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Grand Committee

Volume 760: debated on Tuesday 17 March 2015

Grand Committee

Tuesday, 17 March 2015.

Arrangement of Business

Announcement

My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes. It is unlikely, but I ought to say that.

Emissions Performance Standard Regulations 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Emissions Performance Standard Regulations 2015.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments

My Lords, the regulations before the Committee today are the implementing secondary legislation for the emissions performance standard. The EPS was introduced by way of the Energy Act 2013 and constitutes one of the measures that collectively make up the Government’s programme of electricity market reform.

Noble Lords will be aware that substantive EPS policy—including its application to any new or existing fossil fuel plant—is established by way of the Energy Act 2013. The regulations before us today are limited to making the practical arrangements associated with the EPS legislation contained in the Act. They set out the application of the EPS in cases permitted by the underlying legislation, and, for England alone, put in place the practical arrangements for implementing and enforcing the EPS. We expect that the devolved Administrations will also soon bring forward legislation implementing the enforcement provisions for the EPS.

By way of reminder, the EPS acts as a regulatory backstop to the amount of carbon dioxide emissions that new fossil fuel plants can emit. To clarify, a “new plant” is an electricity generating station that secures development consent after the EPS came into force on 18 February 2014. The EPS is part of the Government’s strategy to transition to a low-carbon electricity system at the lowest cost to consumers, while maintaining security of supply. It works to complement our existing planning policy, which prevents any new coal-fired generating station being approved unless it is equipped with full-chain carbon capture and storage technology. In combination, these measures ensure that any new coal plant will be equipped with, and must use, CCS.

The power to make these regulations is contained in the Energy Act 2013. Part 1 of the regulations establishes their extent and application. Part 2 makes provision for the additional application of the emissions limit duty, which is the legal duty to conform to the requirements of the EPS, and the modification of that duty in specific circumstances. It will apply throughout the United Kingdom. Part 3 sets out the monitoring and enforcement arrangements that will apply in England. I will now describe the operation of these parts in more detail.

As an exception to the EPS applying only to new fossil fuel plants, Part 2 of the regulations clarifies the limited circumstances in which the EPS will be applied to an existing coal plant. The regulations provide that where an existing coal plant installs or replaces a main boiler—so effectively extending the life of the plant by a period comparable to the operating life of a new plant—that plant is treated as if it were a new plant and is therefore subject to the EPS. This is consistent with the approach set out in the Act.

Part 2 also sets out the circumstances in which a plant’s annual emissions limit will be modified. Where a plant commences or ceases operation part of the way through a year, the emissions limit is amended for that year to take into account the portion of the year to which the EPS applies. Similarly, if the installed generating capacity of a fossil fuel plant changes, its emissions limit is to be adjusted to reflect the new situation.

Part 2 also establishes arrangements associated with the three-year carbon capture and storage exemption from the EPS, provided for in Section 58(1) of the Act, the purpose of which is to provide plants adopting CCS with some flexibility during the commissioning of the full CCS chain. The regulations clarify that the exemption applies only to those generating units of the fossil fuel plant equipped with a full CCS chain.

Part 2 also sets out the methodology for calculating emissions arising from qualifying combined heat and power plants, which provides that the emissions associated with the production of useful heat are not taken into account for EPS purposes. This is to ensure that the EPS does not become a barrier to the development and deployment of good-quality combined heat and power. Finally, Part 2, together with the relevant provisions in the Energy Act 2013, provides that where a power plant uses fuel derived from fossil fuel that is gasified off-site, the associated emissions will be taken into account when the relevant power station’s total emissions are calculated. This is to avoid possible circumvention of the EPS.

Part 3 establishes the process by which the monitoring, reporting and enforcement of the EPS will take place in England. Outside England, the monitoring and enforcement obligation will fall to the relevant authority within the territory. These arrangements have been developed in close co-operation with the Environment Agency, which will act as the enforcement authority in England. In designing this framework, we have sought to minimise any regulatory burden by basing it on and tying it to the arrangements already in place for the EU’s Emissions Trading System, which is also administered by the Environment Agency.

Before commencing operation, a plant’s operator will be required to declare its emissions limit—calculated in accordance with Section 57 of the Energy Act—to the Environment Agency. The operator will then be required to provide emissions data where the plant’s total annual carbon emissions, as measured and reported under the EU ETS, exceed the plant’s EPS emissions limit. This approach removes for many plants the need to do significant extra regulatory work, as carbon emissions data already have to be compiled for the EU ETS. Where the reported EU ETS emissions for a plant exceed the plant’s EPS limit, the plant operator will be required to provide a further breakdown of carbon dioxide emissions, identifying those that are relevant for EPS purposes and those that are not. This information will allow the Environment Agency to verify whether the emissions limit for the plant has been breached in any particular period.

Power plants throughout the UK have a strong track record of compliance with their regulatory responsibilities, and many of them took part in our consultation on these regulations last year. We therefore do not expect that there will be breaches of the emissions limit duty. However, in the event that such a breach were to occur, these regulations provide the Environment Agency with the ability to take strong, proportionate enforcement action, ensuring that no plant breaching its emissions limit can benefit commercially from that breach. The Secretary of State may issue enforcement guidance under the regulations that can set the parameters of any penalties to be applied by the Environment Agency in cases of breach by a plant operator. An appeals route is also provided.

My department has worked in close consultation with the devolved Administrations in designing the monitoring and enforcement regime set out in this instrument with a view to ensuring that, consistent with the government policy, a standardised approach to administration of the EPS is applied throughout the UK. I commend these regulations to the Committee.

My Lords, I am grateful to the Minister for introducing the regulations for debate this afternoon. They are implementing regulations that relate to the part of the Energy Bill where an emissions performance standard was to be set for new build of fossil fuel generation. We had a lengthy debate during the passage of the Bill about the EPS regulations and the role that they need to play. It was clear that the Government had decided that the only role that EPS could play was for new build and would not consider the role of an EPS for existing power stations.

We have raised this on several occasions, and we will continue to raise it, because the context for the regulations is that there is very little appetite for the building of new coal-fired power stations in the UK—in fact, there is very little appetite for building any new power stations in the UK if they do not have a contract for difference, which comes from another part of the Energy Bill. So there is potential for a lock-in to existing thermal assets for some time to come. We have always understood that the EPS is a backstop measure to underline and further support other interventions that the Government are planning to try to meet challenging carbon budgets and decarbonisation targets that we expect to be set for 2030.

The crucial question to consider on whether the Government have got the EPS regulations right is the extent to which that back-up—that belt and braces approach—is also needed on existing plant. I say that for a number of reasons. Partly, it is because in the recent capacity market auctions, a large number of plants bid for those capacity contracts and a large number of existing players won contracts, including a significant amount of capacity of old coal. Nine gigawatts of old coal received a contract through that mechanism. That meant that a large number of potential new build, more efficient gas stations, did not receive a contract, so the net effect of that intervention into the market has been to consolidate the existing plant in the market and to squeeze out investment in potentially cleaner, more modern, more flexible and more efficient stations.

We think that that is regrettable and that the situation needs clarity. We have cross-party support. On 4 February, all three leaders of the major parties signed up to a cross-party recommendation that we should take bold action on climate change,

“to accelerate the transition to a competitive, energy efficient low-carbon economy and to end the use of unabated coal for power generation”.

That is a welcome statement. From our side, we do not see a role for unabated coal going forward and we are committed to decarbonising our electricity system by 2030. Within that, we absolutely want carbon capture and storage to play a big role.

We have to look at how the combined elements of the energy market reforms that were accepted in the Energy Bill work together to deliver that aim. That is the crucial question. We must view these EPS regulations in that light. The truth of the matter is that the Government have insufficient levers at their disposal to ensure that we see a steady move away from unabated coal towards carbon capture and storage and cleaner gas generation. The EPS provided one potential lever, but the Government have chosen not to use it. The regulations highlight that it continues to apply just to new build and not to existing plant.

I do not want to have a lengthy debate about this, but I wanted to make that context clear. We cannot consider these instruments in isolation; we must look at the net effect of how they interrelate. At the moment we have a set of policies that are allowing old coal to persist. The only mechanism that the Government have to hold back coal is the carbon price floor. Indeed, that is referenced in the supporting notes to the regulations: the EPS is seen as a back-up for the carbon price floor.

As we all know, the carbon price floor was frozen merely a matter of months after it had been introduced, so the escalator that the Government expected it to follow—the steady increase in its level—has been stopped. It will now be frozen until 2020. DECC seems to continue to believe that at some point in the future we will return to an escalating carbon price floor and that it is this that will drive unabated coal off the system. However, how politically feasible is it that that price mechanism will return to that trajectory?

In this Budget we will see a doubling of the carbon price floor and it will then stay at that level until 2020. However, DECC’s projection shows that it wants the carbon price floor to rise thereafter, reaching an eye-watering £78 per tonne in 2030. How is that going to happen? In 2021, what will the price rise to? Will it go back to the old trajectory that was foreseen when the EMR was drafted or will it step down and take a linear pathway from 2021 to 2030, when it is meant to reach £78 a tonne? Either way, I would argue that this policy is now politically, if not by any other definition, very unlikely to survive. I certainly cannot see that any Government are going to wish to see the price rise to £78 a tonne by 2030.

Is it not time that we took a more holistic approach to the other levers that the EMR created and properly assessed how an EPS could be implemented to achieve that cross-party commitment that we saw from our leaders to phase out unabated coal for a generation, and to do so in the most cost-efficient way? The IPPR recently issued a report looking at how much can be saved for the consumer by using an EPS—a regulatory intervention—on existing coal, as opposed to this rather unfeasible and, quite frankly, not believable policy of the carbon price floor. It will cost consumers more if we try to use that mechanism to achieve the same ends.

