House of Lords
Tuesday 15 January 2019
Prayers—read by the Lord Bishop of St Albans.
My Lords, with the leave of the House, I would like to make a short statement to correct something I said in closing last night’s debate. I attributed to my noble friend Lord Forsyth of Drumlean some comments which were in fact made by my noble friend Lord Lamont of Lerwick. I have apologised to my noble friend Lord Forsyth of Drumlean, and I am grateful for the opportunity to correct the record.
My Lords, protecting children is a priority for the Government. There are strict controls to prevent underage gambling. In 2011, 23% of 11 to 15 year-olds had gambled in the last week, including with friends. Last year, it was 12%. On the other hand, the Gambling Commission’s Young People & Gambling 2018 report shows an increase to 14%, though not to earlier levels. Sample sizes are small, and we do not know if this is a trend. We are of course monitoring the situation very carefully.
I thank the Minister for his reply. At a time when the gambling industry is spending about £1.5 billion a year on encouraging gambling, when children are seeing three gambling adverts every day on average and when 55,000 teenagers in this country are now classified as problem gamblers, we need to look at what is happening particularly online, where young people most often see the adverts, which is outside all the previous criteria for regulation. What are Her Majesty’s Government doing to regulate online advertising, which is particularly focused on our young people?
My Lords, the right reverend Prelate is right that advertising is increasingly going online, although it is not only there. Of course, there are already strict rules to ensure advertisements do not exploit vulnerable people or specifically target children. Those apply online as well. The Advertising Standards Authority has made it clear that age-restricted advertisements online must be actively targeted away from children. However, the evidence is not clear, so GambleAware will publish significant research on the impact of advertising on children this year, including information about how much they see online. The ASA also proactively monitors online advertising, and we will consider all the new evidence carefully.
My Lords, online advertising for gambling is relatively recent. Frankly, while I do not believe in banning things, this is feeding gambling addiction and many families are badly affected by this. Although I am against banning things, on this occasion I say to my noble friend that we should ban it.
My Lords, I am glad that normally my noble friend does not ban things without the correct amount of evidence. The issue here is that there is actually not conclusive evidence on the harms that this does. We are of course aware that there is certain evidence out there, and we are commissioning more. GambleAware is going to look at the influence and extent of online advertising and the effect that it has. If there are clear lessons to be learned, we will take action on that.
My Lords, is the Minister aware that there are games aimed at children that, although not strictly classified as gambling, actually encourage them into gambling habits? There are also games like mystery boxes that essentially are open to children and could be considered as gambling. Surely we need a much more proactive approach to doing something about this.
My Lords, that is exactly why the Gambling Commission is consulting on requiring age verification before allowing free-to-play demo games to be downloaded. However, that will apply only to games hosted by gambling operators. We are aware of the problem of games and are waiting for GambleAware to do its consultation, and we will certainly take the issue that the noble Lord has raised into account.
My Lords, the most common way in which children and young people enter the route into gambling is by the purchase of scratch cards and lottery tickets. These are prominently displayed in many outlets, and it is often difficult for the seller to determine the age of the customer. Is it not time that these cards were put behind shutters, in the same way that cigarette packets are, so as not to entice young people to enter the route of gambling?
My Lords, although there may be an intuitive link there, there is not actually conclusive evidence that that is how problem gambling starts. The other point to make is that, while I am not sure that it is a majority, a significant number of children who buy scratch cards and National Lottery-type products do it with their parents’ money and indeed with their parents actually present. The question of whether 16 and 17 year-olds should be allowed to use the National Lottery will be part of the review for the fourth competition for the next national lottery licence.
My Lords, we know that half a million young people are gambling regularly. I am concerned about the support that we can give to those young people who become addicted. I wrote a Written Question to the Minister and I was very grateful for his detailed reply. We have a national facility, the National Problem Gambling Clinic, and I think we are due to open one in Leeds, but that covers only a small percentage of young people who need support. There is a charity called Beacon Counselling, which is working with the NHS trust in Lancashire to provide a facility. Could the Minister look at that and see how we could roll it out to the rest of the country?
I certainly will look at that. We are looking at treatment for all problem gamblers and for children in particular. That is why I am pleased that the NHS long-term plan is committed to expanding dedicated support for those experiencing problems with gambling. As the noble Lord says, GambleAware is setting up a new clinic in Leeds. We will see how that goes, and we are working with the NHS to see if more treatment centres are needed.
My Lords, we have had a number of questions relating to gambling in recent times. Indeed, there is another Question tomorrow relating to advertising, which is why I would like to ask a question elsewhere in the arena, as it were. I have seen the figure of 450,000 mentioned—it comes in the Gambling Commission report—but a different interpretation is put on it according to where people come from. I have a briefing paper here from Sky Betting & Gaming that puts an entirely different interpretation on the figure and even questions the way in which it is being used by those in favour of clamping down. So my question is—and this has come up in debates again and again—is it not time, in all these consultations and studies that are being done, that we had a serious, focused look at compiling evidence upon which comments can be made? At the moment, there is far too much of a fissiparous nature that allows people to draw whatever conclusions they like. I just wanted to use that word; I am sorry, it just came to me. I wanted to put the Minister on the back foot. Secondly—
I understood some of his question. The noble Lord is right: as I keep on saying, the evidence is not certain, so we are having a serious look at it. For example, Public Health England is doing wider research, which it will produce in the second half of this year, measuring the evidence for gambling-related harms. It is looking at all the available evidence and trying to get some consensus about what the truth is—reading the newspapers, I find that one moment you get a report saying one thing and the next you get one on a different basis. We are taking an overall view, and there is a significant amount of other research that we are doing this year through GambleAware and the Advertising Standards Authority.
My Lords, improving oral health outcomes, particularly for deprived children, is a Public Health England priority. PHE has established the Child Oral Health Improvement Programme Board to improve the oral health of children, with a substantial programme of work involving a wide range of partners. In addition, as the noble Lord will know, government measures to reduce sugar consumption, along with the soft drinks industry levy, will have a positive effect.
I thank the Minister. I was surprised and disappointed that when I asked her a Written Question about how many registered dental practices we have, she replied that the Government do not have the information available.
I want to talk about units of dental activity. The Minister will know, I hope, that if a child needs dental treatment but no NHS dentist is available, they can go to a private dentist under contract where there are units of dental activity. However, when those units are used up and there is no dental treatment available at all, the child goes untreated. Yet there might be other dentists who have spare capacity—spare units of dental activity. Why can the units not be transferred to the dentist who needs them to treat children? It is outrageous that 45,000 young people are going to hospital to have operations to deal with dental decay.
My Lords, I agree that it is outrageous that 45,000 children are requiring operations due to tooth decay but, as the noble Lord will know, tooth decay is a preventable disease. Access to dental services for children remains high. Although NHS England recognises that it has further to go in some hotspot areas, 6.9 million children were seen by a dentist in the 12-month period ending 30 September. NHS England has a legal duty to commission primary care NHS dental services to meet local needs and to help patients who cannot find a local dentist who is taking on new patients. Patients in this situation can contact NHS England’s customer contact centre for assistance.
My Lords, it is to be welcomed that the 10-year plan includes a commitment to seeing more children from a young age form good oral health habits to prevent tooth decay. It is, however, in conflict with the cuts to our public health budget. Does that commitment in the 10-year plan mean that the Government will be investing in children’s oral health and, if so, how much are they going to invest and when will that commence? If the noble Baroness does not have those figures to hand, I would be grateful if she would write and tell me what they are.
My Lords, I do not have those figures to hand, but will write to the noble Baroness with them. Under the NHS Long Term Plan, NHS England will invest to ensure that children with learning disabilities have their needs met by dental services and will work with partners to bring dental checks to children and young people with a learning disability, autism or both in special residential schools. That is part of the 10-year plan, but I do not have the figures that the noble Baroness requested and I will write to her with them.
My Lords, the leading reason for children aged between five and nine now going into hospital is to have teeth extracted, which I think we must all agree is quite shocking. There are many points on which I could ask a question, but I shall ask just one. Can the Minister update us on the implementation of phase 2 of the obesity plan, which will limit advertisements for sugary drinks or sweets, and on the limit on supermarkets using such products as promotions for selling cheaper food? At the end of the day, tooth decay is caused by sugar, and that is the problem.
The noble Baroness is absolutely right: sugar is a leading cause of tooth decay and we must do more to tackle it. Indeed, the Government are doing that. We published the second chapter of our world-leading childhood obesity plan in 2018. This builds on the real progress that we have made since publication of chapter 1 in 2016. The key measures in chapter 2 include restricting promotion deals on sugary and fatty products, introducing further advertising restrictions, mandating calorie labelling in restaurants and ending the sale to children of energy drinks which may be high in sugar.
My Lords, I am aware that the UDAs are not very popular with the dental profession. Can my noble friend update the House on the long-term plan for the NHS published earlier this month? A recent Written Answer revealed that only 108 practices are signed up to Starting Well. As far as I am aware, the scheme has received no new funding. I declare my interest as a retired dental surgeon and a fellow of the British Dental Association. Will the Government agree to examine the success of the tried and tested deals in Scotland and Wales and roll out a properly funded, universal oral health prevention programme to children across England?
I thank my noble friend for that question. NHS England’s Starting Well initiative is supporting dentists across England to see more children from a young age and form good oral health. Two hundred and thirteen practices in 13 identified areas are participating in the programme, of which 210 have preventive champions in place. In Hull, for the first time, each practice has identified a health visitor to work with it. In Ealing, early indications are that children who do not normally attend dental practices are reported to be doing so. However, it is early days. We are also looking at how we might put more preventive dental access into the dental contract, but that will take a little time.
Breast Cancer: Women Over 73
My Lords, routine breast screening is currently offered to women aged 50 to 70 on the basis of evidence. There is currently no evidence to suggest that inviting women over 73 for routine screening provides more benefits than harms. However, women over 70 are invited to self-refer for a mammogram every three years if they wish. They are informed of this when they attend their last routine breast screening appointment.
I thank the Minister for that Answer. The risk of breast cancer increases with age. A third of all breast cancers and a quarter of all breast deaths occur in women over 70—I have these figures from Breast Cancer Care, of which I am a patron. Older women need to know and report their symptoms. They need to be reminded, because as you get older your memory fades. Why are the reminders stopped at 70? Although there is now a trial, it stops at the age of 73. What about those of us over 73?
My Lords, the noble Baroness makes a very interesting point but the NHS breast screening policy is based on strong peer-reviewed evidence. The decision to offer routine screening to women between the ages of 50 and 70 followed support from the Marmot review, which estimated that inviting women between the ages of 50 and 70 reduces mortality from breast cancer in the population invited by 20% and saves an estimated 1,300 lives a year. It also stated that evidence to support screening outside the 50 to 70 age group was not strong enough to allow older women to be invited for screening routinely.
My Lords, does the Minister agree that although the evidence from the study leading to the introduction of screening between the ages of 50 and 73 was strong, the evidence for screening beyond 73 exists only in observational studies carried out in the United States and Australia? Would it therefore not be wise to ask NICE to conduct the same type of study it carried out before and assess the cost-benefit analysis, which includes the health benefits, relating to women over 73 who are offered regular mammography?
On the NICE review, NHS England has asked Sir Mike Richards to lead a review of the current cancer screening programmes and diagnostic capacity. He will make initial recommendations by Easter this year and the review should be finalised in the summer of 2019. The review aims to further improve the delivery of the screening programmes, increase uptake and learn lessons from the review and recent issues. I cannot say any more until the review has completed its work.
My Lords, has the department carried out any research—and if not, will it do so—into the number of women, like me, who were diagnosed with breast cancer on the final routine mammogram for which they were called? If the number is substantial, surely that indicates that the age range for the routine screening service should be extended, particularly in the light of the fact that we are all getting older.
My Lords, I can only refer the noble Baroness to the answer that I gave previously, but I am delighted that her issue was picked up and dealt with effectively in routine screening—I am pleased to hear that. However, as I said, once we know the results of the AgeX trial we can consider any other issues that may emerge.
My Lords, for the second time in a week, the noble Baroness has denied evidence that exists. The evidence from New York—a recent study—clearly shows that screening of women over 75 is valuable. Moreover, most of those cancers—about 85%—are invasive. The problem, of course, is that all cancers are more common in older people. Is it worth while paying for mammography, or is it better to pay for the surgery afterwards?
My Lords, I agree entirely with the noble Lord, Lord Winston. It is always better to do preventive care. I am a passionate believer in that, and so is the department. As I said, however, the reality is that peer reviews in this country demonstrate different evidence. At the moment, we can only look at peer-based evidence and reviews undertaken by clinicians and researchers.
Absolutely not, my Lords. Screening has to be evidence based, there are very clear criteria, and where there is a need, we will endeavour to do it. It is not about inequality or accessibility. If any lady, whatever her age, including women over the age of 73, feels that she has an issue when she is examining herself and there are abnormalities in the breast, she can refer herself to a GP or self-refer for screening. Women are openly and freely able to do it every three years and can be seen more often if the need arises.
