agree with measures that will render the Veterinary Medicines Regulations more effective and modern and enable the development and marketing of veterinary medicines. We hope that these measures will facilitate greater confidence and investment in the UK’s animal health industry, which is a high-value, high-growth and high-skill sector that contributes significantly to the UK.

It is hard not to note the force of the comments from the Veterinary Medicines Directorate, as reported by the Secondary Legislation Scrutiny Committee, which makes it very clear just how important it is that our rules be closely aligned with those of our European neighbours:

“The changes introduced by this SI mirror the requirements in EU law…This further reduces the current levels of UK-EU divergence in relation to labelling”.

I heard similar points made strongly at a recent presentation at the NOAH conference here in Westminster, over the road.

We agree that we must redouble our efforts to tackle antimicrobial resistance. It is important to recognise that UK livestock sectors have made considerable progress in reducing their reliance on antibiotics. The Veterinary Medicines Directorate’s UK veterinary antibiotic resistance and sales surveillance report, which was released in November 2022, shows that UK antibiotic sales for food-producing animals have reduced by 55% since 2014, representing the lowest sales to date. The efforts made also include an 83% reduction in the use of the highest-priority antibiotics for human medicine.

But we need to push harder and go further. That is why we support one of the key objectives of this legislation, which is to put an end to the routine or predictable prophylactic use of antibiotics and restrict treatments to exceptional use only. I can understand why the Veterinary Medicines Directorate stopped short of a blanket ban, but will the Minister clarify what is defined as “exceptional use”? Will he provide more explanation as to how the scope of the exemptions will be contained so that the apparent spirit of that provision is respected? Some stakeholders would certainly appreciate reassurance on that important point.

We agree with the rationale underpinning the requirement for the holder of a marketing authorisation who identifies a shortage of any veterinary medicinal product to notify the Secretary of State. We need to improve our intelligence and foresight of shortages in order to protect animal health and welfare more effectively. I am told that there were shortages of Heptavac this year. Farmers have had historical issues with Enzovax, and pain relief products continue to be in short supply, creating significant issues for timeliness of treatment. It would make a difference to farmers if they could rely on a certain supply of the medications that have significant impact on their livestock.

I appreciate the British Veterinary Association’s point that the reporting system must be implemented in a way that avoids panic buying and stockpiling. It will also depend for its efficacy on timely and reliable intelligence gathering and data reporting. Will the Minister provide more details of the progress on the development of that system? Can he say how he will ensure that it is underpinned by timely and robust information and that it mitigates unintended consequences such as the potential for stockpiling?

One of the main strengths of this legislation is that it should help to ensure that the UK has access to a more reliable and comprehensive supply of medications by reducing divergence from the EU. If we want the UK market for veterinary medicines to continue to offer a broad range of products to vets and animal owners, and to be an attractive place to bring new licensed medicines and innovations, UK regulations should not act as a barrier to trade.

I note the divergence on the issue of data collection: the EU has a mandatory system for the recording of antibiotic use, whereas this legislation maintains a voluntary approach in the UK. I further note that it is intended that the voluntary approach be continued, but that the VMD should have the power to introduce a mandatory approach if it is deemed necessary, as is provided for in the legislation.

The main area of remaining divergence, which is still a significant concern, relates to Northern Ireland. Many people are worried that farmers in Northern Ireland might not be able to access a wide range of important medicines after the December 2025 deadline, when the grace period for the supply of veterinary medicines from Great Britain to Northern Ireland ends. We are talking about approximately 30% to 50% of products ceasing to be available—a significant proportion, which could compromise animal health and welfare and could have an impact on the competitiveness of Northern Ireland’s agriculture. Will the Minister please explain whether and how his Government plan to find a permanent solution to ensure that veterinary medicines remain accessible to farmers in Northern Ireland? Will he update us on any negotiations with the EU to achieve that aim? The Opposition support the draft regulations but, as ever, there are questions to be answered.

I am grateful to the shadow Minister for his support and co-operation. He mentioned divergence, but it is important to recognise that we do not want divergence for divergence’s sake. We want to align with the EU to make things as simple as possible for our food producers, but to maintain our ability to do things differently if we so choose.

Antibiotic use is an important part of the strategy, which I know interests a lot of hon. Members across the House. We have considered it very closely, and it is something that we are very much looking to do.

The shadow Minister asked why we do not fully ban the preventive use of antibiotics in healthy animals. We have included provision for vets to prescribe antibiotics to prevent disease in animals in exceptional circumstances, because a blanket ban might result in a risk to animal welfare and a risk of increased spread of disease.

Our position for many years has been that we do not support antibiotic use to compensate for poor animal husbandry or hygiene. That is now laid out in legislation. The way we would describe that exceptional circumstance, I suppose, is that the use of veterinary antibiotics to prevent disease would have to be prescribed by a veterinary professional. That would be permitted only where there would be a risk of infection or severe consequences if antibiotics were not applied.

The shadow Minister asked about supply in Northern Ireland. We are very conscious of that issue. The changes being made are in line with international standards and, to a large extent, with European regulations. This will encourage applications for new and innovative medicines for the whole UK, including Northern Ireland; such applications could include those for new vaccines to reduce the reliance on antibiotics. They would apply in Northern Ireland, as well as the rest of the UK.

The shadow Minister talked about shortages, which we recognise could be a challenge. The review of shortages will be on a case-by-case basis. We will work with veterinary officers, as well as suppliers and wholesalers, to ensure that there is reliable and available information as soon as an issue is known and identified. In instances of temporary supply issues, the VMD will permit the import of alternatives only until the supply issue is resolved or another suitable product is authorised.

I hope that I have answered the shadow Minister’s questions. I am grateful for the Committee’s support this afternoon.

Question put and agreed to.

Committee rose.