I have said that we are committed to a 2030 target, and indeed we are. Equally, we are committed to CCS playing a role in helping to achieve that goal. Therefore, I very much welcome the elements of today’s regulations that exempt CCS and enable it to be developed sympathetically, enabling it to interact sensibly with these emissions limits. I am very pleased that that can be seen in these regulations.

I have set out my concerns, which relate very much to the generality rather than to the detail of the regulations. The way that the regulations are drafted obviously follows on from what was agreed in the primary legislation, and in that sense we support them. We see that a sensible provision of enforcement is being introduced. However, I have one small question about the conditions under which an EPS might be suspended. There is talk of the EPS being lifted or suspended if there are security of supply concerns. I would like the Minister to reassure me that this would be done in a very transparent way and that the decision would indicate that our capacity market proposals were not working. What would be triggered in the event of having to suspend the EPS? Would it indeed mean that we would then have to review the capacity mechanism on the grounds that it had not delivered sufficient capacity to enable us to keep the EPS?

That was a question relating to the regulations. As I said, we hope that over time the Government will think again about their policy for phasing out unabated coal. We think that there is a role here for an EPS to help us to plan for that. That would enable investors in gas capacity to have greater certainty about there being room for them in the market. We also think that it would save consumers money and reduce our import dependency. Let us not forget that 80% of our coal for electricity generation now comes from overseas, and about 40% of it comes from Russia. That means that, when it comes to concerns about Russia’s role in energy, the UK’s exposure really relates to coal and not to gas.

For all those reasons, this is an interesting policy area that I am sure we will revisit on the other side of the election. For now, we support the regulations in so far as they implement what was agreed in the Energy Act.

My Lords, I am extremely grateful for the general support of the noble Baroness for the regulations. She is right that we did discuss it at great length at various stages of what became the Energy Act and within the Infrastructure Bill—so the debate has been well aired. It is an important backstop measure that complements the wider range of interventions that act to secure and decarbonise our electricity supplies as we work towards a low-carbon future.

The noble Baroness touched on a number of issues and I shall try to go through them—but, as with all things, if I feel when reading Hansard that I have missed something out I undertake to write to her. She asked about the capacity markets and felt that the market had squeezed out gas. We have always made it clear that the capacity markets would be technology neutral and that we needed to make sure that there is competition built in, so that we get best value for the consumer. We project that coal will eventually come off and that we will have far less dependency on it, given that we have the potential for the exploitation of shale and other technologies. We see coal playing less of a role going forward. However, it is important to ensure through the measures we are taking that we do not put such a cost pressure on the consumer and that we have security of supply because it is so necessary for us to demonstrate to the public that the Government have taken all precautions to ensure that the lights stay on. So I think that the noble Baroness was being slightly unfair. The capacity market brought on a lot of different technologies at a cost that was driven by competition, which gives the consumer better value for money.

The noble Baroness also asked us to look at the future of coal. I have just touched on that. Our analysis is very much in league with a lot of other analysis that has been given to us, which suggests that unabated is expected to account for only 1% of total electricity generation in Great Britain by 2025, and will decline even further.

I thank my noble friend for giving way. Are the Government taking a view on when they think carbon capture and storage will become viable at a reasonable price? There were attempts to put out pilot projects, one of which was Longannet in Scotland, which was found to be an uneconomic proposition. I gather that it is now proposed to close that power station.

My Lords, my noble friend may be aware of two projects that we are funding—one at Peterhead and one at White Rose. They will become the world’s first commercial-scale gas CCS projects. They are still being developed. If my noble friend will allow, I will give him a fuller response. We are demonstrating that we are leading in the world with CCS. Investing £1 billion shows our seriousness about taking CCS forward.

I shall continue with the questions raised by the noble Baroness, Lady Worthington. She referred to the carbon price floor, saying that there was a projection and a sort of wish list that it would rise. We all know that the EU ETS has to be reformed properly. None of us expected the carbon price to fall as much as it did. However, we are where we are with it. I was at a European Council meeting a couple of weeks ago where there was broad agreement that we needed to look at reforming the EU ETS to make sure that it better reflects its participatory role in ensuring that countries that do not have an extreme tendency to reduce their carbon footprints will be encouraged to do so. There is broad agreement that it has to be reformed. That will play a large part in how we respond to the discussion around the carbon price floor.

Another important point is that we must remain competitive. It has always been key that as a country we should not out-compete ourselves by driving ourselves to reduce carbon emissions at a pace while others use them to be more competitive. We need to reach a fine balance, and it is important that in pushing for reform we ensure that the measures we take, internally and domestically, give great examples for others to follow. That is my response to the noble Baroness.

Before the noble Baroness moves on to the next topic—perhaps the Minister can write to me if it is easier—to get to that projection of only 1% of electricity coming from unabated coal by 2025, what is the carbon price assumption in that model? Does it start from the current £18, where it is frozen until 2021, and rise from there, or does it go back to its original trajectory, as was published by the Treasury and others?

My Lords, I think it would be beneficial for me to write to the noble Baroness, because I do not want to give her an assumed figure that turns out to be misplaced.

My final response to the noble Baroness concerns the conditions under which the EPS would be suspended. The Government have published a policy statement that sets out the conditions that must be met for a suspension to be made. Details of any suspension must be laid before Parliament. Again, if the noble Baroness and my noble friend find it helpful to have further details on that, I would be happy to put them in the letter that I will send to the noble Baroness on the other issues.

I agree with the noble Baroness that by and large, politically, the three major parties have come to an agreement. We need to work together to reduce the carbon emissions of this country to meet our own goals, but it is important that we send out consistent messages around the policies that we are working on. The Energy Act has driven that and shown that, working together, investors have come with confidence to invest in the UK. I end by thanking noble Lords for their positive remarks, and commend the regulations to the Committee.

Motion agreed.

Children and Young People (Scotland) Act 2014 (Consequential and Saving Provisions) Order 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Children and Young People (Scotland) Act 2014 (Consequential and Saving Provisions) Order 2015.

Relevant document: 24th Report from the Joint Committee on Statutory Instruments

My Lords, this draft order is made under Section 104 of the Scotland Act 1998. In summary, it proposes to do three things. Before explaining them in some—I am afraid—unavoidable detail, I would summarise them thus. First, we propose to amend Section 44 of the Children (Scotland) Act 1995 for the rest of the United Kingdom, with a related saving provision. Secondly, we propose to amend the definition of “child” for the rest of the United Kingdom in relation to the amended Section 44. Thirdly, we wish to make a minor corrective amendment to the definition of “secure accommodation” in the Criminal Procedure (Scotland) Act 1995 for the rest of the United Kingdom.

On the first of those, Section 44 of the Children (Scotland) Act 1995, which I shall refer to as the 1995 Act, makes provision to prohibit the publication of proceedings at children’s hearings and certain related proceedings before a sheriff. Section 44 was repealed, as it extends to Scotland, by the Children’s Hearings (Scotland) Act 2011 and replaced for cases going forward under that Act by a similar provision made in Section 182 of the 2011 Act. However, it is now clear that Section 44 is still needed to ensure that it continues to be an offence for a person to publish relevant information in relation to historic children’s hearings cases dealt with under the 1995 Act, and cases which began under the 1995 Act system and continue to proceed under that Act by virtue of the transitional arrangements.

The draft order is made in consequence of the Children and Young People (Scotland) Act 2014, which I shall refer to as the 2014 Act and which now reverses for Scotland the unintended repeal of Section 44 of the 1995 Act. I wish to reassure the Committee that while it is evident that the repeal of Section 44 was an error, no child’s welfare was jeopardised by it as the repeal was not commenced when the rest of the 2011 Act was commenced—the error having been identified before the commencement order. The 2014 Act also amends Section 44 for Scotland so that, going forward, it applies only to exclusion order proceedings under Section 76 of the 1995 Act. This is required as those proceedings remain under the 1995 Act and are not covered by the 2011 Act.

Given the United Kingdom extent of Section 44 of the 1995 Act, the draft order is required to give effect in the rest of the United Kingdom—that is, outwith Scotland—to both the amended version of Section 44, to restrict its future application to exclusion order proceedings under Section 76 of the 1995 Act, and to save the former version of Section 44 for both historic and ongoing children’s cases under the 1995 Act.

The second matter proposed is a related amendment to the definition of a child in Section 93(2) of the 1995 Act. Section 52(b) of the Criminal Justice (Scotland) Act 2003 made a change to the definition of child in Section 93(2) for the purposes of Section 44 of the 1995 Act, so that it was extended from persons under the age of 16 years to persons under the age of 18. However, that change was not extended to England, Wales and Northern Ireland. Just as the draft order seeks to bring the existing parallel texts of Section 44 into line, it seeks to have the same definition of child for Section 44 purposes for all jurisdictions.

Thirdly, the draft order also corrects a minor error made by the Section 104 order made in consequence of the 2011 Act. The previous Section 104 order amended Section 44(11) of the Criminal Procedure (Scotland) Act 1995 by substituting the definition of “secure accommodation” with a new definition that took into account the most up-to-date statutory cross-references for Scotland, England, Wales and Northern Ireland. However, the substituted definition contains an undefined reference to the “2000 Act”. The 2014 Act corrects this for Scotland by clarifying that the reference is to the Care Standards Act 2000. The draft order makes the same clarifications for the other jurisdictions.