My Lords, will the Minister please return to that question? My noble friend asked what value the state and the NHS are putting on the lives of older women, because they are not included in the screening programme. Surely that is a question that she and her colleagues need to ask themselves.
My Lords, we place the same value on everyone’s life. No one life is more important than the next. I have already answered the noble Baroness on that. We will endeavour to do everything possible to save lives where we can and where evidence demands it.
My Lords, we are very concerned by the current situation in Sudan. Together with our troika partners, Norway and the United States, we continue to call for restraint in policing the protests, for the release of detainees and for accountability for those killed. We expect the Sudanese people to be allowed to exercise their right to freedom of peaceful expression. Sudan’s response to these protests will shape our approach to engagement with the Government of Sudan in the coming months and years.
My Lords, I thank the Minister for his reply. Is he aware that I visited war zones in Sudan virtually every year during the self-avowed jihad waged by its Government from 1989 to 2005 and, subsequently, saw people suffering from its genocidal policies in the Nuba mountains and Blue Nile? Every time that I have returned and raised these issues in your Lordships’ House, the Government’s reply has always been, “We are talking to the Government in Khartoum”. That Government there love talking to the British Government but continue to kill while they talk. So what specific requirements are the Government placing on the Sudan Government after their current atrocious perpetration of human rights abuses against peaceful protesters, including reportedly killing 40 and injuring and arresting hundreds more—or will Her Majesty’s Government allow the Government of Sudan to continue their violations of human rights with impunity?
My Lords, I am fully aware of the work done by the noble Baroness in Sudan and the support she extends to people there who are suffering oppression and the denial of their human rights. As Minister for Human Rights, I assure her that I am acutely aware of these challenges. During a visit to Sudan last year, I raised these directly with government officials as well as civil society leaders. On the issue of our engagement, our excellent ambassador there, His Excellency Irfan Siddiq, met directly with the acting Foreign Minister immediately after these protests. As I outlined in my original Answer, we will hold the Sudanese Government to account if they persist in the brutal suppression of the longest protests we have seen since the independent Sudan came into being.
There have been some positives, however. Through our direct engagement, we saw a humanitarian corridor open to South Sudan to address some of the issues beyond the borders of Sudan itself. So engagement does have some positive returns.
My Lords, there is no doubt that engagement has a positive impact, but the Minister referred to the impact of the relationship. What range of impacts does it have? The strategic dialogue meeting will take place very shortly, at which surely we should make it clear to the Sudanese that we will not continue this dialogue if they continue to abuse human rights the way they are doing.
My Lords, the noble Lord is aware that, on these issues of direct engagement, the strategic dialogue allows for exactly those conversations to take place. For example, at the last strategic dialogue in November last year, issues of human rights, including human trafficking, modern slavery, freedom of religion or belief and gender equality, were all raised in a productive and structured way. I assure the noble Lord, and your Lordships’ House, that we will continue to do so and use those dialogues to ensure that we hold the Government to account.
My Lords, the Minister recognised that the largest demonstrations for some considerable time are taking place in Sudan right now, with the same measure of reaction from state security. It is rather disturbing that Qatar, Saudi Arabia, China and even the United States seem to continue to side with President Bashir. Now we have reports that Russia’s mercenary army—the Wagner—fresh from atrocities in Syria and Ukraine, is now seen on the streets of Khartoum, presaging an escalation of peaceful protest into bloody violence.
In the meantime, is the Minister aware that the Mo Ibrahim Foundation reports that Sudan has dropped towards the bottom of its index of African governance, because of its human rights abuses and lack of freedom? Will the Government now liaise with that foundation and work with African Governments, beyond the IGAD arrangements, to protect the well-being of the Sudanese people?
I will certainly follow up on what the noble Lord suggests. He mentioned IGAD at the end of his question. The returns that we have seen from the IGAD relationship demonstrate directly the benefits of Uganda and Sudan working for the betterment of near neighbours, including South Sudan.
My Lords, has the Minister had a chance to look at the information that I sent him in the past couple of days about the disproportionate use of force by the Bashir regime in firing bullets and tear gas into a hospital? Is this not in line with precisely what this regime has done in Darfur, where 2 million people were displaced and 200,000 killed, and in Blue Nile and South Kordofan, to which my noble friend Lady Cox referred? Is this not also in line with a Government who are in debt to some $40 billion and are using that money on violence and internal repression rather than to lift up the standard of living of people who are often living in gross misery, fuelling the exodus from that country and therefore fuelling all of the deaths that we see in the Mediterranean?
I have seen the detailed assessment that the noble Lord sent, and I thank him for it. We are acutely aware of, and of course deplore, the attack that took place on the hospital, firing into those people and actually targeting those who were assisting people who were already injured. It was appalling, and I assure the noble Lord that we are taking it up in the strongest terms. On the wider issue of Darfur, during my visit to Sudan I did visit the region. With the UN mission actually pulling away from Darfur, we remain deeply concerned that any gains that have been made in bringing peace will be lost.
Voyeurism (Offences) (No. 2) Bill
I beg to move that the Bill do now pass.
My Lords, at the risk of my complete and utter humiliation, I rise in these difficult and fractious times to celebrate a moment of genuine positivity, collaboration and leadership in this place and beyond it. I pay tribute to the campaigner Gina Martin, whose original indignity was converted into a powerful campaign to do something important that we can all agree on. I also pay tribute to her lawyer, Ryan Whelan, for that campaigning partnership and to parliamentarians on all sides of both Houses who made it possible—even at the expense of rivalries and through self-censoring—to allow a speedy and successful passage of this Bill. I particularly thank the government Bill team, the Minister and his colleague, the noble Baroness, Lady Vere. This was good work and very well done.
I am obliged to the noble Baroness, Lady Chakrabarti, for her observations. I, too, extend my thanks to all who were engaged in bringing this Bill to fruition. I thank in particular the Bill team, which did so much work to ensure that the passage of this Bill was as simple and swift as we would all wish.
Tenant Fees Bill
My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the Tenant Fees Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.
Clause 11: Interest on payments under section 10
1: Clause 11, page 8, line 31, after “10(8)” insert “—
(i) in a case within paragraph 4 of Schedule 2”
My Lords, I will speak briefly to Amendments 1 and 2 in my name. They are minor and technical, and consequential to an amendment we agreed on Report that would require landlords and agents to be up front about why they are retaining a holding deposit. Amendments 1 and 2 to Clause 11(3)(c) specify the day on which interest is to be payable where reasons for retaining the holding deposit have not been provided within the required period, and the holding deposit needs to be repaid. This date is the day after the end of the relevant period. I beg to move.
My Lords, on these Benches we accept this amendment. I take this opportunity to thank the Minister and his team for all their hard work. The last time I thanked them, they were a little busy trying to sort out a little local difficulty regarding definitions of damages. I am pleased to learn from Citizens Advice that it is now reassured that sufficient clarity will be given in guidance. If there is a latest draft of the guidance, having suggested some of the amendments, I would be happy to take a look at it. I am sure that my noble friend will do the fulsome thanks in the next bit but I just wanted to thank the ministerial team and the Minister very much for progressing the Bill. I look forward to its further rapid progress and would like to hear from the Minister when he thinks it will be enacted.
My Lords, I too thank the Minister for listening. He has been very attentive in listening to the suggestions, comments and evidence from tenants and all those people involved with this part of the Bill. I have been in correspondence with the Minister, starting in the Moses Room. He has been very attentive to people’s concerns and cares. The Bill is what it is because of that attention.
My Lords, I thank noble Lords for their contributions concerning these amendments. I will say more at the final stage of the Bill—the passage, I hope—about the points the noble Baroness, Lady Grender, raised, but I thank her very much indeed. As always, I thank the most reverend Primate very much indeed for his positive contributions and engagement, and his most kind comments. He is extremely gracious. As always, the noble Lord, Lord Foulkes, asks a question that goes straight for the middle stump. I will write to him, if I may, on that issue because I do not want to mislead him.
I am grateful and anticipate being the recipient of a letter. However, if we agree it may be too late because, before we agree, should we not know if Saturdays and Sundays are included, or if it is only weekdays? I normally find that weekdays are the only days counted for this purpose, and that Saturdays and Sundays, when offices are closed and people are unable to take payments and so on, are not included. I do not know if help is on its way, but I think it would be helpful to know exactly before we agree this.
My Lords, I now have the answer, and it is “any day”. I am very grateful to the noble Lord for coming back on the issue, which gave me the opportunity to get expert advice on it. I hope he is content with that. I also thank the noble Lord, Lord Kennedy, for his contribution.
Amendment 1 agreed.
2: Clause 11, page 8, line 33, leave out “paragraph 4 of Schedule 2” and insert “that paragraph, or
(ii) in a case within paragraph 5 of that Schedule, the day after the end of the relevant period within the meaning of that paragraph.”
Amendment 2 agreed.
My Lords, I will make a few concluding remarks. It has been clear throughout that this is a Bill that we all support, and one that will deliver important changes to the private rented sector, improving lives for millions of tenants. I am grateful to all noble Lords from all parts of the House who have engaged so thoroughly and passionately during the proceedings in this House.
Specifically, I thank the noble Baroness, Lady Grender, for her work to date in promoting a ban on letting fees, which has been notable. I also thank the noble Lords, Lord Kennedy and Lord Shipley, for their significant contributions during our debates. I thank the noble Baroness, Lady Hayter, who is not in her place at present, for helping to ensure that the client money protection regulations work as intended and the considerable work that she has done on this, as well as the noble Lord, Lord Palmer of Childs Hill. Finally, I thank my noble friends Lady Barran and Lady Jenkin for raising the important issues of home share schemes, which I think we all value.
I firmly believe that all the amendments made in this House strengthen the Bill and offer greater protections for tenants while not unfairly impacting on landlords and agents. I thank industry groups and local authorities for their constructive engagement and support in strengthening the Bill’s provisions and offering feedback on our draft guidance.
We will continue to work closely with stakeholders to ensure that the ban is properly communicated to tenants, landlords and agents, particularly with regard to contractual damages, which were the subject of debate on Report. I reassure the House again that there are already large amounts of case law that deal with what is appropriate in a damages case. Damages are generally not meant to do anything more than put the innocent party—“innocent party” being a legal term—back in the position they would have been had the contract not been breached. They are not a back door to default charges. I will repeat that: they are not a back door to default charges.
We are committed to working with Citizens Advice, Shelter and other industry groups to ensure that tenants fully understand their rights with regard to paying and challenging contractual damages. I know that it is in all our interests to ensure that this vital legislation becomes law as quickly as possible.
Implementation is, of course, subject to parliamentary timetables, and amendments we have made need to be considered in the other place. We also need to allow a period of time following Royal Assent to enable agents and landlords to become compliant with the new legislation. We therefore intend for the provisions of this Bill to come into force on 1 June 2019. This would mean that the ban on letting fees would apply to all new tenancies signed on or after this date.
I conclude by thanking officials who have worked diligently on this Bill and have performed massive tasks in ensuring that we are in the position we are now. I thank Becky Perks, Rosie Gray, Tim Dwyer, Nigel Bousfield, Elly-Marie Connolly, Laurence Morton, Jane Worthington and, from my own office, Lucjan Kaliniecki. I beg to move.
My Lords, I thank the Minister for his statement. He said that the Bill would improve the lives of millions of tenants, and he is absolutely right. It is a much better Bill as a consequence of the close cross-party co-operation it has undergone in your Lordships’ House.
I thank the Minister for his willingness to give a great deal of time, meeting regularly with us to identify outstanding issues. From these Benches, I thank my noble friend Lady Grender, whose assiduous campaign over a substantial period has led to fruition in this Bill, which is indeed a significant milestone in the support of tenants’ rights. I also thank Sarah Pughe, in the Liberal Democrat Whips’ Office, for her help. I also extend my thanks to the Bill team and all the officials who gave us a great deal of time in recent weeks while the detail of the changes that were being made in your Lordships’ House was finalised.
We lowered the level of the deposit cap to five weeks’ rent, listed default fees on the face of the Bill, introduced greater transparency around holding deposits, removed local authorities—I declare that I am a vice-president of the Local Government Association—and those acting on behalf of local authorities from the definition of a “relevant person”, and we addressed deficiencies in the client money protection scheme, among a number of other changes. Some of those changes are very important, and enable the Minister to say that the Bill will indeed help financially a large number of tenants.
I thank the Minister for his co-operation throughout this process. The last few weeks have been very productive, making sure that the Bill will stand the test of its application.
My Lords, the Bill before us leaves this House in a much better state than when it arrived. It has had a positive consideration across the House, and I thank every Member who has contributed to our debates and discussions, bringing their expertise and ideas. We have made a real difference and, as the noble Lord, Lord Shipley, outlined, some improvements to the Bill, so we have made progress. We have certainly made a positive contribution to the rights of tenants in the private sector, and it is important that we do that. I also thank the Bill team from the department, who have been courteous, helpful and informative, and have engaged with me and my noble friend Lord Beecham at any time. I am very grateful to them for that.
I thank the noble Lord, Lord Bourne, for whom I have great respect. We spend a lot of time on these Benches batting things back and forwards, and I have always found him courteous, friendly and engaging, and always willing to talk to me both inside and outside the Chamber. I also thank my noble friend Lord Beecham for his support and hard work, and I thank Rhian Jones from the opposition office. She has supported me with research and draft amendments and has helped me to understand the Bill—she understands it much better than I ever would—sending me out to battle with the right papers at the right time, fully briefed, so that I can raise things here. I am very grateful for all the work she does for us in our office, and I thank her very much for that. I am delighted that the Bill is where it is today, in a much better place.
Bill passed and sent to the Commons with amendments.
Counter-Terrorism and Border Security Bill
Clause 4: Entering or remaining in a designated area
1: Clause 4, page 3, line 11, at beginning insert “Subject to subsections (3) and (4),”
My Lords, I will also speak to the other government amendments in this group.
Government Amendments 1 to 4 return to the issue of the proper scope of the new designated area offence provided for in Clause 4. I thank the Opposition for their constructive approach to this provision. It was clear from our earlier debates that there was general support for the principle of a designated area offence to help protect the public from a real terrorist threat, such as we have seen as a result of UK nationals and residents travelling to conflict zones in Syria and Iraq. The area of dispute was how we protect those who have a legitimate reason for travelling to a designated area.
On Report, the Government sought to provide greater reassurance by building on the existing reasonable excuse defence and setting out an indicative list of such excuses. However, your Lordships preferred an alternative approach, put forward by the noble Lord, Lord Rosser, which excludes from the scope of the offence travel to a designated area for one or more specified purposes. The list of such specified purposes matched the Government’s list of indicative reasonable excuses, but with a power to amend the list of specified purposes by regulations.
It is clear that, while the Opposition and the Government took different approaches to the challenge, we were ultimately striving to achieve the same result. I am pleased to say that, on reflection, the Government are content to accept the approach put forward in the Opposition’s amendment. Having consulted our operational partners, we consider that this change would not materially affect the operation of the offence. Indeed, noble Lords will recall that, on Report, I indicated that, from the perspective of an individual returning to the UK from a designated area, the two approaches would, in one sense, not look very different. Either way, the police would still need to investigate to determine whether, under one approach, an exclusion from the offence applied or, under the other, whether the subject of the investigation had a reasonable excuse.
I also reminded your Lordships that the police have made very clear that they will investigate any person returning from Syria to establish what risk they may pose to the public, given the high level of terrorist threat associated with that region. It seems reasonable to expect that this is likely to be the position in relation to any area that might be designated in the future under this power, as part of the police’s basic responsibility for protecting the public. This is aside from the question of whether a person returning from such an area may have had a legitimate reason for travelling under Clause 4. I accept, however, that an individual with a legitimate reason for travelling to a designated area would take greater comfort from knowing that they had not committed the offence in the first place than from knowing that they had a defence to the offence.
The Government must ensure that the law is as clear as it can be. These four amendments will help to achieve this. Amendment 1 is intended to make explicit in the Bill that there are exemptions from the offence—namely that an individual would not commit an offence if they leave a designated area within one month of the area being designated; that an individual enters or remains in a designated area involuntarily; or that an individual enters or remains in such an area in connection with one or more specified purposes.
Amendments 2 and 4 simply ensure that, consistent with the drafting of the Terrorism Act 2000, the parliamentary procedure for the new regulation-making power is set out in Section 123 of that Act rather than in new Section 58B. This in no way changes the operation of the regulation-making power or the parliamentary process for approving regulations made under it.
Finally, Amendment 3 provides for a definition of “terminally ill” where a person enters a designated area to visit a terminally ill relative. This point was raised by the noble Baroness, Lady Hamwee, on Report. This amendment will provide greater clarity for individuals who may pray in aid this reason for travelling to a designated area.
Before the Minister sits down, I want to raise a particular point about the amendment: why six months? Why was six months chosen rather than three months, a year or any other period? I wondered whether there was a clear medical or legal reason for that or whether it was just taken out of the hat. What is behind the choice of six months in particular?
My Lords, I am advised that it is in line with provisions in other Acts. If the noble Lord will allow, I will write to him on which they are, as I do not have that information. Essentially, it was a matter of drawing a line at some point. One cannot legislate for every type of terminal illness; it seemed a reasonable line to draw.
In summary, these changes are merely intended to refine and polish the amendment agreed by the House on Report. I hope noble Lords will agree that they reflect the collaborative approach that has characterised the passage of the Bill. I beg to move.
My Lords, I beg the indulgence and forgiveness of the House because I have not been involved in previous stages of the Bill, but the amendment concerns terminal illness, and I should declare that that is my specialty. It may be helpful to the Minister if I explain that the DS1500 benefits are where the six-month definition has come from—we are going back many years. If someone is deemed likely to die within six months in this country, they become eligible for DS1500 benefits, which is a special fast-track benefit.
However, the problem with the six months is that it is impossible to predict. All the evidence is that you cannot accurately predict whether someone’s prognosis is longer or shorter; it is really a best guess. Therefore, I completely accept the humanitarian rationale behind the amendment, but it is important that the Minister clarifies that this provision is six months with treatment available wherever that person is. I raise that because, to take the example of an insulin-dependent diabetic, if they stop their insulin and already have complications, they will die within six months, but if they carry on with their insulin, they may well live for many years.
It is important to clarify on the record that they are expected to be terminally ill given that they have accessed the treatment available wherever they are. I fully accept that in some parts of the world there is very little treatment available for a lot of diseases, but there is a very wide range of conditions which are fatal in a short time if they are not treated, and I should hate the Government to be caught out by any manipulation.
I am grateful to the noble Baroness. The example she cites illustrates very well that whether the exemption applies will depend very much on the facts of the individual case and would ultimately be for a jury to determine, if a case got that far. In her example, it would need to be established whether drugs were available for the person or not and the likelihood of their being available. She will notice that the wording is very carefully drawn to say that if, at the time, the person suffers from a progressive disease and their death in consequence of that disease can reasonably be expected within six months—it is that reasonable belief that we need to focus on. It is possible, of course, that the exemption could come under one of the other headings in the amendment: for example, for aid of a humanitarian nature.
My Lords, will the Minister contemplate another example? Megrahi was sent from a Scottish jail back to Libya and expected to die within a short period, but he lived for longer than six months. What if someone was here and the same thing applied? President Pinochet was allowed to go back. Everybody expected him to die but he walked off the plane and lived for quite some time. So the six-month period could become a problem. One needs to find a way of describing it in another way. People have died within six months but some have lived longer. Can the noble Earl help us with that quandary?
I am grateful to the most reverend Primate. Again, we come down to the words “reasonable belief”. If it is reasonable to believe that somebody is about to die within the six-month period, I feel sure that the police will not argue that point to the nth degree.
My Lords, I am grateful to the Minister and the Government for pursuing the point. I looked at this for some time and came to the view that the words “reasonably be expected” were the best that one could provide to cover circumstances that cannot be listed in detail. Indeed, I confess that having complained throughout the Bill’s progress that I did not want to rely on the CPS tests, the police’s common sense and all the rest of it, I will do so on this one. I thank him.
However, I want to raise another point and I hope the Minister is aware of it—I emailed the Bill team about it yesterday. I am happy with the drafting amendments, which are to do with regulations, but given the supplementary delegated powers memo, I thought that I should pursue the issue of peacebuilding as a reasonable excuse. The paragraph of the memorandum dealing with “reasonable excuse defence” gives,
“purposes of a peacebuilding nature”,
as a possible example of a purpose that can be referred to as a reasonable excuse. I referred to peacebuilding at the previous stage, on 3 December, and the noble Earl said:
“I entirely accept the importance of peacebuilding activity … the government amendment does not preclude a person advancing this or any other category of reasonable excuse. I am of the view that legitimate peacebuilding activity could very well be a reasonable excuse”—[Official Report, 3/12/18; col. 860]—
but that it was up to a jury.
The debate continued and, as the House is aware, the amendment in the name of the noble Lord, Lord Rosser, which we supported, was agreed on a Division. Therefore, the point rather floated away. Essentially, I hope the noble Earl can commit the Government today to considering adding peacebuilding when the Bill goes back to the Commons. It seems, from correspondence I have received since I emailed the Bill team, that peacebuilding may or may not be what is understood to be a humanitarian activity. There is a particular concern that—given that this is not something that we talk about and define every day—juries may be puzzled as to what it is and not understand its value. I am not sure whether that is a fair comment. However, it has been described to me as being “complementary to humanitarian aid” and covers a large range of activities, including mediation, support to the local community, justice and reconciliation, psychosocial support and research in the area. The Government have been considering this matter. It would complete the provisions in this area if it could be referred to specifically when the Bill is enacted.
My Lords, I support very strongly indeed what has just been said. Having spent much of my life working with humanitarian agencies, I know that the importance of what has been said cannot be overemphasised. We must not slip into an attitude in which relief, when things have gone badly wrong, may be interminable and highly costly, apart from anything else. There is a real need in hot situations to be working at prevention.
In broad government statements we get very reassuring remarks about the importance of conflict resolution and peacebuilding. The humanitarian agencies frequently find themselves involved in this and I think with all possible clarity that that is valid. They should not just be tolerated, they should be supported by the Government and others. That is significant because anything that either intentionally or unintentionally detracts from the commitment in that area would be very unfortunate.
My Lords, I rise briefly to say that I support the amendments before us. I am pleased that the Government have listened to the proposal put by my noble friend Lord Rosser, who is unable to be with us today. I think that the noble Baroness, Lady Finlay, has raised an important issue as regards the medical terminology used, but the noble Earl has answered the point in terms of what can be expected. Generally, I support the amendments because they certainly clarify what we put forward in the first place and I thank the Government for listening in this case.
My Lords, I am doubly grateful to all noble Lords who have spoken. I am sympathetic to the point made by the noble Baroness, Lady Hamwee, but only up to a certain point. Given that this is Third Reading, our starting point has to be that any further amendments to the Bill should be limited to those that are absolutely necessary to improve the drafting of the Bill in the light of the amendment agreed by the House at Report. I am not persuaded that adding to the list of exemptions from the offence properly falls within the category of amendments that we should now be contemplating at this late stage of the Bill, either today or when the Bill returns to the Commons to consider the Lords amendments.
However, I can assure the noble Baroness that the Government will keep the list of exempted purposes under review. The Bill now helpfully includes a power by regulations—a Henry VIII power to all intents and purposes—to add to the list of exempted purposes should it be appropriate to do so in the light of experience of operating the new offence. I am sure that officials in the Home Office will closely scrutinise the use of this power and will work with their colleagues in the Department for International Development and the Foreign and Commonwealth Office to determine if peacebuilding could usefully be added to the list of exempted reasons in the future.
But I need to make clear to all noble Lords that this is a nicety. In the absence of such an exemption the Government are clear that entering and remaining in a designated area for the purpose of engaging in peacebuilding would constitute a reasonable excuse. We have that all-encompassing provision, as the noble Baroness is aware, in the Bill. There is a problem associated with any approach that has within it a list of some kind, which is why we started out with a very short list indeed. Through our debates we persuaded ourselves that it would be helpful to augment the very short list that the Government started off with, but we have to ask ourselves where we stop.
I hope what I have said has offered some assurance to the noble Baroness and she understands that, while it would not be appropriate to add peacebuilding to the list of exemptions at the moment, that will not preclude us doing so in the future, should there be an operational imperative.
My Lords, to be rather blunt it is always frustrating when procedure gets in the way of substance. I ask the Minister to ensure that Home Office officials appreciate that “in the light of experience” should not just be what may happen when someone comes back and says, “I have been working on peacebuilding in Syria”. It is also about deterring NGOs from going into conflict or post-conflict areas to work on peacebuilding. That could be a consequence we do not want to see from the offence we have created in the Bill.
I entirely agree with the noble Baroness, but I hope too that she will recognise that the wording of the first purpose set out in this amendment,
“providing aid of a humanitarian nature”,
is quite broad. So humanitarian agencies of any kind could feel secure in going out for almost any humanitarian purpose one can devise.
Before my noble friend sits down, I caution that sometimes lists can become exclusive and that some good things are easier to recognise than to define. He ought to stick to the way the Bill is currently drafted and allow himself the freedom to consider rather more carefully, despite the charming way in which the noble Baroness has advanced her case.
My Lords, the Minister has been very helpful in the comments he has made and I most genuinely thank him for that. I just wonder whether it is possible for the Government and the Minister, when this legislation is given final consideration, to say some encouraging and positive things about the recognition of the courage and value of such work, so as to in no way whatsoever inhibit organisations that are able to make a positive contribution of this kind. Having been through this kind of situation, the trustees and leaders of the agencies concerned obviously give a great deal of deliberation to what they do and what is involved. To feel they are doing it in a climate of good will and not just acceptance is very important.