This order again demonstrates the Government’s continued commitment to working with the Scottish Government to make the devolution settlement work. I can confidently say that this will be the last such order in this Parliament, so it may be for the interest of the Committee to note that 45 orders have been made under the Scotland Acts of 1998 and 2012 in this Parliament, since May 2010. In your Lordships’ House, 27 of these have been subject to the affirmative resolution procedure. There was an extra one in the other place which related to bonds, and therefore did not require to be affirmed by your Lordships’ House, and 17 of them were subject to the negative resolution procedure. That is indicative of the way in which the devolution settlement is flexible, and indeed of the commitment on the part of the Government to work to ensure that legislation passed in Scotland is applicable in other parts of the United Kingdom and that the devolution settlement works.

With that, I thank the officials in the Scotland Office, in various departmental offices and, not least, in my own office of the Advocate-General, for all the work they have put into these, as well as officials in the Scottish Government, because it requires a lot of co-ordination to get these orders to be brought forward and there has been a lot of co-operation here. I also thank the noble Baroness—I think this is the second time she has done a Scotland Act order—and her other colleagues, not least the noble Lord, Lord McAvoy, who I saw up until just a moment ago was engaged in the Chamber on the Corporation Tax (Northern Ireland) Bill. I appreciate the constructive co-operation they have given, and with those words I commend the order to the Committee.

My Lords, I thank the Minister for his explanations, which are helpful. We support what seems to be the tidying up and correcting of some anomalies in the legislation. I also thank him for his generous comments. I know that he will have been somewhat surprised to see me here again today, having been expecting my noble friend Lord McAvoy, who discovered at the last minute that he was unable to be in two places at once. His skills extend some distance, but he could not quite achieve that. I will pass on the noble and learned Lord’s comments to him, and I know that he will welcome them. He has always found the Minister to be very co-operative and willing to engage in discussion of issues, which is appreciated. Again, the Minister will be surprised to see me—this is the second order I have done. My link is that I have a Scottish mother and I spent a lot of my childhood in Scotland; that alone does not qualify me, but I hope that it helps.

I have a couple of questions on this. I appreciate that Section 44 was repealed in error and that this is a step to correct that—to which we give our full support. When was it recognised that the mistake had been made? Was the issue ever raised in debates as the Bill was going through? The comments the noble and learned Lord made were helpful when he said that the repeal was not commenced, so no child had suffered as a result of that. That is clear, and it is helpful to have that information. However, for it not to be commenced, it must have been recognised very soon afterwards at least that there was a problem and that it should not have been repealed. Perhaps the Minister can help us by saying when that came to light; that is the only question we have on that. Overall, we support the order before us today.

My Lords, I thank the noble Baroness for her kind comments. I, too, know the tremendous talents of the noble Lord, Lord McAvoy, but being in two places at once probably defeats him.

The noble Baroness asked when it was recognised that a mistake had been made. Clearly, it was not recognised during the passage of the Bill, otherwise up until the final stage 3 in the Scottish Parliament it would have been possible to move an amendment. However, it was recognised before the Act was commenced in 2013. The error was noticed between the passage of the 2011 legislation and its commencement: therefore, when the commencement was done, it did not commence the repeal provision. When the Section 104 order, which was consequential to the 2011 Act, was brought before this Parliament, the error had been noted by then, so in no way did we seek to extend the appeal provisions to England, Wales and Northern Ireland. I repeat the assurance that because of that and because of the lack of commencement, no child has had their interest jeopardised.

Motion agreed.

Community Radio (Amendment) Order 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Community Radio (Amendment) Order 2015.

Relevant document: 25th Report from the Joint Committee on Statutory Instruments

My Lords, the Government are committed to a strong and vibrant community radio sector. Since the sector’s establishment in 2004, it has developed into an important and integral part of the modern radio landscape—valued by the communities that it serves and reflecting a diverse mix of cultures and interests.

Stations range from those targeted at a particular community, those run for our forces and those targeted at students and hospitals to stations serving small and rural communities. Community radio stations are required, by legislation, to be run by not-for-profit organisations and to provide original, distinctive and, crucially, local output. Two hundred and twenty-three stations are currently on air. This is made possible by the huge amount of effort and support that stations receive from their army of volunteers—on average, the equivalent of 214 volunteering hours per week, every week. Community radio also attracts young volunteers, who gain really valuable skills.

Although demand for community radio licences up and down the country has remained high, the position for existing licences has not been easy. We have received representations that community stations have had to turn down sponsorship—not advertising—from local businesses. For the 19 stations not allowed to take any income from sponsorship or advertising, such as Swindon 105.5, the issues are particularly acute.

The other concern expressed was the position of stations launched in 2005, whose licences would, under the current law, start to expire from October this year. Quite rightly, community radio stations wanted to know whether they would be able to renew their licences or whether they would need to go through an open competition for a new licence.

In the Connectivity, Content and Consumers strategy paper, published in July 2013, the Government said that they would consult on possible changes to the restriction on commercial funding of community stations. We also said that we would look at whether there was a case to allow community stations that continued to fulfil their remit to have licences renewed for a third five-year period. We carried out this consultation between February and April last year and received more than 100 responses. We published our response to the consultation in January this year. It is fair to say that there was strong support from community radio stations for the changes, although some were concerned that the changes might affect the characteristics of community stations. RadioCentre and commercial radio stations were, overall, opposed to the changes. In essence, they wanted to maintain the precautionary approach taken when the Community Radio Order was adopted in 2004.

Given the lack of common ground, we took further soundings from both RadioCentre and the Community Media Association before publishing the conclusions to the consultation. I acknowledge the frustrations of the community radio sector about the delay, but it was important that we should make sure that, in setting the new arrangements, we got the absolutely right balance between the legitimate needs of both sides.

We need to ensure that there remain protections for the smallest independently run commercial stations, and we have reflected that in our conclusions. We therefore believe that the so-called “absolute rule”, which enables Ofcom to place restrictions on some community stations, preventing them receiving any income from sponsorship or advertising, should be modified but not removed entirely. Instead, the order introduces a new arrangement allowing all community radio stations, including the 19 stations currently subject to the “absolute rule”, as a minimum to raise up to £15,000 per year from those commercial sources. This figure represents a quarter of the average revenues for community stations. Stations not subject to restrictions will be able to raise 50% of income above that level from commercial sources. This increases the headroom for all community stations, but helps most those community stations with smaller average revenues.

The final aspect is that those stations that were subject to restrictions due to being in the same area as a small commercial station where that commercial station is now part of a larger group will also be able to raise up to 50% of their annual income from those sources. The effect is that, where restrictions are no longer needed because of consolidation with commercial radio groups that are taking advantage of the ability to share premises and network content, those community stations should be treated the same as community stations with no restrictions.

Finally, the order recognises that many community stations need a 15-year rather than a 10-year window to establish themselves fully, given a station’s set-up cost and the effort involved in creating and establishing services. In recognising this problem, the Government have decided to address this concern by giving Ofcom the power to renew licences. Licences are currently awarded for up to five years with one further period of up to five years, making a total of 10 years. This order permits Ofcom to renew licences for one further period of up to five years, allowing community radio stations to operate for up to 15 years, provided licensees meet their licence conditions. The order also permits holders of local TV licences also to hold a community radio licence.

The purpose of the order is to give community radio stations more scope to raise funding from commercial sources while protecting the characteristics of community radio. The changes are quite modest. There are no changes to the basic requirement that community stations must be run by not-for-profit organisations for social gain and we have retained protections for smaller independent commercial radio stations. We believe that there will be minimal impacts on small commercial stations, but we will keep the position under review. The changes also allow the longest established community stations, which are valued by their communities, to apply for a further five-year renewal of their licences—something strongly welcomed by community radio stations. I commend the order to your Lordships.

I thank the Minister for that extremely clear introduction to the issue. By and large, we welcome the order. The Minister is quite right to say that it is modest. I would like to press him on the fact that it perhaps needs to be less modest.

I come at this partly from having been an activist in the 1980s on community radio, where I worked with the sociologist Michael Young, who believed that there was great scope for community-controlled radio stations in tower blocks with common aerials. He was technically right: getting a licence from the Home Office, as was the case then, was impossible. It took a very long time from then, until about 10 or 15 years ago, for community radio to become truly accepted.

Community radio is a great thing and we should be helping it to happen. It is clear that Article 5(5) is the important one: it gives provision for holders of community radio licences to extend their licences twice; provision to allow one organisation to be the holder of a local digital television programme licence, as well as a community radio licence; and provision to allow certain community radio stations to receive income from the takings of advertising and sponsorship of their programme output, when they were previously prevented from doing so. I remember when this legislation went through your Lordships’ House; I thought it was restrictive then and I think it is still restrictive.

I point the noble Lord to the Government’s notes—the Explanatory Memorandum. Paragraph 7.2 states:

“Notwithstanding this apparent success”—

of community radio stations under the current regime—

“many community radio stations are struggling to build a long term sustainable business model”.

The question that we need to ask is: will the £15,000 limit help to make community radio stations more sustainable? Was there an examination of the business case for this? How will that help them?

The Community Media Association believes that this is a modest step forward but not necessarily one that will provide community radio stations with sufficient. Why is there a limit of £15,000 and why set the level at 50% for community radio stations earning revenues through advertising and sponsorship? Back in 2003, the Everitt report recommended that there should be greater flexibility and I wonder why the Government have not picked up those recommendations and run with them. Those are my questions to the Minister but, as I say, they are within the context of supporting the order as a further step in recognising the important role that community radio plays in our local communities. In Bradford, we have Sunrise Radio, which is absolutely wonderful and brilliant.