I accept the point the noble Lord has made. That is why the whole tone and flavour of this part of the amendment carries the implication he would wish, in particular the provision that talks about,
“carrying out work for the government of a country other than the United Kingdom … carrying out work for the United Nations or an agency of the United Nations”,
and so forth. It is clear that the value of work of this kind—whether carried out by an individual, an agency or a Government—is fully recognised. I am sure that point will not be lost on those whose job it is to implement the Bill.
Amendment 1 agreed.
Amendments 2 to 4
2: Clause 4, page 4, leave out lines 15 to 17
3: Clause 4, page 4, line 26, at end insert—
“(c) a person is “terminally ill” at any time if at that time the person suffers from a progressive disease and the person’s death in consequence of that disease can reasonably be expected within 6 months.”
4: Clause 4, page 5, line 29, after “regulations)” insert “—
(a) in subsection (4), after paragraph (b) insert—“(ba) section 58B(7);”;(b) in subsection (5), for “or (b)” substitute “, (b) or (ba)”;(c) ”
Amendments 2 to 4 agreed.
My Lords, I extend my thanks for the wide range of expertise from around your Lordships’ House that has provided such a constructive and measured approach to what is a very serious Bill that has passed through the House. I thank first my noble friend Lord Howe, who has helped me through all stages of the Bill, and my two noble friends Lady Manzoor and Lady Barran for their contribution as Government Whips.
On the Opposition Front Bench, I thank the noble Lords, Lord Kennedy and, of course, Lord Rosser—I express the feeling of the whole House in wishing him well and looking forward to seeing him back in his place very soon. On the Lib Dem Benches, I thank the noble Baroness, Lady Hamwee, and the noble Lords, Lord Paddick, Lord Marks and Lord Stunell, for their contribution. Then, of course, there are the heavyweights on the Cross Benches—I refer not to their frames but to their intellects—the noble Lords, Lord Carlile and Lord Anderson, the noble and learned Lord, Lord Judge, and the noble Baroness, Lady Manningham-Buller; I thank them all for the helpful advice they have given me in proceeding with this Bill. Finally, I thank the officials from both the Home Office and the Ministry of Justice who have supported us as the Bill proceeded.
I am very pleased at this stage that we have achieved an outcome where there is a broad consensus on all aspects of the Bill bar one: whether there should be an independent review of Prevent. We continue to reflect on that matter in advance of the Bill returning to the House of Commons. In any event, I hope that this issue will not stand in the way of the Bill securing Royal Assent. On that basis, I beg to move.
My Lords, we thank the noble Baroness, the noble Earl, and their Whips and officials for the way in which they have, at least to some extent, listened and responded to the concerns that we have raised. It was interesting, having been completely opposed at one stage, to find a government amendment in accordance with the arguments we had made coming in at the next stage of the Bill, but surprises are sometimes good ones.
However, we are still concerned that a dangerous precedent is being perpetuated by this Bill adding to the list of criminal offences where those acting completely innocently commit an offence for which they can be arrested and charged, and only have a defence once they have been charged. We note that the Government, in accepting the Labour amendment excluding people with legitimate reasons from the scope of the designated area offence, recognise those concerns to some extent. Perhaps I should say to the noble Lord, Lord Carlile of Berriew, with whom I jousted on this issue, that this is a matter to which we will return when we debate the Offensive Weapons Bill in the coming weeks.
We are still concerned about people being criminalised by this Bill for what they think rather than what they do, or for being foolish or unwitting; that people can be detained at our borders without any reasonable grounds for suspicion; and that, in the exercise of these powers and the operation of Prevent, black and minority ethnic people and Muslims may be unfairly targeted. We believe the Bill amounts to a further erosion of civil liberties, and that is something the Liberal Democrats will continue to fight to prevent.
My Lords, this Bill was intended to do everything necessary at present to counter terrorism and protect our borders. It does not. I have made repeated attempts to persuade the Government to evaluate—just evaluate—the need for a secure personal identity number system, with biometrics held on a secure central database with which the biometrics of any UK citizen could be compared online by those authorised to do so. The Home Office has refused point blank to even consider this suggestion. This is inexcusable. I recognise that the default position of the Home Office has long been to ignore, reject or oppose external suggestions for changing its procedures, practices or policies, but that is not a satisfactory situation. That it may get away with such behaviour can of course be a reflection on the effectiveness of Ministers, some of whom are coaxed into being mere parrots of Home Office views. I suspect that a rule of the department is, whenever necessary, to remind Ministers “Theirs not to reason why”.
On border control, I will make three points. First, the list published in Hansard, in response to Written Questions I have put down periodically since 2012, of Home Office immigration officials who have been sentenced to often long periods of imprisonment, up to eight or nine years, for misconduct in public office—that is what Hansard describes their offence as being, in most cases—now includes over 50 such cases. This is a disgrace which should have been tackled long ago. All that has happened is that the Home Office has now decided to withhold the names of those who, in open court, have been so convicted, apparently on the grounds that it infringes their privacy or human rights. Secondly, there is still no record, for online access at entry and departure points, of other passports held by UK passport holders. Thirdly, the Home Office seems to have been caught by surprise, with the Home Secretary having had to hurry back from holiday, by the sudden increase in the number of illegal immigrants who have sought to travel to the UK across the Channel in small boats. This was both predictable and predicted, and it can be expected to increase greatly next summer unless effective action is taken to halt it.
Perhaps I could end by quoting Sherlock Holmes:
“From a drop of water a logician could infer the possibility of … a Niagara”.
I am afraid there is a shortage of logicians in the Home Office.
My Lords, I join others in thanking the Government and in particular the noble Baroness, Lady Williams of Trafford, and the noble Earl, Lord Howe, for the way they have conducted themselves in the course of this Bill. I enjoy our tussles across the Dispatch Box very much and I have great respect for both noble Lords on the way they conduct themselves in the House, as does the whole House. I thank them very much for that. I also thank Ben Wallace MP, the Security Minister, for his engagement in this Bill—he has been very helpful. I too thank my noble friend Lord Rosser. He is much missed, and I hope he will be back in the House very soon. He is certainly more forensic in dealing with the Government, and I look forward to having him back by my side shortly.
I also thank the officials from the Bill team and other officials from the Home Office and elsewhere whom we met. They were able to discuss our concerns and look at the issues that we were raising, and they came back in a very positive way. That was very helpful for me and my noble friend Lord Rosser.
I thank noble Lords across the House for their contributions. As the Minister said, they have been wide-ranging and authoritative. Something that we certainly saw on this Bill was the authority that people spoke with on a variety of issues. In particular, as has been said, the contributions by the noble Lords, Lord Anderson of Ipswich and Lord Carlile, the noble and learned Lord, Lord Judge, and the noble Baroness, Lady Manningham-Buller, helped us to understand where we were coming from.
I thank Grace Wright from the opposition office. She has been helpful and supportive in her guidance to me, and ensured that we were able to put our arguments forward well and effectively. She is a skilful member of staff and we are very appreciative of the work that she does for us all.
All sorts of claims and counterclaims have been flying around for the last hour or two about who did what or who did not in relation to the Bill. That is all quite regrettable, and I am not going to engage in it. All I will say is that my job as the opposition spokesperson here is to table amendments and put forward suggestions and ideas to engage with the Government. Hopefully, we all agree that the Bill was necessary; it is about ensuring that we keep our country safe and can deal with the threats that are posed. At the same time it is about protecting our liberties, and that is the balance that we always have to find. That is certainly my and my colleagues’ job here. I think we have got the balance right. The Government have listened on a number of issues, and I thank them very much.
I also thank the Minister for her comments on the issue of Prevent. We had certainly hoped that the Government would look at reviewing it, and clearly they will. Hopefully, in time we will have some good news about that, but if not then I am sure we will have a further debate in the House. At this stage, though, I again thank the House with respect to the Bill.
Bill passed and returned to the Commons with amendments.
Occupational and Personal Pension Schemes (Amendment etc.) (EU Exit) Regulations 2018
Motion to Approve
My Lords, these regulations make minor and technical changes to domestic legislation that would otherwise no longer operate effectively once the UK withdraws from the European Union. The regulations were specifically designed to ensure that domestic legislation continues to operate effectively in the event that the United Kingdom leaves the EU without a deal. In the event that a deal is reached, after the implementation period there will be a need to make legislative changes, but the nature of those changes will be informed by the nature of the relationship that exists between the EU and the UK.
Before I discuss the details of the regulations, it may be useful if I give some context and background. The UK is not reliant on any European institutions or agencies for essential functions in respect of private pensions such as approvals, licences, decisions or rights. The Pensions Regulator’s powers are derived from UK law. This means that the UK does not need to create any legislation to replicate domestically any EU-level activities relating to occupational and personal pensions after the UK’s exit from the EU.
Nevertheless, we must ensure that domestic legislation relating to occupational and personal pensions continues to work and does not rely on any definitions, obligations or reciprocal arrangements that will no longer apply once the UK is no longer an EU or European Economic Area member state. UK domestic legislation contains various instances of references to EU law, and to the UK as a member state of the EU, which will no longer be the case once the UK exits the Union. This includes where distinctions have been made between EU or EEA member states and overseas entities that will no longer apply, where the UK is referred to as an EU or EEA member state or where the UK is obliged to share data with EU agencies or member states under reciprocal arrangements that will no longer apply.
These regulations are made using powers in the European Union (Withdrawal) Act 2018 to fix legal inoperabilities and other deficiencies in retained EU law that will arise when we leave the Union. The legal powers used are those provided for under the European Union (Withdrawal) Act, and the amendments made are completely in line with both the policy and legal intent of that Act. The use of secondary legislation to amend primary legislation—so-called Henry VIII powers—was debated at length during the passage of the withdrawal Act. The Explanatory Memorandum that supports these regulations sets out the legislation in Great Britain that is being changed.
The noble Baroness has just said that the regulations are completely in line with the EU withdrawal Act and do not go beyond any provisions in that Act. But from reading the Explanatory Memorandum and the impact assessment, my understanding is that the regulations had to be revised and re-laid, and that this is the second version of the regulations, because in the first version the regulations were defective. They were not properly consulted on and would have required pension funds to disinvest from European funds because they had not been subject to a proper consultation procedure. Furthermore, there has been no formal process of consultation on these regulations either. Could the noble Baroness inform the House about these matters?
I can inform the noble Lord. He is absolutely right that a formal consultation was not considered necessary for these changes as there is no policy change and they make only minor and technical amendments designed to ensure that UK legislation operates effectively on the day the UK leaves the EU.
I interrupted only because my noble friend might be able to answer my question at the same time. The question is this: if it were not thought necessary to have the consultation in the first place, but then it was found that by not having the consultation the orders had to be taken and re-laid, would it not have been better to have had the consultation in the first place—and would it not now be better to have consultation, because that is the fundamental issue in all these matters? It is not that they somehow get outside the withdrawal Act, but that they do not have the proper consultation we need.
My Lords, it was as a result of ongoing communication with our industry stakeholders that we discovered that it was important to re-lay the regulations. In a sense, there was not a formal consultation, but we do have ongoing and constant communication with industry stakeholders who will be affected by these minor and technical amendments when we leave the European Union. I stress that we were very concerned to correct a fault in terminology, which is why we withdrew the original draft.
The Minister read from paragraph 10.1 of the Explanatory Memorandum for my noble friend Lord Adonis. That paragraph does confirm what she has just read out: that,
“the Department did engage with and respond to industry concerns over one aspect of the draft regulations that created an unintended consequence”.
How can she know, without carrying out a full consultation, that other aspects would not create unintended consequences?
The noble Lord, with all his experience, will know that all legislation, however much it is consulted upon, runs the risk of unintended consequences. However, in this case, there was ongoing communication and involvement with industry, and it was industry that pointed out the risk we were taking by laying the regulations with the wrong terminology—the words “UK regulated market”. We redrafted regulations that were originally laid in draft on 24 October so that we could fix an unintended consequence that industry stakeholders highlighted for us. They were concerned that the use of the term “UK regulated market” in the original draft regulations could have resulted in occupational pension schemes having to disinvest from regulated markets outside the UK. So there was a concern that this could impact further than was intended. The redrafted regulations re-laid on 3 December addressed the issue by clarifying the definition of “regulated market” to include United Kingdom, European Economic Area and other regulated markets. Industry stakeholders have welcomed the change.
The Explanatory Memorandum that supports these regulations sets out the legislation in Great Britain that is being changed. Noble Lords will see there a list of all the Acts where changes are required to be made. Primarily, the regulations make changes to reflect the UK’s new status as a state independent of the EU in the event of no deal and to ensure that domestic legislation continues to operate effectively following the UK’s exit from the Union. Consequently, they deal with the authorisation of cross-border pension schemes—that is what they are really about.
The EU’s cross-border authorisation regime applies to cross-border activity between member states and requires pension schemes to seek authorisation from their regulator to undertake such activity. Broadly speaking, cross-border activity is when an employer in one member state selects to base its occupational pension scheme in another.
These regulations recognise that once the UK ceases to be a member state following its exit from the Union, it will no longer be subject to the rules of the regime for any cross-border activity. Consequently, the regulations remove the requirement for UK occupational pension schemes to obtain authorisation from the Pensions Regulator to carry out cross-border activities.
As I have said, but I will repeat it for all noble Lords to make sure that I have got the message across, these regulations were originally laid on 24 October and were intended to make changes to domestic legislation. It was at that point that industry stakeholders in conversation with our department identified an unintended consequence of the draft regulations relating to its use of “UK regulated market” as a definition of regulated markets rather than “other regulated markets”. Industry stakeholders were concerned that this could have resulted in occupational pension schemes having to disinvest from regulated markets outside the UK.
As this was not the original policy intent, and following engagement with industry stakeholders, we redrafted the regulations to correct this unintended consequence. The draft regulations that were re-laid on 3 December addressed this issue by extending the definition of “regulated market” to include UK, EEA and other regulated markets. A corresponding change has been made to the Northern Ireland regulations, which I will speak to shortly.
These instruments are part of a wider legislation package that my department is laying. We have already laid statutory instruments relating to social security and to the European job mobility portal, more commonly known as the EURES regime.
As I have said to noble Lords, a formal consultation on these regulations was not carried out by the Department for Work and Pensions. It was not considered to be necessary because the regulations do not make any policy changes and make only minor and technical amendments designed to ensure that UK legislation operates effectively on the day the UK leaves the EU.
Similarly, we expect the regulations to have no significant impact on business, charities, voluntary bodies or the public sector. In fact, in their absence, if elements of the UK’s occupational and personal pensions legislation do not work effectively after the UK departs the EU, it will result in associated costs on all involved parties; for example, extra resource invested in trying to clarify the situation. These instruments make the changes needed to avoid this situation and, on this basis, are assessed to be at least cost-neutral or beneficial on balance to all involved parties, charities and voluntary bodies. In other words, we felt it was very important to make sure that the legislation was clear prior to leaving the EU.
The Minister said that the regulations would be cost neutral and the Explanatory Memorandum says, as she has just noted, that they,
“make minor and technical changes”,
but that does not appear to be the view of the sector. The journal Professional Pensions, which did a long article on these regulations, quoted Faye Jarvis from Hogan Lovells who said the regulations,
“could result in significant costs being incurred, the magnitude of which will depend upon the level and type of exposure that would need to be relocated to comply with the rules in the event of … no deal”.
Since there has been no impact assessment, what the Minister is saying to House this afternoon is pure assertion. The only response that I have been able to discover—because although an impact assessment has not been conducted there has been a certain amount of response in the media—suggests that there might be significant costs. How does she think that the House can make a judgment between the claims of people in the sector that there could be significant costs and her assertion that there are no costs, when no impact assessment of any kind has been conducted?
My Lords, it is interesting that the noble Lord has taken one quote from one article on this. Certainly, our understanding from our discussions with industry is that because this focuses on cross-border activity, it is up to the industry to decide whether to do something different if we leave the EU with no deal. Our focus has to be on the resulting associated costs to all parties involved—for example, extra resources invested in trying to clarify the situation: in other words, certainty of the law post exit from the European Union.
Our focus is on what happens if there is no deal. Should different companies in the pensions industry choose to do something different post exit, there may of course be other impacts on business, but certainly in our discussions with business, that was not the impression we received.
Since there has been no formal consultation, the House has no basis on which to make any judgment at all. The Minister has simply made a number of assertions which appear to be at variance with the actual public response. She said that there have been ongoing consultations and dialogue. Can she tell the House more about them?
My Lords, we are constantly in touch with the Pensions Regulator, with which we have a very good relationship. We work very closely with industry. My honourable friend in another place, the Minister for Pensions and Financial Inclusion, also has ongoing discussions with the Pensions Regulator and individual companies within the pensions industry. The noble Lord will recall that I have stated that there was no formal consultation because there was no change to policy. Given that there is no change to policy and that we are dealing with minor and technical amendments, and given our constant and ongoing involvement with the industry—those in the industry are very much in touch with each other; it is not an industry that is hard to be in touch with—and this niche area of cross-border activity of pension companies and pensions, it is fair to say that the department has done all that is reasonably necessary and, indeed, cost-effective to limit our consultation to an informal ongoing communication with both the Pensions Regulator and industry stakeholders.
On this constant and ongoing activity with the industry, I wonder whether the Minister can help me. The territorial extent of this provision is the United Kingdom. What is the position if my pension is based in the Channel Islands or the Isle of Man, or if my employer has a base in the Channel Islands or the Isle of Man? How is that covered?
My Lords, we are talking about occupational pensions and private pension schemes. If the noble Lord has a pension in that area, it would be important for him to make sure that he is in touch with his pension provider, to make sure that payment will continue. However, these regulations have nothing to do with payment of pensions.
I am not asking that. I should make it clear that I do not have a pension based in the Channel Islands or the Isle of Man. At least, if I do, then Brian Donohoe is going to be in trouble, because he is in charge of parliamentary pensions, which is all I have. I asked the question as a Member of this House, scrutinising this on behalf of people outside who may have pensions based in the Channel Islands and the Isle of Man. I have read through the whole document and there is nothing related to either. What discussions have taken place? As the Minister knows, the Channel Islands and the Isle of Man have large financial sectors. They are providers of pensions and investments that are the basis for other pension funds that may be based in the United Kingdom or elsewhere in the European Union. How are the funds in the Channel Islands and Isle of Man affected by the proposed changes? It is not clear in any part of the document and I hope the Minister can tell the House.
My Lords, if I am unable to give the noble Lord a full reply, or after this debate my officials tell me that there is something else to say about the Channel Islands, I will certainly write to him and share my letter with all noble Lords. We are not moving away from current legislation. We are just introducing minor technical amendments to make sure that current UK legislation carries on working seamlessly in the event of no deal. There is nothing in UK private occupational pensions legislation that prevents occupational pension schemes making pension payments overseas. We do not expect this to change as a result of the UK withdrawing from the EU. We also do not expect there to be any issues with EEA schemes making occupational pension payments to residents in the UK. However, as I have said, individuals should contact their EEA scheme to clarify whether they expect any changes as a result of the UK leaving the EU.
These regulations are not about pay, but if a pension is paid into a UK bank account the bank should contact the scheme member if it expects any changes as a result of the UK leaving the EU. In the same way, those points would extend to any arrangements that an individual had with pension providers in the Channel Islands and elsewhere.
I would like to progress and complete my opening statement. We expect these regulations to have no significant impact on business, charities, voluntary bodies or the public sector. These instruments make the changes needed to avoid a situation that could be other than cost-neutral or beneficial. All noble Lords will know that the European Union (Withdrawal) Act is a crucial piece of legislation that will ensure that, whatever the outcome of negotiations, we have a functioning statute book on exit day, providing certainty to people and businesses across the UK. The Act enables this by providing a power for Ministers in the UK Government and devolved Administrations to deal with deficiencies in the law arising as a result of our exit from the EU. I beg to move.
The Question is that the two Motions in the name of the noble Baroness, Lady Buscombe—
My Lords, I am grateful to the Minister for that extended explanation. It was quite clear, but perhaps it is easier for me to say that because I am a serving member of the Secondary Legislation Scrutiny Committee, which has been looking very carefully on the House’s behalf at all of these points. These regulations were cleared, and the SLSC does not clear regulations that are not properly looked at. All of the important questions were addressed. While I would encourage your Lordships to ask more questions about some regulations—because there are occasions when regulations are laid before Parliament that deserve a lot more scrutiny than they normally get—this is not one of them. This regulation is technical and I take the point that has been made about the lack of consultation. That is always something that the committee is very solicitous to understand and the explanation that we got, which was crystal clear to me, was that the objection that came in and was found by bilateral consultations with the industry was so technical that you would not expect a member of the public to be able to volunteer something of that kind.
There are two kinds of consultation, and we are always looking for consultations where there is any case for making them. In regard to this regulation, this was not a sensible judgment to make, so the department was right both to take the advice from industry and to make the change. It is standard that regulations, in the gestation between Parliament and the department, often get relaid. Often the Explanatory Memoranda are changed and that is all to the good.
My noble friend—I have known him for many years—is an expert on social security and a member of the Secondary Legislation Scrutiny Committee. The two committees under the noble Lord, Lord Trefgarne, and my noble friend Lord Cunningham do a terrific job. However, is it not perfectly possible, because of the huge avalanche of legislation—the statutory instruments now coming to these committees—for things to be overlooked? Therefore, it is absolutely right that the Grand Committee and the House, where there is a wider membership and people might have looked at the regulations in some detail, might raise some of the issues. I fear that a lot of things will get through and these unintended consequences—few and far between as they have been in the past—will just become an avalanche themselves.
My noble friend makes a good point. I certainly have serious concerns about the scale, complexity and volume—not just the number, but the extent—of some of these SIs that the two committees upstairs are struggling to deal with. One thing that we are very solicitous of—and it supports the point—is that it is very easy to reduce the standards of scrutiny, which is one thing that we must not do. I gently say to the noble Lord, however, that if parliamentary procedures are tested to the extent that it takes up more time than this normally would, there are emergency procedures available to Governments which they might resort to if you push them too hard on the Floor on the time necessary to discuss these things. Therefore, I am absolutely happy to spend time when time is due to be spent, but these regulations are not of sufficient weight or concern to justify spending a lot of time, or more time than is necessary, on them.
The point about consultation has been made. The important thing is that we need to be more agile and more flexible about how we handle these statutory instruments. But I support the regulations and I hope the Government will take on board the important points that have been made about when consultations are and are not needed.
My Lords, if I had not gone through earlier debates, I would have agreed with the noble Lord. I want to make it clear that whatever certain government sources may say, there may well be some sort of arrangement as far as the Opposition are concerned but it is not one in which I have been involved at all. I went to listen to some later SIs last week. In listening to the debate, it became clear to me that a number of assertions were being made by the Government which, frankly, did not stand up.
Of course, the whole problem with these SIs is that the Government constantly remind us that they hope they will never be implemented and this is all about the possibility of there being an exit with no deal. But that does not mean, as I am sure the noble Lord, Lord Kirkwood, will agree, that we can ignore these SIs because they probably will not happen. Of course, as the days go on, that becomes less and less probable, in my view. Now that the Prime Minister has said that it is more likely that we will have no Brexit than a no-deal Brexit, perhaps one may be happier about it. But I am not here because I happen to believe that Brexit is a nonsense. I am here because I believe that there are some really fundamental things in these SIs.
The first is the assertion that we do not need to work too hard on them because they are not going to happen. That seems unacceptable.
I was not making the assertion about my noble friend; I was referring to the meeting of the Grand Committee last week, when that was very much the underlying assertion. That is all I was doing. I do not wish to make any such implication or accusation about my noble friend, whose presentation was perfectly right and reasonable, except that it is based on falsities. I will go on to the other falsities on which it is based.
The second falsehood is that this SI is not making much difference and therefore we do not have to go through the usual procedure. The difficulty with that is that there is a definition here which I find very peculiar. The definition of “impact” refers only to the direct impact of what is in this—the impact on people in the United Kingdom who do not have anything outside the United Kingdom, and who are concerned only with the United Kingdom. There is no reference to the cost of or the damage done by these regulations to those who are in the United Kingdom but have arrangements outside the United Kingdom within the European Union, who will be seriously disadvantaged because the UK will not be within the same arrangements. I realise that that is a result of Brexit but the idea that you can assess the impact without mentioning that seems very peculiar. If you mention that, you have to have an impact assessment. I am very suspicious of this because I think the Government do not want an impact assessment that explains to people precisely why exit from the European Union is so damaging. I do not understand how we are supposed to deal with an SI when it says simply that there is no, or no significant,
“impact on business, charities or voluntary bodies”.
That is the second reason that it seems to me that this is a kind of fudge.
The third reason, and this is the most important thing that I want to say, is about consultation.
The noble Lord and I have spent some time with other noble Lords in Grand Committee scrutinising a whole swathe of these regulations. Does he agree that a pattern is becoming very clear in that there has been no formal consultation on any of these regulations, whether or not they are making minor changes? In parenthesis, I say to the noble Lord, Lord Kirkwood, that the deficiencies in the first set of regulations were not minor but major in their impact and were not picked up by the engagement of the department with the industry. However, even those that involve substantial changes have not been consulted on formally. He will recall that in Grand Committee yesterday we were told that there had been selective engagement with “trusted” individuals. It became clear to us during those debates that there was a huge reluctance on the Government’s part to engage formally in consultation because—until the moment that we have just reached, when it has become public knowledge—they did not want the degree of preparation made for no deal to be known. The very scale of the problem to be encountered in respect of no deal and the alarm it would create was a reason why the Government have not been consulting, as they should have been, on these and other regulations. That ought to give the House very great concern about the state of the regulations and the degree to which the Government have engaged with those who are going to be very significantly affected in the way that he suggested.
I have to say, there are many fates which are worse than death—though I am not quite sure that that is one.