My Lords, it is a pleasure to reply to the noble Baroness because she clearly knows very much more about these matters from her long-standing experience of activism, which always helps to colour the debates. I am delighted by her welcome, and I do identify the noble Baroness as an activist. From reading about the many community radio stations that exist up and down the country, I know that that activism has been of great benefit to the communities with which it has been seeking to communicate. On the point about tower blocks, one of the issues that we have always had is how to retain a sense of community and communicate well there. The arrival of community radio stations has been of great social benefit to those communities.

In terms of building a sustainable business model, there have been discussions with the commercial sector and the Community Media Association about the £15,000 and the 50%, and about trying to get the balance right. Like all these things, in the end it is about where to strike the balance. The Government felt that we should move in a direction that we thought would not adversely impact on the commercial radio sector, but would very much help the community radio sector to prosper and enable it to raise funds. To answer the question: it was to try to keep some distinction of retaining this not-for-profit, for-social-gain community sector, but wanting it to prosper more and to have the ability for revenue generation. The £15,000 represents a quarter of the average revenue of a community radio station, and we thought that that was an appropriate level at this stage. No one wants to rule anything in or out; we have all moved since 2004 into thinking that we need to do a bit more to help the community radio sector. That is the Government’s move, and, as I say, I am most grateful to the noble Baroness for her welcome of the provisions.

The main point is that I am sure that any future Government will want to keep these matters under review; that would be the appropriate response. We want to see how the provisions bed in. We want community radio to prosper. When I received my first brief on this matter, there were 219 community radio stations on air; by the time I had my final briefing, there were 223. That shows that this sector commands the attention of, and is of great interest to, the communities which they serve, and I wish it well. In the mean time, I commend the order.

Motion agreed.

Occupational Pension Schemes (Charges and Governance) Regulations 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Occupational Pension Schemes (Charges and Governance) Regulations 2015.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments

My Lords, I am satisfied that this instrument is compatible with the European Convention on Human Rights. The instrument was passed by the House of Commons on 3 March 2015 and, subject to your Lordships’ approval, will come into force on 6 April 2015.

As noble Lords will be aware, automatic enrolment has got off to an excellent start. We now have more than 5 million people enrolled in a workplace pension scheme. As we move towards our goal of automatically enrolling 10 million workers, we must be sure that their pension savings are invested in well governed schemes with fair and reasonable charges. The regulations will protect members in occupational schemes from high and unfair charges and will introduce new governance standards. The Financial Conduct Authority will introduce similar provisions for workplace personal pension schemes, which will come into effect on the same date.

First, the regulations introduce measures to control the level and types of charges in pension schemes used by employers to meet their automatic enrolment duties. There will be a cap on charges in the default arrangement within these schemes, protecting savers who have had little or no engagement with their pension savings.

Broadly speaking, a default arrangement is the arrangement into which a member contributes if they have not made an active choice about where their savings should be invested. Historically, not all schemes have had that sort of default arrangement. The regulations therefore set out two further tests to identify arrangements which are used in a similar way to the “true” defaults. In order to ensure member protection, they, too, will be subject to the cap.

The charge cap will be set at 0.75% annually of funds under management, or an equivalent combination charge. The regulations also restrict the charging structures that schemes may use in their default arrangement. Schemes must use either a single funds-under-management charge or a funds-under-management charge in combination with either a contribution charge or a flat fee. The cap covers all costs and charges relating to general scheme and investment administration. Transaction costs, along with a small number of other costs—including those associated with providing death benefits—are not included. The regulations provide two methods by which trustees can measure whether charges in their default arrangements have complied with the cap. They may decide which of these methodologies to use, depending on how they levy charges on members.

The regulations also ban active member discounts from April 2016. By these, we mean charges imposed on a member’s pot which are increased when they stop contributing to the scheme—for example, because they leave their job.

All of these measures on charges apply to occupational schemes offering money purchase benefits which are used by employers to meet their duties under automatic enrolment. They do not cover those schemes which include a promise to the member about the benefits that they will receive.

Secondly, these regulations set out minimum governance standards for relevant occupational pension schemes. These require trustees or scheme managers to ensure that default arrangements are designed in members’ interests and kept under review. They also require that core financial transactions are processed promptly and accurately, that trustees report on the level of charges and costs borne by scheme members, and that they assess the value of such costs and charges.

To ensure that trustees have appropriate freedom in how they govern their schemes, the regulations also ensure that trust deeds and rules do not tie trustees into using particular service providers. This requirement overrides any conflicting provisions of the scheme.

Where a scheme does not already have a chair in place, the regulations require that the trustees appoint one. The chair will be responsible for signing off an annual statement on how the minimum governance standards have been met.

We also want to strengthen the independent oversight of schemes used by multiple employers—what we commonly call master trusts. The regulations therefore require that relevant master trusts have a minimum of three trustees. The majority of these trustees, including the chair, must be independent of any providers of services to the scheme. This will apply to schemes used by employers who are not part of the same corporate group.

We have made a temporary exemption to these master trust independence requirements for schemes set up by statute in order to further investigate the level of governance requirements that already exist in these schemes. The National Employment Savings Trust, NEST, is exempt from these independence requirements, as it already has rigorous governance requirements required by statute.

The regulations also require master trust trustees to be subject to limited-term appointments and to be appointed via open and transparent recruitment processes. Taken together with the new requirement that trustees must make arrangements to encourage the airing of members’ views, this will help to ensure that master trusts have members’ interests as their priority.

The governance measures have a wider scope than the charges measures and will cover occupational schemes offering money purchase benefits, regardless of whether they are being used for automatic enrolment.

These regulations introduce a comprehensive package of measures to ensure that savers’ interests are put first by protecting members from high and unfair charges and the consequences of poor governance. I commend them to the Committee.

My Lords, there is much to welcome in these regulations, including the banning of active member discounts—what I prefer to call “inactive member premiums”—where charges increase when a member stops contributing; the capping of charges at 0.75% in the default arrangements; that the cap will apply at the level of the individual member; and a set of minimum standards for governance, including the oversight of master trust multiple employer schemes where employers are not all part of the same corporate group. As I said, there is much to welcome.

When the staging of automatic enrolment is completed in 2018 and some 8 million to 9 million people will be newly saving, or saving more, most of them will not have made an active choice about their scheme or their investments. Many employers will be making most of the key decisions about their workplace schemes but they lack the capability and/or the incentive to ensure that workers receive value for money. Therefore, neither employers nor employees can be expected to drive competition—a proposition stated by numerous bodies in recent months.

As we know, auto-enrolment is built on inertia. At the same time, several reports reveal conflicts of interest in the industry. Therefore, it would be a failure of public policy if millions of citizens were auto-enrolled into workplace pensions but Parliament had not ensured that sound governance was in place and value for money delivered.

I am most grateful for the helpful replies to all my queries from the person at the DWP identified as the contact point in the Explanatory Memorandum. However, I have further questions. Regulation 3 specifies that, once an arrangement satisfies the definition of a “default arrangement”, it will always be a default arrangement and will be subject to the charge cap. If a scheme has a default arrangement covered by the charge cap but contributions then cease because the employer chooses to close that scheme, or a company becomes insolvent so that there is no employer, will the scheme’s default arrangement in those circumstances always remain subject to the charge cap? Are there any circumstances in which a default arrangement ceases to be covered by the cap?

Similarly, an employer’s scheme has a default arrangement but when an employee leaves, the employer is not bound to keep the ex-employee in their scheme. An increasing number of employers are choosing not to do that. If an ex-employee does not arrange their own transfer, the employer defaults their savings into a pension product that is not covered by the workplace pensions charges and governance protections. I can see no provision in these regulations that imposes restrictions on the pension products into which employers can default their ex-employees’ accumulated savings. I would be very happy to be told that I am wrong on this point.

Furthermore, if an employer is able to close their scheme and default arrangement, and bulk transfer the deferred members’ savings into an alternative pension product, which some can under the rules of their scheme, there appears to be no restriction on the products into which such bulk transfers can be made. Can the Minister say whether there are any restrictions on such bulk transfers, where they would breach the principle that a default arrangement is always covered by the charge cap?

Coming on to value for money, any charge not covered by the cap will be covered by the value-for-money assessment which trustees have to undertake on charges and transaction costs—a very welcome requirement—but some imponderables remain. TPR and the FCA want trustees and the independent governance committees to adopt a common approach. Although the Pensions Regulator publishes guidelines, good value is not defined in the regulations so it is not clear what is intended by a common approach. Trustees are required under the regulations to calculate,

“in so far as they are able … the transaction costs”,

which anticipates the complexities in the different types of costs—brokerage fees, bid-offer spreads, transaction taxes et cetera—and of getting hold of all the data. Trustees will need the co-operation of investment managers but if those managers are subject to confidentiality agreements with their own service providers, they will not provide all the information. So the Government need to consider such confidentiality agreements if transparency on transaction costs and other costs is to be achieved.

A matter of interest is how the charge cap will apply to the new pensions flexibilities. I welcome the provision that a saver who wants to access the new flexibilities and transfer out of their default arrangement into another scheme or draw-down arrangement will be protected by the cap for charges incurred by transferring out. But that leaves outside the cap the costs of transferring into the draw-down arrangement and the ongoing charges in the draw-down product. On the final rules for charges, the FCA reports that the Government have decided that, for the time being, draw-down should not constitute a core service and that in view of this temporary position, the FCA does not intend to amend its proposed rules. Can the Minister confirm that excluding from the charge cap the charges in income draw-down arrangements is indeed a temporary position and that they will be included later?