I wonder whether I could go on to the question of consultation. It is very difficult to uphold the argument that there was no need for consultation when you have had to withdraw the SI because, as a result of publishing it, it turns out that there was a need for consultation because a very serious mistake was found in it. If this were the only case—I say this to the noble Lord, Lord Kirkwood—I would be less concerned, but last week and yesterday we found a series of really serious changes which needed to be made which had been brought to our attention by the very industry with which the particular ministry concerned had claimed to have had ongoing and general discussions.
There is, for example, a very major problem for the pharmaceutical industry because there was no such consultation. I do not want to go into detail on that because obviously that is not the subject here, but it is important to say that this is a case where, had there been consultation, there would not have had to have been a second draft of this SI. My noble friend said, “Well, we have changed it”, but she has not. She has not, I think, convinced the House that there might not be something else that needs to be changed. Because you have changed one thing does not mean to say that there will not be any other.
Will the noble Lord agree with me, having sat through six sets of regulations which have been negatived, that there is a pattern emerging? Does he agree that the pattern is real doubt about whether there are accurate impact assessments and real doubt about whether any worthwhile consultation has taken place with interested parties? I am asking the question because this is of great importance to the House as a whole. There is a continuing assertion that these were minor and technical issues which did not involve a change of policy; but on further investigation, all showed that there were serious concerns about impact assessments, there were changes of policy, and there were great deficiencies in the consultation. As this House in Grand Committee has negatived six sets of regulations, one after the other, one can be excused for being a little sceptical about assertions from the Dispatch Box.
My Lords, if I may be helpful to the House, I think I made it clear to all noble Lords that, because of consultation with the industry concerning this fairly niche area within the pensions industry of cross-border activity with the EU, we learned that one word was wrong within the draft regulations. Therefore, notwithstanding what may have happened with other SIs that noble Lords have been debating in recent weeks, with regard to this SI, one word was out of place and, quite rightly, the pensions industry alerted the department, which withdrew the draft regulations. As the noble Lord, Lord Kirkwood, so helpfully stated, the reality is that this happens. It does not happen on a regular basis. I cannot believe that, when my noble friend was Secretary of State, every piece of legislation he brought forward was perfect the first time round.
I perfectly agree with my noble friend that I did not always produce legislation that was perfect the first time round. However, I did consult. I would not have dreamed of having a situation like this, where after I had published the legislation and told people that there was no need for consultation, I then found that there was a need for consultation. In this case, my noble friend is coming to the House and saying, “Although we got it wrong the first time, we know we are not getting it wrong the second time”. I know that she does not wish me to refer to what has gone on in other SIs, but the trouble is that there is beginning to be a pattern here. There is an assertion that proper consultation is not needed but it is then found, after they publish the document, that a series of people from the industry come up with really very serious matters. In two cases, those matters could affect the lives of people in this country because of the way in which the legislation has been framed. My noble friend really does have to understand that we are not having this argument for some esoteric reason or because we happen not to like the withdrawal Act. We are having it because, by accident, we have come to understand that when you work this out, discuss it and think about it, it does not turn out to be quite the legislation that we were told it was. That is the next reason why I find it difficult to accept this SI.
Then there is the question of cost. Evidently, it was not thought necessary to have a consultation because it would not be cost effective to have one. I do not know how much it costs to withdraw an SI and then to replace it, but that does not seem to be a cheap alternative to having a proper discussion in the first place. I do not understand why there could not be a consultation. After all, if the consultation had taken place at the time the original SI was laid, it would have happened, it would have been over, and we would have known that there had been such a consultation.
Lastly, I will talk for just one moment about the whole question of cross-border activity. This SI says, “If we leave the European Union, and if we leave it without an agreement, we are putting in place something that will enable us to be an island which does not have any outside connections at all but our own internal arrangements”. This means that we are going to reduplicate what are, at the moment, some of the arrangements which are done across the whole EU. I do not see here the cost of having entirely our own system and the cost to pension operators in this country of having to make new cross-border arrangements themselves. That does not come into the impact assessment. There is no question about that cost, but it is not here. All we have here are the costs of that very narrow area which the Government have decided is what is defined as “cost”. Yet the Government are going to have to accept that pension people in this country will have the cost of making arrangements so that they can do the things they are doing at the moment inside the European Union. This is a cost, but it is not here.
I know my noble friend is bored with it and thinks that we should let this all pass, but this House is about revision. We have made a mistake with this particular SI. We should recognise that all these SIs need to have at least a formal consultation. There should be a time when people can be asked to put in their concerns; the ability for a Minister to get up and say, “We have had a consultation”. I think it is unfair on my noble friend. She can only get up and say, “Well, there has been an informal series of talks”.
My noble friend is right to say that the problem with all this legislation is that it takes time. If you are going to make fundamental changes, you have to face it: it is better to have short consultation periods in which everyone is told that there is a consultation, rather than this egregious kind of concept where you say, “We have had a bit of a consultation and we have ongoing talks”. We cannot get up in this House and say that we have had a consultation that shows that we have covered everything. I agree with my noble friend that you have to have a short consultation but it must be public and clear. It is frankly not our fault that we have lost a lot of time. It is because the Government did not start two years ago to prepare for what might be a no-deal exit.
The noble Lord raises an extremely important point about the need to consult before regulations are published, rather than after. The Minister said that these were technical and that there was ongoing engagement. Responses from practitioners in the sector show that they were concerned about the mistakes made the first time round. Unlike the noble Lord, Lord Kirkwood, who thought that everything would be perfect the second time round, the response of Faye Jarvis, a partner at Hogan Lovells whom I quoted earlier, was that they were getting very significant impacts from the original version of these regulations. She warned schemes to pay attention to any further changes to the regulations in case they brought such unintended consequences again, saying:
“People will need to be scrutinising and seeing what else is coming out in terms of draft regulations to make sure there aren’t any other inadvertent errors but also to check there aren’t any unexpected impacts”.
Does the noble Lord agree that the whole reason one consults before presenting regulations for approval to Parliament is so that these kinds of inadvertent changes do not take place? The fact that partners in pensions law firms are saying that they have not been consulted and are not content that these regulations will not produce more inadvertent errors with a major impact entirely supports the noble Lord’s argument. We need proper consultation and not the rushed, informal dialogue which is taking place because of the very rushed nature of these no-deal preparations.
I will answer the noble Lord, but I do not want to prolong my remarks. I am already a bit fed up with being told that I must not talk about these things because it takes too long. I find it extremely difficult but it has to be talked about. The noble Lord is entirely right. This will be true and, if so, I have to declare my interest as chairman of PIMFA. I have some allied interests, but not as far as pensions are concerned.
I come back to my noble friend. There is national concern about the responsibility of government and Parliament. That leads me to say very seriously to her that if it looks as though you are hiding the consequences of decisions that you make, that does a great deal of harm. Not having the proper costs here—
Frankly, I did not say that my noble friend was hiding it. I said, “If it looks as if you”—and I am not referring to my noble friend but to the Government who have laid this SI—“are hiding”. She really cannot take exception to that—well, she has taken it, and if exception was taken, I apologise for any reasonable exception—but really, I say to my noble friend that we are trying to debate this issue. I was saying that if it looks as if you are hiding something because you do not include the costs of withdrawal, the public will find that difficult to accept. I do not think that I have accused her of anything, and trying to get upset about it is not acceptable.
All I am saying to her is that I hope that she will talk to the people who have laid these instruments and have not told us directly the costs. I believe that they intended not to tell us the costs, because if people add up the costs of Brexit in each of these SIs, they will begin to see why some of us have been so concerned.
I end by saying simply this. We need to have proper consultation and proper costings—not just generalised ones—and, when we have a changed SI such as this, which has been changed because we did not have a consultation, it would have been much more reasonable to have had a consultation before this SI was produced. I do not believe that it is possible for a Minister to get up and say that there is no need for consultation because we know that it is perfectly right. So, for all those reasons, I think it is perfectly correct that we should be having the kind of debate that we are on this SI.
I intended to intervene on the noble Lord, but I realised that it would be incredibly embarrassing if my name were to be attached to his speech, so I spared him the embarrassment. However, I shall quote him in a moment.
I was struck by a point made by my noble friend Lord Kirkwood of Kirkhope about the sheer quantity of secondary legislation coming through, and the great work that he and other members of those committees are doing. I am involved in a small way because I am on the Delegated Powers and Regulatory Reform Committee, which is involved at an early stage. My noble friend rightly made the point that the sheer quantity of SIs coming before your Lordships’ House is causing us real problems. I very much concur with what was said by the noble Lords, Lord Deben and Lord Warner, because we were together in the Grand Committee both last week and yesterday. A pattern seems to be developing. If I may illustrate it in this way, each time we come to one of these SIs—it is happening again today—the Minister says that this is contingency planning. It is fairly set out in the Explanatory Memorandum and very well explained that it will become applicable, relevant and of interest to Members of your Lordships’ House only if there is a no-deal outcome.
So all this is speculative; it is hypothetical. When I used to ask questions of the noble Lord, Lord Deben, in the other place, he would say to the House, “The question from Mr Tyler is hypothetical and I refuse to answer it”. That was perfectly reasonable. Now the Government are making a hypothetical statement: if there is no deal, this will be necessary. Most of the SIs coming before the committees of your Lordships’ House, let alone here in the Chamber, are hypothetical in that sense. This is a real problem—and, as the noble Lord, Lord Deben, said a few moments ago, it is becoming more of a problem every day.
In our vote yesterday, there was a huge majority against a no-deal outcome. The Prime Minister is increasingly saying that she is against a no-deal outcome—she even thinks it is more likely that there will be no Brexit. In those circumstances, the pressure on us all—and on the Government—to get consultation right, to get the impact statement right, to get the costs allocations right are becoming, in the words of the noble Lord, Lord Deben, more and more difficult and taking up more and more of the time of Ministers, their civil servants and your Lordships’ House. That means that we may be neglecting the “normal” SIs, if I may call them that, which are not related to a no-deal situation.
As we all know from the European Court of Justice judgment before Christmas, the only circumstances now in which a no-deal outcome, on which this SI is based, could happen would be as a result of a deliberate decision by the Government. It is not going to happen by accident. We were told in previous debates that there was a risk of an accidental no deal, but that is now impossible as a result of that judgment.
I will quote very speedily from the noble Lord, Lord Deben, who I hope will not be even more embarrassed than he was by being given my name. He said in Grand Committee last Wednesday that,
“I do not think this House is doing itself any good by conniving in what is manifestly a total nonsense … There is no no-deal scenario which does not mean chaos, so there is no point in having legislation which pretends that it will stop a no-deal scenario being chaos. That is inevitable, ineluctable and inextricable from the whole process”.—[Official Report, 9/1/19; col. GC203.]
We are back at that point. Here we are, inevitably finding that in a number of ways that have been well illustrated by other Members of your Lordships’ House, this SI may have serious problems. The Government are entitled to say, “We have no intention of going there. We do not want a no deal. We want the Government’s deal”. In that respect we are, unfortunately, jamming up and putting so much new work into your Lordships’ House at every level, which may be a complete waste of time. That will distract us from doing a good job on other SIs, and that is a very regrettable situation.
Does the noble Lord not agree that another theme that came out of the Grand Committee’s consideration of these statutory instruments was a more fundamental issue? The House of Commons debated and voted on no deal last Tuesday in one of the largest Divisions on Brexit since this whole process started two and a half years ago. It voted by a majority of seven against no deal and in favour of an amendment to the Finance (No.3) Bill, under which the disbursement of public funds in respect of no deal was conditional on the House of Commons having a specific vote on no deal, with it being clearly understood—because that amendment had been passed—that the House of Commons would not be favourable to it. So there is real concern among Members of your Lordships’ House about the legitimacy and validity of all this planning, given that in the one opportunity the House of Commons had to express its view, it expressed a firm view against there being no-deal planning.
In the interests of brevity, all I need to say is that I agree with the noble Lord—but this evening we may of course find that there is an additional expression of opinion by the other place. In that case, all this work may well turn out to be even more absurdly out of place.
My Lords, I just wanted to ask the Minister: how much consultation was undertaken with industry before the first regulations were produced? Did industry suggest, rightly, that this would cause trouble for the Pensions Regulator and others because it was bigger than just the United Kingdom? I listened to the noble Lord who said that he did not think that these small, technical changes required the same amount of consultation. If that is the case, we must distinguish each regulation from others. If one takes a generalised view of consultation, one can never have proper legislation that requires greater scrutiny than other legislation.
As far I am concerned, I was persuaded by the noble Lord that this is purely technical. From what I am hearing, it is. If, of course, as happened yesterday, there is no question of a no deal and the House of Commons says the same thing, and the same thing happens today, these regulations may not be necessary. But any sensible planner must always plan for all contingencies. You cannot go blindly in one direction alone—so I want to know.
My Lords, I have stayed out of this to date and I propose to do so in the future. I want to make just one point before we lose sight of it. The Minister talked about the change involving just one word. I think that we should recognise that that word is “UK”, which is a pretty substantial one.
My Lords, these draft regulations are part of a suite of instruments intended to plan for the no-deal scenario, necessitating a sweep across the stock of pension law. Such contingency regulations may well amend both primary and secondary legislation, the remit of the Pensions Regulator, the Pension Protection Fund and the Financial Assistance Scheme. What we have not received, however, is a broader assessment of what the pension landscape would look like in a no-deal scenario which sets the context for the consideration of these SIs individually. That is because to call them technical, when we stand back and look at the wider implications of no deal, is not to see some of the serious challenges and loss of member protections that could flow as the consequence of a sudden dropping out of EU legislation in a no-deal scenario.
These particular regulations address cross-border activity where an employer in one member state selects to base its occupational scheme in another member state, but they remove from the Pensions Act 2004 the requirement for occupational pension schemes to obtain authorisation from the Pensions Regulator for cross-border activities. They repeal the cross-border regime.
The UK and Ireland are the two countries between which there is significant cross-border pension provision, which will be another complication in future UK-Ireland relationships. Recent amendments to the Occupational Pension Schemes (Cross-border Activities) Regulations 2005 were made to allow for the IORP II strengthened requirements on cross-border activity which would be revoked if there is no deal. The acronym IORP comes from the EU directive meaning “Institutions for Occupational Retirement Provision”. Thus a new set of regulations that has just been accepted and which puts in place protections for cross-border activity would be revoked. In the event of no deal, the Pensions Regulator would need to provide guidance to those pension schemes which are currently authorised for cross-border activities within the EU. They exist now and they will not cease to exist simply because we may leave with no deal. Can I ask the Minister what would be the effect of substituting existing Pensions Regulator authorisation with a weaker system of Pensions Regulator guidance for cross-border activities? How would the effect of that weaken the level of protection afforded to scheme members in respect of both contributions and the protection of their assets? When will the regulator’s guidance be published so that we can more fully understand the implications of no deal?
Could the Minister advise whether there have been any discussions between the Pensions Regulator in the UK and Ireland on pension cross-border activities in the event of a no-deal scenario? Will the IORP II new authorisation process for schemes wishing to undertake bulk transfers of assets with a separate scheme located in another EEA state include ensuring that the cross-border transfer is approved by a majority of the members and beneficiaries or, where applicable, by a majority of their representatives? What will happen to those protections in a no-deal scenario? I do not know because I cannot find the answers to those questions. There will be UK citizens whose assets are in occupational schemes in other EU states that may be protected by ring-fencing or whatever.
The original draft of these regulations, as has been said on numerous occasions, required pension schemes to invest predominantly in UK-regulated markets. Regulation 29, the one being referred to, has been revised to allow schemes to invest in regulated markets more generally and therefore avoids the unintended consequence of large numbers of occupational pension schemes having to divest themselves of investments in regulated markets outside the UK. It illustrates how the impossible speed and pressure our departments and regulators are expected to work under to prepare simultaneously for a possible no deal and a withdrawal deal can lead to unintended consequences, which worries me. I fear that in retrospect, in the rush to prepare for no deal against a self-imposed deadline of 29 March, we will discover more unintended consequences in the canon of UK law, not simply in pension law. We have seen others, on trademarks or wherever, where people are beginning to identify unintended consequences.
I will not refer to Northern Ireland because we are now taking that separately, but on the broader point of how impact is defined and measured, there is a series of cliff-edge issues that could pose material risk to our financial markets in a no-deal scenario. UK providers will also be unable to rely on current passporting rights, could experience difficulties in servicing cross-border contracts and will not be part of the legal framework for moving data between the EU and the UK. In the absence of regulatory co-operation agreements or memoranda of understanding between the UK and the EU in a no-deal scenario, the operation of pension schemes and the value of members’ pension pots will be negatively impacted.
This takes me back to my opening point that, in considering these statutory instruments individually, the House lacks a broader assessment of what the pension landscape will look like in a no-deal scenario. To argue that somehow there is no need for consultation if the impact of no deal does not result in a change of policy is to completely fail to understand that the effect of no deal in weakening the protectors of members’ rights is a policy choice if one chooses no deal, because it will consequently affect members’ rights. It seems so narrow to argue that you cannot find a change of policy, though really the issue around consultation is not well argued. Although I accept that these regulations deal with the more narrow issue of cross-border activity, they are indicative of the problem of trying to look at any SI on pensions without the context of understanding the impact on pensions generally under no deal. Pension schemes everywhere are sitting and worrying about the consequences of this, particularly in financial markets. There are also UK citizens whose assets are in pension schemes in other EU states. Just walking away from the regime without any understanding, even with the Irish regulator, does not seem to be good preparation.
My Lords, my noble friend made an extremely powerful argument, which corresponds to a pattern that has emerged to those of us who have spent time in the Grand Committee discussing these regulations. They have all been prepared in a rush to meet an imminent deadline. Because of the rush, the need to meet the deadline and the secrecy inside the departments with which these regulations have been drafted and all no-deal planning has taken place, the pattern that has emerged in the debates in the House and the Grand Committee is that much wider issues have become apparent that could only become apparent through consultation.
The conclusion I can see we are already reaching—my noble friend makes an extremely powerful argument—is that it is not just the technical changes of the regulation and the precise changes in UK law, though clearly those have been very badly handled and have potentially had a dramatic impact on UK pension funds, but the whole wider context in which these funds and the professionals engaged in them will have to operate under no deal that will bring about fundamental changes. That is precisely why one would wish to have a full consultation, which has not taken place.
The noble Viscount opposite asked how long we would wish a consultation to be. There are established Cabinet Office rules on this which, when I was a Minister, we observed as a matter of course for any changes in the law; he will know this better than anyone, having dealt in this area so frequently. The rules say 12-week consultations. That is the norm. In my day, when we had a quality of Government rather higher than the one now engaging in all this helter-skelter planning for no deal, you needed a special exemption based on special emergency requirements not to go down the 12-week route, and that could happen only if the changes concerned were exceptionally minor. In this case, the Government themselves have imposed the deadline and the changes under consideration have a very wide potential impact. It is abundantly clear that the right thing to do in this and other cases is to have a 12-week consultation, with the wider policy environment under consideration being subject to consultation too.
I would like to ask the Minister some other questions about the detail of these regulations. For those of us who are not experts, it is not clear precisely how deep the impact will be. Paragraph 2.5 of the Explanatory Memorandum says that,
“UK occupational pension schemes will no longer need to obtain authorisation from the Pensions Regulator for cross-border activities”.
I take that not to be a minor change in the regulatory regime but a fairly significant one, on which the Pensions Regulator should have been asked to give advice—including to the House—when we were considering these changes. Can the Minister tell us what the impact of that change will be and why the Pensions Regulator was not invited to give us advice?
On the wider issue of no-deal planning, which of course underlies all these regulations, the Government have said that they do not wish to see no deal take place. Last week, when the House of Commons debated no deal and voted that it should not take place, Robert Jenrick, the Exchequer Secretary to the Treasury, said that,
“the Government do not want or expect a no-deal scenario”.—[Official Report, Commons, 8/1/19; col. 269.]
It is entirely within the purview of the Government not to have a no-deal scenario; if they do not want it, they can ensure that it does not take place, not least because of the ruling of the European Court of Justice before Christmas. They could revoke the notice under Article 50 to ensure absolutely that there will not be no deal.
A point was raised perfectly properly by the most reverend Primate the Archbishop of York that one should prepare for contingencies, but these are contingencies entirely of the Government’s making. They are not talking about preparing contingencies for, if I may say so, acts of God or other things that happen for which one cannot be accountable. When I was Secretary of State for Transport, a volcano went off and we had to get planes flying when there were big ash clouds. One should be expected to make contingencies for those kinds of things over which one has no control. In the case of the contingency for which we are discarding all our normal consultation mechanisms, playing fast and loose with a regulatory regime and, as my noble friend said, not taking account of the wider policy context and what may happen as a result of no deal, it is all self-inflicted by the Government because they are sticking to a self-imposed deadline.
The response of noble Lords who have sat in Grand Committee is that this does not sufficiently justify not going through established consultation routes. A whole stream of statutory instruments will be coming from Grand Committee where big concerns have been raised, not least by the noble Lord, Lord Warner, in respect of a set of pharmaceutical-related SIs that we debated yesterday. Key affected partners were not consulted at all; the reason for that, it appears, is that the department did not want to hold a consultation that would have made people aware that no-deal planning was taking place. Indeed, in the debate we held yesterday on one of the key regulations, the only person who we could establish firmly had been consulted was the noble Lord, Lord Warner, himself; he had phoned the relevant public authority that was engaged in the no-deal planning.
My Lords, I invite the noble Lord to give way, because it gives me the opportunity to say that I think my noble friend the Minister will now understand that when I said that if one looks as if one is hiding something, I did not refer to her at all. I referred to a very long experience of exactly what the noble Lord refers to: a refusal to consult the very people who could have made sure that the SI was correct. In the case we talked about yesterday, it seems to me that the Government are very likely to have to withdraw that SI and then replace it, as they did with this SI. I did not think it was unreasonable to point that out.
The noble Lord makes an extremely good point. I invite noble Lords to read the debate in the House of Commons on 8 January on no-deal planning. It lasted about an hour and, as I say, it had a vote that led to the Government being defeated on a specific proposal to rule out no-deal planning. It became very clear in that debate that Members from all sides of the House of Commons were not prepared to contemplate no deal; that they wished to rule it out and did so in their vote; and that they regarded no-deal planning as an immoral activity. The only reason it is being kept in play and detaining the House at huge length, as it has done today and in the consideration of these regulations in Grand Committee, is as a means of trying to scare Members of Parliament into thinking that if they do not vote through the Prime Minister’s deal, there may be a no-deal Brexit. This is a straightforwardly immoral activity if it does not command a majority and the confidence of the House of Commons in the first place.
I must tell the noble Lord that I listen to his interventions with growing frustration, as very little of what he says is about the merits of the statutory instrument we are supposed to be debating. The noble Lord might wish it were otherwise, but Parliament voted to enact legislation which is now an Act of Parliament and states that the UK will leave the European Union on 29 March. The only way to avoid that is for Parliament to agree a deal, or repealing that legislation. Until either of those events happens, it is only sensible that we should plan for what is now on the statute book, as the most reverend Primate said. The noble Lord is wasting the time of this House.
My Lords, I do not accept that for a moment. The whole basis on which we engage in no-deal planning is fundamental to these regulations. If no-deal planning does not have the authority of the House of Commons—and it appears from the vote last week that the other place is not prepared to contemplate no-deal planning—why on earth are we detaining the House at huge length in making clearly unsatisfactory arrangements? They have not been properly consulted on and are leading to regulations that are not properly drafted, in pursuit of a contingency that will not arise. I flatly disagree with the noble Lord.
We are the subordinate House, but it appears that leading Members of the House of Commons are concerned with these affairs. The amendment last week which led to a majority against no-deal planning was a cross-party amendment tabled by Nicky Morgan and Yvette Cooper, two very senior Members of the House of Commons. In moving it, Yvette Cooper said:
“I have heard some say that they want the imminent threat of no deal to persuade people to back the Prime Minister’s deal, if not now, then later. But brinkmanship in Parliament is not the way to resolve this and get the best deal for the country. This is too serious for us to play a massive Brexit game of chicken”.—[Official Report, Commons, 9/1/19; col. 263.]
I entirely agree with that statement and so did a majority. That leads to a huge question mark over the validity and legitimacy of all this no-deal planning and puts a particular duty on this House to see that we do not pass regulations which have been inadequately consulted on, inadequately drafted and inadequately scrutinised in pursuit of a deadline artificially imposed by the Government. The Government have the power to change it if they wish, because the European Union (Notification of Withdrawal) Act 2017, which the noble Lord just referred to, gives them the power to change the exit date and unilaterally revoke Article 50. It also does not appear to have the confidence of the House of Commons in the first place. I hope noble Lords will in no way be dissuaded by the ardent partisans of a no-deal Brexit from giving these regulations the scrutiny which they not only deserve in respect of those affected by them, but which we have a duty to give them if we are to follow the will of Parliament as expressed by the House of Commons.
My Lords, I am not going to continue the discussion about our previous experiences of SIs. I just have a question that I want to put to the Minister on this set of regulations, prompted by the helpful remarks of the noble Baroness, Lady Drake. To what extent, if any, would this set of regulations require pension funds to shift their investment strategies, which could be deleterious to the beneficiaries of those pension funds?
My Lords, this has been a wider debate than I anticipated when I signed to speak on these regulations but, I suggest, relevant nevertheless. Some important issues have been raised. The noble Lord, Lord Deben, implicitly shared my noble friend Lady Drake’s view of the squeezing of time to look at these things properly. My noble friend Lord Adonis went to the root of the problem and the challenges that we face on no deal.
My noble friend Lord Adonis talked about secrecy in the departments. I have to say that I have been disappointed in one respect because I have always been a supporter of the DWP. There is a note attached to each information note saying, “X at the Department for Work and Pensions, telephone number Y and email Z, can be contacted with any queries regarding the instrument”. When I tried to do so, I was told that that was not really for opposition Members to use. Given that these are situations where there is highly technical stuff, I found that disappointing. We had always thought that we would have a basis of sharing technical issues, even if our conclusions may be different.