The regulations ban active member discounts but employers will be able to pay some or all of the charges on behalf of their current employee. So when Regulation 11(1) refers to prohibiting trustees and managers imposing higher charges “on a non-contributing member”, that means the overall level of charges to which the member’s pot is subject and not the charges borne by the member themselves—a subtle but important distinction.

The regulation allows employers to choose to subsidise active members, but active members cannot be subsidised by deferred members. I support the Government in wanting to allow generous employer practices towards employees who are active members. It will be important to ensure there is no masking of differential charging. The requirement that the amount the employer pays must be equal to the subsidy the employees receive will act as a control up to a point. But these practices will need to be properly documented by employers and providers if differential charging is not to be masked. The ban on applying higher charges applies to workers who cease contributing after 6 April 2016—not before, I understand. Similarly, the charge cap will not apply to those who ceased contributing before its introduction. That still leaves a lot of pension savings vulnerable to poor value for money.

The minimum standards of governance are welcome. The requirement on the chair to sign an annual statement will focus the minds of trustees, although many trustee boards are already very focused. Failure to prepare such a statement will result in a fine but it is unclear what the penalties are for non-compliance with other governance duties. Raising the governance standards in master trusts for multiemployer schemes is very welcome, but the requirement to have at least three trustees is a rather low threshold, especially as only two of them need to be independent of the provider.

I welcome the regulations because they represent an important start, not the end of the journey to achieve better value for the saver. However, there are still important matters to be addressed. A cap of 0.75% on a default arrangement needs to come down further. It is not the role of the saver or public policy to fund inefficient business models or conflicts of interest. Full transparency on all costs levied on the saver is needed. Extending the cap to include transaction costs is also a need, as is achieving value for money in draw-down products and annuities. We await the regulations to ban commission and consultancy charges in occupational schemes.

I repeat that there is much in these regulations that are welcome, but ensuring sound governance through the effective control of conflicts of interest I am sure remains unfinished business.

My Lords, I feel to some extent that this is where I came in. I spent the 1970s persuading a number of university colleges to join a decent occupational pension scheme and to leave their insurance-based, extremely poor-value local college schemes. Incidentally, the charges for those poor-value schemes were between 4% and 5%. I was able to persuade people that that was such appalling value that they would be much better off in a different scheme. That is where I think there is a bit of repetition of history. That is not counting, of course, what the investment people took from the scheme; that was just the administration charge. Therefore, I cannot help thinking that in the pensions political world we take one step forward and then sometimes two steps back.

Inertia selling is something that I strongly agree with when it comes to an issue as important as pensions, and we certainly had that in the 1970s. People were joined up to their schemes and they had to take a step to opt out. That was made unlawful by a Conservative Government and it changed the pensions world substantially.

I am sorry if I have a good memory on these things but that is very important when we start off on something that might turn out to be a very good thing, as only history will show whether it is. My fear is that the smaller schemes will have a worse record on governance and compliance. The surveys that are pointed out in the Explanatory Memorandum prove that 24% of small schemes are likely not to conform, compared with 10% of big schemes. So here we go again on this roundabout. I understand that the Government do not want to force schemes together, but there is a logic in pointing out that you get better value for money in the larger schemes.

I support my noble friend Lady Drake on some of the safeguards that she has been asking for. I have seen insurance companies use every trick in the book when it comes to taking money from pensions. People do not understand the issue of pensions. When they are young, they do not think it is important, and, as they get older, they are fearful but they do not necessarily understand it. It is an important part of public policy that we should protect people from those who understand money and understand how to take it surreptitiously, where the pension pot ends up being of a scandalous level.

Therefore, this is just a plea that we should be quite humble about some of the things that we do on pensions, as there is no proof whatever that this measure will be successful. The fact that the general issue has all-party agreement is a good thing, but we have a long, hard road to travel before anyone in this Room can say that it has been a success.

My Lords, I thank the Minister for his explanation of these regulations, my noble friend Lady Drake for a characteristically thorough interrogation of them, and my noble friend Lady Donaghy for highlighting some very important lessons from the past that should inform our discussions today. I remind the Committee of my registered interest as the senior independent director of the Financial Ombudsman Service.

We on these Benches welcome the fact that action is now being taken to address the problems with governance and excessive charges. Like my noble friend Lady Drake, I welcome action on the active member discounts, although her terminology may indeed be a fairer description of what happens there.

As the Minister indicated, 5 million people are already saving in schemes under auto-enrolment, and that figure will end up closer to 9 million or 10 million in due course. The point made by my noble friend Lady Donaghy is crucial here. If we are to cap the charges levied on pension savers in such schemes, we need to be sure that it works well because of the duty of care owed to those savers who have made no active choice about saving but who have been defaulted by their employer in particular or by the state in general into schemes which they have simply never chosen. It is critical that those who are auto-enrolled remain so and that we do not see a significant opt-out rate, but also that the highest possible retirement income is derived from the savings that individuals and their employers make. That is the context for these regulations, and the history lesson from my noble friend Lady Donaghy is very helpful. People need to know that their pension pots are not being siphoned off in unreasonable charges and that someone in whom they can have confidence is looking after their interests.

My noble friend Lady Drake asked a number of very important questions, and I will add just a few. First, on the charge cap, Labour has been campaigning for that, so it would be churlish not to welcome it—and I very much welcome it. However, can the Minister please tell the Committee why the Government chose 0.75% and what plans they have to reduce that further? The latest impact assessment suggests that, following the response to the consultation, the Government considered just two options: the one set out in these regulations, and doing nothing. I agree that of those two choices, acting to cap charges is definitely the right one, but the case for a lower figure is very strong. Certainly on these Benches we support capping charges at 0.75%, but with the aim of reducing it to 0.5% over the course of the next Parliament. Does the Minister agree that that is where we ought to end up?

Secondly, I would appreciate some clarification about how the cap will work. The Minister explained that it will be set at 0.75% of funds under management or an equivalent combination charge, but can he explain a bit more how the combination charge will be calculated? Regulation 5 seems to suggest that there will be three options: a funds-under-management charge, a combination of a funds-under-management charge and a contribution charge, or a combination of a funds-under-management charge and a flat-rate fee charged to the member.

Regulation 6 sets out the limits if one of the combination options is chosen. Can the Minister tell us a bit more about why these were fixed as they were? Is it the intention that a combination option cannot yield more than the equivalent of 0.75% of funds under management? If so, how can the saver be assured of that? If that is not the case, why are the Government giving the option to choose a charging structure that could yield more than the headline rate of 0.75% of funds under management?

Whatever figure is chosen, for controls on charging to bite, savers need to understand fully what charges are being levied. As we know, defining pension charges is not an easy job. The Minister indicated that transaction charges are not included in the cap. The biggest problem is that, as my honourable friend Gregg McClymont pointed out when the regulations were considered in another place, we do not yet know the full range of transactions attached to pension schemes. The only way to deal with that is through full disclosure of all transaction costs, which is long overdue and to which the Opposition are committed. I would be interested to know the Government’s position on that.

Will the Minister tell me a bit more about the compliance regime? Whose job is it to check that the cap is not breached and what will the penalties be for a breach? As for the minimum governance standards, they are welcome as far as they go, but again I would like to ask about compliance. Is the intention that the main or only compliance tool will now be the chair’s statement? Paragraph 7.34 of the Explanatory Memorandum says that the Pensions Regulator will have the power,

“to issue a fine against the Board of trustees or managers”,

in the event of failure to prepare a chair’s statement as required by the regulations. Will the Minister give some indication of the likely level of fines?

Of course, charges can take different forms, and the Government have made a welcome move in recognising this. For a while, they chose to focus primarily on the annual management charge, but these regulations acknowledge that that is only one part of the picture. My honourable friend Gregg McClymont highlighted the need to focus on the total expenses ratio, which includes custody, legal accounting and administration, and which consequently tends to be significantly higher than the AMC. Do the Government have any plans to evaluate the impact of the regulations on the total costs levied on affected pension schemes and savers?

We need urgently to address the range of challenges facing pensions at the moment if we are to be successful in persuading workers to save for their retirement at the rate that they need to do. My noble friend Lady Drake mentioned the draw-down products, but Labour will take a range of other, tougher steps to protect savers—for example, from new products that damage retirement income. Indeed, a Labour Government will begin immediate consultation on plans for a cap on fees and charges for income draw-down products, with a focus on products bought from the saver’s own pension provider. However, I welcome the progress that has been made and I very much look forward to the Minister’s reply to these and all the other questions that have been asked.

My Lords, I am grateful for the participation of noble Lords in this debate. Let me try to deal with the points that have been made while saying at the start that, over the next decade, the default fund charge cap should transfer around £200 million from the pensions industry to savers. That is an important point.

I very much take the points made by the noble Baroness, Lady Donaghy, about the historical perspective and the fact that, across the House, we are trying to ensure a fair regime relating to charges. We need a balance to make sure that the industry is properly and fairly rewarded for the services that it is providing and that, at the same time, savers are not overcharged for the services that they are receiving. That has very much been the thrust of the reform and it is why the figure of 0.75% has been chosen, which will represent for most people a fall in the amount that they are charged for the service, as I indicated.

Let me turn to the contributions made by noble Lords. I very much welcome the welcome in general terms from the noble Baroness, Lady Drake, for these regulations, which, as I say, bring in governance arrangements for the default automatic enrolment, as well as a cap on charges. I am pleased that we have universal welcome in general terms for the regulations. I welcome the support that we have had from around the Room in trying to get right the legislation and the consequential regulations.

The noble Baroness—and I apologise if my answers are not necessarily in the order of her questions—asked whether once a default always means a default. In general terms, the answer is yes. The regulations set out where an arrangement is designated as a default for a particular employer by virtue of meeting the tests in the regulations. It will continue to be designated as a default regardless of whether it continues to meet those tests. That is the general position. However, I will write to the noble Baroness on some of the specifics that she raised, because the devil is in the detail and I would not want to mislead her on specific examples, some of which I was a little blindsided by. I will, therefore, write to her about some of the specific examples she brought forward.

The noble Baroness also raised value-for-money issues. The regulations are designed to ensure that we get value for money and that there is transparency on the transaction costs—a matter also raised by the noble Baroness, Lady Sherlock. A transparency regime will come in as a result of these regulations that will enable us to look at value for money in relation to transaction costs. We are committed to looking at that in April 2017 to see whether we should bring it into the cap. That is the schedule. Therefore, at the same time as we are looking to ensure that we have an effective cap, in general terms, on auto-enrolment, we are also looking more widely at the transaction costs, to see whether it is appropriate to bring those into the cap in April 2017. We are already looking at that issue as we move forward from these regulations.

I turn now to the active member discount, or, as the noble Baroness, Lady Drake, phrased it—with some justification—the inactive member premium. There is no intention that we should stop a discount for active members unless it is the deferred members—the inactive members—who are paying for it. As the regulations make clear, there is nothing wrong with providing a discount for employees, provided it is not being subsidised by deferred members. That is the intention of the regulations, and I think that it is delivered by them. Again, however, if I am wrong about that, or there are exceptions to that general principle, I will write to the noble Baroness and copy my letter to other noble Lords who participated in this debate.

The noble Baroness also raised the issue of decumulation, which, as she rightly says, is not covered at this stage by these regulations. That does not mean that the Government are not looking at decumulation; it means that we are not looking at bringing it in at this stage. We are, however, keeping it under review, because, as we say, we want to ensure a fair regime: a fair amount paid—or a fair cap—so that the industry gets its fair return on what it is doing but savers are not ripped off, to use the vernacular. We have that under review.

The matter of the penalties regime was raised by the noble Baroness and also by the noble Baroness, Lady Sherlock. First, there are regulations that provide for a statement by the chair of trustees and a mandatory penalty of between £500 and £2,000 if such a statement is not produced. Trustees will have to demonstrate compliance with the governance and charges requirements in the chair’s statement. I am not sure of the precise sanctions that apply; I think it is under Section 43 and Schedule 18 of the Pensions Act 2014. I think that is right, in respect of the regime. However, I will write to noble Lords on the regime relating to non-compliance with the regulations and what the sanctions are.

Secondly, the contribution of the noble Baroness, Lady Donaghy, gave a very fair assessment of where we are. The noble Baroness made the very fair point that smaller schemes, generally speaking, do not represent such good value as larger schemes. It would not be fair to say that that is universally true, but it is probably generally true. Consolidation is happening—the figures show that—but it is right that we ensure that there is effective protection across the piece. That is, therefore, something that we need to keep under review. I made that clear as the Bill was going through the process of becoming an Act. It applies in general terms but it is a point well worth making.

I am trying to remember whether there were other points raised by the noble Baroness, Lady Sherlock, which I have not covered. If there were, perhaps she would remind me of them.

I thank the Minister. He has picked up most of them or has said that he will write to me about them. However, I asked how the combination charging options would work, whether the intention was that, if a combination option were chosen, it would be no more than the equivalent of 0.75% of funds under management, and how savers would know about that.

I am most grateful to the noble Baroness for reminding me of that. It is fair to say that generally, although not universally, that will be the case. I will write to her about the exemptions because there will be some situations where the charge will be higher, but in the majority of cases it will be the combination charge, which will certainly be no more than the 0.75% cap.

With that, I once again thank noble Lords for their support for the regulations. I undertake to write on the points that I have raised and on anything else that I have missed. I commend the regulations to the Committee.

Motion agreed.

General Medical Council (Fitness to Practise and Over-arching Objective) and the Professional Standards Authority for Health and Social Care (References to Court) Order 2015

Motion to Consider

Moved by

That the Grand Committee do consider the General Medical Council (Fitness to Practise and Over-arching Objective) and the Professional Standards Authority for Health and Social Care (References to Court) Order 2015.

Relevant documents: 24th Report from the Joint Committee on Statutory Instruments, 26th Report from the Secondary Legislation Scrutiny Committee

My Lords, I beg to move the first Motion standing in my name on the Order Paper.

This Section 60 order will amend the Medical Act 1983 to establish the Medical Practitioners Tribunal Service, the MPTS, in statute and make other reforms to the General Medical Council’s fitness to practise procedures. Reforming the way that the GMC adjudicates on cases where a doctor’s fitness to practise has been called into question has been a long-term policy objective for both the Department of Health and the GMC, following the decision not to proceed with the establishment of the Office of the Health Professions Adjudicator, the OHPA, in 2011.

The introduction of these amendments will strengthen and modernise the GMC powers and systems, enabling it to carry out its fitness to practise adjudication functions more effectively. They will place the MPTS on a statutory footing and enable the GMC to make amendments to its fitness to practise rules to further modernise the procedures which govern how fitness to practise cases are handled.

These reforms will increase the separation between the investigation of fitness to practise cases and adjudicating on what should happen in each case to enhance public and professional confidence in the system of medical regulation. They will modernise the MPTS’s adjudication function, including strengthening the case management arrangements, by introducing enforceable case management directions. These include costs for unreasonable behaviour, introducing the ability to hold reviews on the papers where the parties agree, and introducing a duty to use rule-making powers in order to pursue the objective that cases be dealt with fairly and justly, similar to the courts’ Civil Procedure Rules.

The MPTS will be subject to accountability hearings held by the parliamentary Health Committee in Westminster, ensuring transparency and public debate in relation to the way that it discharges its statutory functions. The MPTS will also be required to lay its annual reports and accounts before the UK Parliament, and it is also held to account by the Professional Standards Authority, the PSA, via its annual performance review.

This order will address a number of patient safety issues, including strengthening the power of the registrar to require the disclosure of information from a doctor, to refer a doctor to the MPTS for decisions as to whether to impose conditions in relation to registration or to suspend that doctor in the event of non-compliance.

The GMC currently operates a rule which enables it not to proceed with an investigation if the matters relating to the allegation are more than five years old, unless it is deemed to be in the public interest to do so, and is in the “exceptional circumstance” of the case. The Government are using the opportunity of the order to remove the “exceptional circumstance” element. That is because a developing body of case law demonstrates that the additional test of having to prove that a case has an exceptional circumstance has prevented cases from being taken forward, even when it was considered in the public interest to do so. By expressly setting this out in statute, we are ensuring that an investigation can be taken forward, regardless of the amount of time that has passed, without having to prove exceptional circumstances. That will mean that the GMC will be able to investigate an allegation no matter what the circumstances or how much time has passed, if it feels that it is in the public interest to do so. That can only strengthen public protection and reduce risk to patient safety.

The order will bolster the objectives of the GMC in relation to its fitness to practise functions expressly to take account of the need to promote and maintain public confidence in the profession and the need to uphold proper professional standards and conduct, in addition to protecting the health, safety and well-being of the public. However, maintaining public confidence must only be considered as being relevant in pursuit of the protection of the public. Its inclusion in the overarching objective will help to ensure that it is given due weight in all fitness to practise cases.

The proposed overarching objectives will include the term well-being, as this term encompasses those aspects of a professional’s role that may have an impact on individual patients—not directly impact on their health or safety, but nevertheless affect them in a manner which is relevant to the health professional’s clinical care. Dignity, compassion and respect are all important in delivering care, and it would not be right to disregard them. The inclusion of the term well-being ensures that the well-being of a patient under the care of a health professional is not disregarded as a standard for regulatory action. The Law Commission’s report states that well-being has already been incorporated, without difficulty, into the main duties or objectives of regulators, and it feels strongly that, within that context, the term cannot be misinterpreted.

Increased separation will make it explicitly clear that the GMC has the role of investigating and presenting evidence in fitness to practise cases, but it will be for the MPTS to constitute tribunals to adjudicate on whether a doctor’s fitness to practise is impaired. With the greater separation between investigation and adjudication introduced through the order, the Government believe that it would be appropriate for the GMC also to have a right to appeal decisions made by the MPTS in cases where it believes that a decision does not protect the public. That will provide a transparent mechanism for decisions to be challenged in those instances where the GMC has concerns about a decision made by a medical practitioner tribunal.

The proposals also change the grounds on which the Professional Standards Authority can make a referral to the higher courts. That will enable the PSA to make a reference if it believes that a decision is insufficient to maintain public protection, which involves protecting the health, safety and well-being of the public, maintaining public confidence in the profession and maintaining proper professional standards and conduct. The order will ensure that the PSA can take action where it considers it appropriate in the interest of public protection, guaranteeing its right to intervene and take over an appeal where the GMC has withdrawn. The proposed GMC right of appeal would be in line with these revised grounds.

The Department of Health undertook a UK-wide consultation on making changes to the way that the GMC makes decisions about doctors’ fitness to practise. The consultation received 81 responses from a range of respondents, including medical and legal professionals, healthcare recruitment organisations, regulatory bodies and members of the public. The responses demonstrated strong support for the principle of enhancing the separation between the GMC’s role in investigating fitness to practise concerns and its role in adjudicating on whether those concerns amount to impaired fitness to practise.

A significant proportion of respondents—52%—felt that creating an entirely independent body like the former Office of the Health Professions Adjudicator, rather than establishing the MPTS as a statutory committee of the GMC, was a preferable approach. However, this group included an organised group of 39 co-ordinated and near-identical responses, which the department had to consider as individual responses. The department’s original decision not to proceed with OHPA was taken in 2011 and endorsed and implemented by Parliament in the Health and Social Care Act 2012. The Government’s proposed approach remains that we should enhance and protect the independence of decision-making at fitness to practise panel hearings, to secure public protection and the confidence of doctors and patients. However, the department believes that the same benefit as establishing a separate body can be achieved without the expense by retaining the adjudication function within the GMC and increasing the separation between its investigation and adjudication functions. Taking into account the group of respondents who wanted greater separation, as well as those who supported the statutory committee model, there was significant support for the principle of greater separation. We consider that establishing the MPTS as a statutory committee of the GMC is the right means of achieving this. The majority of consultation respondents did not agree that the GMC should have a right of appeal to challenge MPTS decisions. However, this again included the group of 39 co-ordinated responses, although they did not give reasons.

The policy intention, once separation of functions has been achieved, is to enable the GMC—the organisation that is best placed to challenge a tribunal decision about a doctor’s fitness to practise, having already acted in the prosecution role before the tribunal—to be better able to make such a challenge, given its closer knowledge of the case. These proposals to strengthen and modernise the GMC’s fitness to practice process will make the system more efficient and effective, benefiting patients, practitioners and the health service. They will result in improved public protection and an increase in public confidence in the GMC. I commend the order to the Committee.

My Lords, I am grateful to the Minister for the way he introduced this legislation. We debated much of the content and wording of it previously in discussions on the Health and Social Care (Safety and Quality) Bill. I do not intend to go over that ground again. I simply ask the Minister whether I am correct in believing that the guidance relating to this legislation is to be produced by the GMC, not the Department of Health, and whether the Department of Health will be able to have some kind of scrutiny role over the way that guidance is worded. As I have outlined before, there is concern among the profession—I declare my interest as a licensed practitioner, as well as a registered practitioner—that the term “well-being” could be viewed as being much wider. The public confidence issue is one where there remains concern—I am sure there will be concern—about trial by media and what is in the public domain that might influence the thinking of a panel.

My Lords, I rise briefly to support the order. I declare an interest that, maybe for a short while only, I am a licensed practitioner and a registered practitioner, and the rules of the GMC may not be sufficient for me to revalidate.

However, the issue to which I want to refer is the separation of the functions, of which I approve—we have discussed that many times—but for the fact that the GMC can appeal against the decision made by the MPTS. Its role becomes that of an adjudicator as well. I would like the noble Earl to clarify that. I know that in the consultation process there were the same number of responses—39, as mentioned by the noble Earl.

Another issue that we have discussed before is that these changes are welcome, but there are other changes that the Law Commission identified in its report, published in April 2014, on the regulation of health and social care professionals Bill. The Government indicated that they would bring in legislation to deal with all the issues. This is obviously a piecemeal measure taken out of that Bill, so the noble Earl may want to comment on that.

My Lords, I, too, thank the noble Earl for introducing the order. I shall say at once that the Opposition support it. Like the noble Lord, Lord Patel, we are disappointed that it is yet another Section 60 order being considered in Committee. We should have had the Law Commission Bill, either in pre-legislative scrutiny or in its substantive form. It is disappointing that we are having to deal with these various professional regulation bodies in such a piecemeal fashion.

That said, on the question of the overarching objective, we very much support that and the three pursuits set out in Article 21(1B),

“to protect, promote and maintain the health, safety and well-being of the public … to promote and maintain public confidence in the medical profession, and … to promote and maintain proper professional standards and conduct for members of that profession”.

I want to pick up the point raised by the noble Baroness, Lady Finlay, and the British Medical Association. I suppose it is an issue of proportionality. In its report, the Law Commission expressed concern about examples given, suggesting that regulators were inappropriately imposing moral judgments in essentially private matters under the guise of maintaining confidence. The BMA has raised the issue of whether the order might end up punishing doctors who pose no threat to the health and safety of the public, on the basis that failure to do so might incur the public’s disapproval. The Law Commission has urged regulators to look carefully at regulatory interventions that do not take some colour from the need to protect the public.

This is a very important point. I have been very impressed with the GMC and the way in which it has improved its procedures and processes—and certainly with its current leadership. However, there are other regulators, perhaps not so much in the health sector, which clearly lack confidence and which are very much influenced by the flow and ebb of media comment and potential political interventions. I think that we have to be very careful about regulators which, in a sense, lose confidence in their own ability to make common sense judgments, and then have knee-jerk reactions in the face of media storms. I hope that the noble Earl will agree that that is not the intention in the case of the health regulators, and like me, he will express confidence, particularly in the GMC to apply common sense judgments in response to the points raised by the noble Baroness, Lady Finlay.

I now come to the question of the Medical Practitioners Tribunal Service. The Minister referred to the fact that the consultation demonstrated strong support for enhancing the GMC’s investigative and adjudication roles, but that 52% of respondents took the view that creating an entirely independent body would be preferable, with only 27% supporting the proposal to put the MPTS on a statutory footing.

We must refer in particular to the evidence of the Professional Standards Authority. It,

“did not agree that the proposals to establish the MPTS as a statutory committee of the GMC would achieve the aim”,

of appropriate separation of function. It commented that,

“former and current members of GMC staff should be excluded from sitting on medical practitioner tribunals or interim orders tribunals … The PSA also asked about the ability of the GMC to make rules delegating functions from the MPTS committee to ‘officers of the Council’”,

and it,

“referred to the fact that case managers will be paid by the GMC, but case managers will be performing a statutory office”.

The PSA was obviously concerned that because those managers were paid by the GMC, they might come under undue influence. As the Explanatory Memorandum points out, the PSA,

“conducts annual performance reviews of each of the health and care professional regulatory bodies”.

I would like the noble Earl to explain why the views of the PSA, above all others, were ignored in relation to this issue.

To pick up the point raised by the noble Baroness, Lady Finlay, about guidance, again, the Explanatory Memorandum says that:

“The Department does not intend to publish any guidance in respect of”,

this statutory instrument but that the GMC,

“will publish guidance as appropriate”.

Is the Minister in a position to respond to the noble Baroness about what kind of guidance will actually be produced?

However, overall I believe that the GMC has made great strides in recent years. It deserves to be supported for what it is doing. I accept that this will speed up processes to protect the public and provide more and better information about doctors on the register. It will improve doctors’ education and training and increase efficiency, and on that basis we are very glad to support the order.

My Lords, I shall endeavour to answer the questions that noble Lords have asked but first I endorse the comments made by the noble Lord, Lord Hunt, about the GMC, in which we in the department have great confidence. It is a well led organisation and has approached this whole exercise in a very responsible way. The background to this order is of course, as the noble Lord stated, that we do not have— much as we wish we did—a consolidated Bill building on the Law Commission’s work. In the absence of parliamentary time for a Bill, we are therefore working within the limitations of existing legislation and using Section 60 orders. Let me reassure the Committee that we are very much committed to taking forward a Bill in this important area when parliamentary time allows.

The various Section 60 orders being taken forward are driven by the need to address a small number of areas which we view as priorities. They both deal with the priorities of government such as English-language concerns, which will be debated later this afternoon, and address some immediate issues that have hampered the regulators from being able to fulfil their basic function of protecting the public. I therefore welcome the fact that the noble Lord, Lord Hunt, is willing to give the order a fair wind.

The noble Lord, Lord Hunt, asked about the possibility that the inclusion of the objective of promoting and maintaining public confidence in the medical profession could in some circumstances be used in a vexatious way, perhaps at a personal level or in the media’s response to what has happened—a so-called trial by media. If the actions of a doctor appear likely to reduce confidence in the medical profession and influence the decision of individuals as to whether to seek medical help at all, it may be right to take action. However, panels and tribunals will be asked to reach their own objective judgment as to whether particular acts or omissions would affect public confidence if no action were taken. A subjective view, uncritically influenced by public opinion or the media, would be an unacceptable basis for a decision. The question of whether GMC staff will be able to sit on the MPTS was raised. The answer is no, they will not. The noble Baroness, Lady Finlay, asked about the guidance. The GMC is consulting on its rules, and the department, I can assure her, will work closely with the GMC in drafting the guidance.

The noble Lord, Lord Hunt, asked about the issue of legal support for a medical practitioner tribunal. The MPTS will be best placed to assess what kind of legal support a tribunal will need and therefore what criteria legal assessors should meet. It is important that medical practitioner tribunals have appropriate support to make decisions based on strong legal knowledge. Where the MPTS has appointed a legally qualified case manager to also act as a chair of a medical practitioner tribunal, the MPTS may consider that there is not also a need for a separate legal assessor.

The noble Lord, Lord Patel, asked about the right of appeal for the GMC. As I explained, the order would enable the GMC to appeal decisions made by the MPTS in cases where it believes that the decision does not protect the public. Currently a respondent doctor has a right of appeal against panel determinations, although the GMC has no such right. Once greater separation is introduced through this order, the Government believe that it would be appropriate for the GMC to also have a right of appeal. This will reflect and underline the separation of investigation and adjudication. It will also provide a transparent mechanism for challenging decisions where the GMC, as a party to the proceedings, disagrees with a decision made by a medical practitioner tribunal. I hope that that explanation is helpful.

I would like to briefly return to the issue of guidance. I was not completely convinced by the noble Earl’s reply. Does he agree with me that there is a danger for a doctor, when there has been a lot of media coverage of the accusation—whatever that is—that the panel hearing the case may have been subject to a barrage by the media, which can be compared to baying hounds, and it can be very difficult for the doctor who is before the panel to be confident of a fair and balanced hearing?

For that reason the guidance becomes critical. It is incredibly stressful for a doctor to be reported to the GMC. The rates of suicide and mental health problems among such doctors are extremely high—higher, in any case, than the baseline population in normal circumstances, but there have been some notable cases of suicide. Does the Minister agree with me that the guidance for panels, particularly about the way they receive reports through the media, will be really important in ensuring that it is a balanced and fair hearing and not excessively influenced by press reports?

I completely understand the point that the noble Baroness has made. I hope that I can reassure her that the GMC is mindful of that issue. It would be the last organisation to wish for anything other than a fair and just approach to every fitness to practise case. I suggest that one of the safeguards here is that the legal representative and the legal assessor would advise the MPT on what is acceptable in law and proceed on that basis, so the tribunal would be governed by legal considerations and the guidance will make that clear. However, if I can add to those remarks in writing after this debate, I will be very happy to do so.

Motion agreed.

Health Care and Associated Professions (Knowledge of English) Order 2015

Motion to Consider

Moved by

That the Grand Committee do consider the Health Care and Associated Professions (Knowledge of English) Order 2015.

Relevant document: 24th Report from the Joint Committee on Statutory Instruments.

My Lords, the Government recognise that overseas healthcare professionals make a valuable contribution to our NHS, and we are keen to ensure that highly skilled professionals do not face unnecessary barriers to working in our health service. However, it is vital that all healthcare professionals practising in the UK have the necessary English language skills to properly communicate with and care for patients and members of the public. The department has consulted on proposals to introduce language controls for nurses, midwives, dentists, dental care professionals, pharmacists and pharmacy technicians, and the vast majority of respondents to the consultation—99%—were supportive of the proposals.

We have worked with the Nursing and Midwifery Council, the General Dental Council, the General Pharmaceutical Council and the Pharmaceutical Society of Northern Ireland to identify a system of language controls for EU nurses, midwives, dentists, dental care professionals, pharmacists and pharmacy technicians which provides greater safety for patients and members of the public. The draft order gives those regulatory bodies the powers to apply proportionate language controls so that only healthcare professionals who have the necessary knowledge of the English language are able to practise in the UK, together with an assurance that they can do their jobs in a safe and competent manner.

The draft order sets out to amend the Nursing and Midwifery Order 2001, the Dentists Act 1984, the Pharmacy Order 2010 and the Pharmacy (Northern Ireland) Order 1976 to strengthen the regulatory body’s powers to introduce proportionate language controls and to require EU applicants to provide evidence of their knowledge of the English language following recognition of their professional qualification—but before registration and admission on to the register. We also propose corresponding amendments to the fitness to practise powers of the NMC, GDC, GPhC and PSNI, so that they can initiate fitness to practise proceedings in cases where a healthcare professional’s knowledge of the English language may pose a serious risk to patient safety.

A new category of impairment relating to English language capability will be created. It will allow the regulatory body to request that a professional undertakes an assessment of their knowledge of the English language during a fitness to practise investigation where concerns have been raised—something that they are currently unable to do. Those changes will strengthen the regulatory body’s ability to take fitness to practise action where concerns about language competence are identified in relation to healthcare professionals already practising in the UK.

Our overall approach is compliant with EU law which clarifies, under recent changes to the mutual recognition of professional qualifications directive, the ability of national authorities to carry out language controls on European applicants where the profession has patient safety implications. Any language controls must be fair and proportionate. For example, there cannot be automatic testing for all European applicants, and any controls cannot take place until the applicant’s qualification has been recognised by the regulatory body.

The order makes amendments to the relevant legislation which will require the regulatory body to publish guidance setting out the evidence, information or documents which a healthcare professional must provide to demonstrate that they have the necessary knowledge of the English language in order to practise their profession. Any person who is refused admission on to the register on the grounds that they have failed to demonstrate the necessary knowledge of English will have a right to appeal. The process for determining whether a person has the necessary knowledge of English will be set out in the relevant regulatory body’s rules or regulations, which we anticipate will be amended and implemented before the end of the year.

These changes are a major step forward for quality of care and patient safety, and build on the language checks already in place for the registration of healthcare professionals coming to work in the UK from outside the EU. They further build on the amendments made last year, which provided the General Medical Council with the powers to introduce a strengthened system of language controls for doctors from within the EU.

Since the GMC’s legislation was changed in June last year, the GMC has required 1,956 doctors from Europe to provide evidence of their knowledge of English when applying for first registration and a licence to practise. Of these, to date 429 doctors have been registered without a licence to practise medicine in the UK due to insufficient evidence of language competence. This evidence shows that these proposals are essential to ensure patient protection and uphold the standards of care delivered. I commend the order to the Committee.

My Lords, I thank the noble Earl for explaining the order. Clearly, we support the order because we want to protect patients from the risk of avoidable harm.

My own view is that language testing of healthcare professionals from outside Europe is now entirely adequate as a result of last year’s measures—which, again, the Opposition supported. However, we accept that there may be a—one hopes—small number of European professionals whose knowledge of English is not at a level that we might reasonably expect, and indeed an even smaller number of UK nationals who do not possess the requisite knowledge of English and where there are concerns.

I wonder whether the Minister can spell out one or two things in relation to how this is going to be done. I note—the noble Earl said it and it is repeated at paragraph 7.5 of the Explanatory Memorandum—that:

“Any language controls must be fair and proportionate, for example, there cannot be automatic testing for all European applicants and any controls must not take place until the applicant’s qualification has been recognised by the regulatory body”.

Paragraph 7.10 cautions that, in relation to the requirements that can be imposed as to English language controls, the bodies concerned,

“must first request and consider any available evidence before requiring a test”.

Can the Minister explain a little further how it is expected that employing authorities will go about that?

I also want to ask the noble Earl about the implementation of the power to implement fitness to practise proceedings. I noted from the Explanatory Memorandum that there is currently provision for most of the relevant regulatory bodies to commission an assessment of performance where fitness to practise allegations have been made. I was not sure about the purpose of the extension in this order, given that the Explanatory Memorandum notes that there is already provision for most of the relevant regulatory bodies to do this.

I would like to ask the Minister about support and guidance for individual employers. This comes back to my first question about how you make the assessment that a test should be undertaken. I should have thought that human resources professionals within NHS organisations would need some careful advice and guidance on this—first, because this may be a sensitive area, and, secondly, because some consistency throughout the NHS would be appropriate.

Finally, there is the question of vexatious complaints, which we discussed in relation to the previous order. Clearly, we have to balance the public interest with that of the appropriate interest of medical professionals. We know that there are cases in which medical professionals have been subjected to complaints that have turned out to be unsubstantiated. Clearly there are political sensitivities around the ability of European immigrants to speak English; I refer the noble Earl back to our previous debate and the points raised by the noble Baroness, Lady Finlay. I want to be clear that the Government understand that, while this is undoubtedly the right measure for patient safety and the protection of the public interest, we have to have regard to ensuring that doctors and other professionals are dealt with fairly under these provisions.

My Lords, I am grateful to the noble Lord for his support of the order. The first point for me to make about what might trigger a language test is that European healthcare professionals currently provide a range of supporting information to accompany their application for registration and admission to the register. It is during that process that if a regulatory body had cause for concern, such as a poorly written application form, it would write to the individual to seek further evidence of English language competence. It is important to restate that the individual would still have their qualification recognised, but would not be admitted to the register until the body was satisfied that they met all the requirements for registration.

The draft order requires the regulatory bodies to publish guidance on the evidence to be provided by a healthcare professional where there is cause for concern about their English language capability. However, the regulatory body, as the independent regulator of the relevant healthcare professionals in the UK, will have the power to decide what the necessary knowledge of English is to practise safely in the UK. All the regulators subject to this order are in the process of developing this guidance. In recent discussions they suggested that, where there is a cause for concern, the evidence required could be the required score in the academic version of IELTS—the International English Language Testing System—or that the healthcare professional has a primary qualification taught and examined in English. In making that determination, the regulatory body will need to be mindful of EU law and ensure that such requirements are necessary and proportionate in view of their scope of practice.

As regards vexatious complaints, responses to the department’s public consultation highlighted the potential serious risk to patient safety posed by a professional practising without adequate English language skills. As I explained, these proposals would allow the regulatory bodies to take pre-emptive fitness to practise action, even if no actual harm has yet occurred, to maintain public protection. We accept that this could lead to a rise in the number of referrals but we are confident that if these are triaged correctly, any discriminatory or vexatious complaints can be identified early on and dealt with appropriately by the regulatory bodies affected by the order. The regulatory bodies will also be responsible for communicating the changes effectively to employers, which may be best placed to deal with issues at a local level. As I mentioned, there is a right to appeal if a person is refused admission on to the register, or is subject to fitness to practise proceedings and then found to be impaired on the grounds of defective English.

The noble Lord asked how we would ensure that the controls were fair and proportionate. Guidance will be published by the regulator on the evidence accepted on initial application for registration. If that has not been supplied, an individual will be sent a letter of recognition requesting further evidence. If it is not supplied at that point, a test will be requested.

The introduction of language controls at national level should not have the effect of requiring individual professionals to undertake the same English language test twice: once at national and once at local level. We agree that that would be disproportionate. However, it must be remembered that the regulatory bodies’ roles as the national regulators of the healthcare professionals affected by the order will be to ensure that all professionals have the minimum English language capability required to work as a practitioner. It will still be for the employer to assure themselves that the applicant has the necessary English language skills for a specific role, which may require more sophisticated language skills. I hope that that is helpful.

Motion agreed.

Committee adjourned at 5.46 pm.