The noble Lord, Lord Kirkwood, started off by giving us robust reassurances about the degree of scrutiny and sufficient time. What came from that bit of the debates, which involved my noble friend Lord Adonis and the noble Lords, Lord Kirkwood and Lord Deben, was that we need to reflect on this issue. What started off as a narrow technical piece of legislation has raised a lot of questions about scrutiny—not only the scrutiny of this legislation but other things that we do as a result of Brexit.
I am again indebted to my noble friend Lady Drake, who has done the heavy lifting for us on this SI. She has focused particularly on the challenge caused by the absence of the Northern Ireland Assembly, and raised an important point about a weaker regulatory system for cross-border activities and the broader question of what the pensions context should look like.
I thank the Minister for her explanation of these regulations. They have a fairly straightforward intent, so we are told, despite the seemingly technical nature of the proposed adjustments. As we heard, the regulations are part of the planning that would enable UK law to operate effectively if the UK leaves the EU without a withdrawal agreement in place. One example would be the obvious problems where the UK is currently particularised in relation to the EEA, either as “with the UK” or as “other than in the UK”.
The Explanatory Memorandum asserts that we do not need to make policy changes to ensure UK law in the field of occupational and personal pensions continues to operate effectively in the event of withdrawal without an agreement. I am not sure that is right; at what point is a change a policy change, and at what point is it not? For example, Regulation 2(3), among others, in reference to insurance policies or annuity contracts of security, would,
“omit ‘or any other EEA state’”.
Is that a minor tactical detail or a change of policy? The Pensions Act 2008 excludes Article 6 of the IORP directive, with its main administration in the EEA. Is that not a change of policy? The regulations enter into force on exit day, so could the Minister confirm what date this is? It is not specified in the regulation so far as I can see. If the UK should exit the EU on an agreed basis, how does this impact the entry-into-force date? Does it simply fade away? How much of this SI still stands or is necessary should—however unlikely—the Prime Minister’s deal be supported by the Commons? Indeed, can the Minister remind us of what is in the Prime Minister’s deal on the issue of pensions? The amendment to the Pension Schemes Act 1993 is focused on the security for GMP not to be allowed to be an instrument of an EEA state. May I ask the Minister why that is the case?
Further provisions are a bit convoluted; perhaps the Minister can comment on some, starting with Part 2 and Regulation 2, which amends the Pension Schemes Act 1993; what is this detail about? I tried to get clarification from the department. Can the Minister please give us a detailed explanation of this and the amendment to the Pensions Act 2004?
These are important provisions. I share with many the view that we may never have to deal with them in practice, but they should be properly introduced and scrutinised in the interim.
I thank all noble Lords who have taken part in the debate, and I will do my best to respond. My notes are somewhat spread, so if I may I will begin by responding to the noble Lord, Lord McKenzie. On his not being able to contact the department, I took 27 pieces of legislation through this House on behalf of Her Majesty’s Opposition, and not once was I given access to civil servants or to support from any department. I recall the wonderful Lord McIntosh of Haringey, who sat in my place and whom I miss still, because he was utterly brilliant when it came to the most technical and difficult regulations. I would telephone him and he would laugh at the suggestion that I should have access to any of his civil servants. However, on one occasion he did relent, because he agreed that the support I had from industry was so exceptional that he would share his expertise with me if I shared mine with him.
My department responded to a question from the noble Lord only this morning, confirming that these regulations are focused on what will happen in the event of no deal, but in the event that there is a deal, it is very important to stress that they will no longer be required. We would then expect to defer, revoke or amend the instruments in time for the end of the implementation period to ensure that they properly reflect whatever deal scenario might be in existence. It is important to make it clear that these regulations are about legal certainty on exit day; they are not about trying with a crystal ball to know what would happen in any particular deal situation. They are about ensuring legal certainty in the event of a no deal, which would mean that we walked away from the EU on 29 March.
I want to say clearly to the noble Lord, Lord Adonis, and others that there is no question of this being rushed. I have been in this department for about 19 months now and can attest that we have been working assiduously to prepare for both a deal and a no-deal situation. It is crucial that, whatever happens in another place—because the decision rests there—and until there is legal certainty on the withdrawal agreement or any other course of action, the Government behave entirely responsibly by continuing to prepare for all eventualities. I appreciate that noble Lords may not like that, but it is the sensible and responsible thing to do.
There is no question of hiding behind any situation; there is no question of a rush. Our civil servants are working exceptionally hard across Whitehall. I have often thought that we have not been public enough about the work that we are doing to reassure the public in the event of our leaving with no deal, but in recent weeks we have been much more open on that front.
On consultation, I have a memory. I remember that the party opposite had no consultation when it introduced the Human Rights Act, so it is very difficult for us on this side of the House to take lessons about that. I have taken through a number of SIs in the past year and a half and I do not remember any of the noble Lords who have spoken today about a lack of consultation—
May I just correct the Minister, as someone who was highly involved in the Human Rights Act? There was extensive consultation before the 1997 election with a whole raft of interests concerned with that Act. It therefore came as no surprise, and many external lawyers were highly involved in drafting the policy and advising on the legislation. It is simply not true that the Act was suddenly sprung on Parliament without any consultation. It was also in the Labour Party manifesto that it would be introduced after the 1997 election.
I am sorry, but the Minister is misleading the House on a specific point which she chose to introduce on the passage of the Human Rights Act and the consultation on it. I was a member of a body set up called the Human Rights Act taskforce, which was designed to consult and involve stakeholders in how the Act should be implemented. There was consultation because I was part of it. I was not a Member of this House at that stage; it was something that the then Government did.
My Lords, let me turn to the consultation that took place in relation to these statutory instruments. Other noble Lords have insinuated that there was no consultation. I made it clear at the outset that there was a form of consultation. As the noble Lord, Lord Kirkwood, made clear, there is in a sense consultation and consultation. We are talking here about consultation with those very closely connected with the industry. The Department for Work and Pensions engaged with a pension provider, an advisory firm and a trade body for occupational pension schemes, that trade body obviously representing a fair number of those in occupational pension schemes. Any suggestion by noble Lords that there has been no consultation is simply not true. I reassure the most reverend Primate the Archbishop of York that consultation took place with those involved in the bespoke part of the industry concerning cross-border activity within the EU. These SIs do not have any policy intent. They do not change policy; they are minor and technical amendments. It is not our role to look at the implications of a deal or no deal; it is more about ensuring that there is preparedness for a no deal and legal certainty when we leave the EU on 29 March.
I am grateful to the noble Lord, Lord Kirkwood, for his support and to hear that the Secondary Legislation Scrutiny Committee decided that the regulations were clear. Of course, it was necessary to re-lay them when an incorrect reference to UK regulated markets was found, but we were very quick to do that. We withdrew the draft regulations and re-laid them on 3 December. It is about making sure that we can be agile and flexible and therefore respond with certainty when we need to. Any question of there not having been consultation with those in the industry whom the regulations impact is simply not the case.
As always, the noble Baroness, Lady Drake, asked the more challenging questions. I will do my best to reply, but, if I fail with regard to any aspect of these very technical regulations, I will write to her. These statutory instruments fix elements of the UK’s occupational and personal pensions legislation that will not work effectively after the UK departs the EU, including where distinctions have been made between EU or EEA member states and overseas entities, such as EEA central banks, that will no longer apply, where the UK is referred to as an EU or EEA member state, or where it is obliged to share data with EU agencies or member states under reciprocal arrangements that will no longer apply.
If someone lives in the European Economic Area and has a personal pension or annuity with a UK-based firm, the firm should have made plans to ensure that the person can still receive payments from the personal pension or annuity even if the UK leaves the EU without a deal. If the firm needs to make any changes to the personal pension or annuity, or to the way in which it provides it, it should contact the person. If the person has any concerns about whether they might be affected, they should contact their firm. The UK state pension will still be payable cross border into the EEA.
The European Union (Withdrawal) Act repeals the European Communities Act 1972 and converts into UK domestic law the existing body of directly applicable EU law and UK laws relating to EU membership. So, this body is referred to as retained EU law. The Act also gives Ministers a power,
“to prevent, remedy or mitigate … any failure of retained EU law to operate effectively, or … any other deficiency in retained EU law, arising from the withdrawal of the United Kingdom from the EU”,
through statutory instruments such as these regulations.
We believe it is in the interests of both the EU and the UK for the UK to have a smooth and orderly exit from the EU, as set out in the withdrawal agreement. But it is our duty to continue to prepare for a range of potential outcomes, including no deal.
To answer the question from the noble Lord, Lord Warner, when companies invest in pension schemes it is up to those schemes and pension providers to think about their investment opportunities in future. It is not something that we can reflect through these statutory instruments.
I want to be sure that I have covered as much as I can to the best of my ability. Noble Lords have been concerned that we have not given these statutory instruments enough attention. I can only repeat that that simply is not the case.
The Minister is doing a great job of responding to the points raised. I raised the point about paragraph 2.5 of the Explanatory Memorandum, which says,
“UK occupational pension schemes will no longer need to obtain authorisation from the Pensions Regulator for cross-border activities”.
Can she explain what the impact of that would be and what the regulator has said about the effect it would have on the pensions industry?
The noble Lord is talking about cross-border pensions that do not have to come to our Pensions Regulator once we leave the European Union. The whole point is that we have to make sure that our Pensions Regulator no longer retains a power to influence cross-border activity where it ceases after we leave the European Union.
These are pension schemes operating in member states. If they are operating in member states they do not then have to make sure they abide by UK law and the UK Pensions Regulator. If they happen to be operating in the EU, they do not have to abide by UK law if we leave the EU. Does that make sense? I hope it does.
I did understand what the Minister said, and I completely accept that she always seeks to answer my questions. One of my concerns is that it is impossible. I found it difficult from the SI and the memorandum to understand, in the traffic both ways, how individuals’ assets are protected if the UK is no longer in the IORP regime. I could not trace that. Given the volume of cross-border activity on pensions between Ireland and the UK, what is the realistic prospect, even in a no deal, of getting a memorandum of understanding to address that and to try to have a common regime?
I will be turning to the Northern Ireland regulations shortly. If we leave with no deal it is not possible at that point for our Pensions Regulator to continue to protect assets beyond what will become our borders. That is where there is a great hope that there will be a deal, so that during the implementation period we can make sure that we introduce legislation that will protect our pension assets—the very thing that concerns the noble Baroness. We hope we will be able to bring it before the House prior to the end of the implementation period. Then we could revoke the statutory instruments before your Lordships’ House today.
Might it be helpful if my noble friend went back to the department and asked it to reassure itself that pension assets can be protected in the event of no deal? It strikes me that there may be an issue that has not yet come to light, and that some cross-border issues might need to be addressed a little more carefully.
I take on board my noble friend’s question. We have to be realistic about this. I am sure noble Lords will accept that we cannot impose any legal rights, certainties and protections prior to the end of March, or prior to knowing whether we will have a deal. In the event of a no deal, it would be impossible for us to be certain on that day that we can protect things. I put my hand on my heart and say that in the event of no deal, I am sure that those in my department who are focused on this subject—including my honourable friend in another place, the Minister for Pensions—will do all they can post exit to ensure that we can negotiate and work closely with those with whom we currently have a cross-border relationship, and to reassure them that we can continue in the same vein.
However, I can make no guarantees at the Dispatch Box. It would be wrong for me to seek to try until we have certainty. I repeat: these regulations give legal certainty at the moment when we leave the EU with no deal. I hope that all noble Lords will accept that I have done my best to reassure them that these regulations are in good shape. Again, I thank most particularly the noble Lord, Lord Kirkwood—who sits on the SI Committee and has access to a whole host of regulations—for his support, saying that these regulations are effective. I hope noble Lords will show their support for them.
Occupational and Personal Pension Schemes (Amendment etc.) (Northern Ireland) (EU Exit) Regulations 2018
Motion to Approve
My Lords, Northern Ireland’s occupational and personal pensions legislation broadly mirrors legislation in Great Britain. These regulations, therefore, make analogous minor and technical changes to Northern Ireland legislation as the regulations I have just spoken to. The intent of the regulations is the same: to make sure that Northern Ireland legislation continues to operate effectively once the UK withdraws from the European Union.
Let me explain why we are laying these regulations on behalf of Northern Ireland. The UK Government remain committed to restoring devolution in Northern Ireland. This is particularly important in the context of EU exit, where we want devolved Ministers to take the necessary actions to prepare Northern Ireland for exit. This includes ensuring that the necessary legislative corrections are made to ensure that Northern Ireland’s statute book is ready for exit day. That is consistent with the action being taken at Westminster and the other devolved legislatures.
However, with exit day only a few months away, and in the continued absence of a Northern Ireland Executive, the window to prepare Northern Ireland’s statute book for exit is narrowing. UK government Ministers have therefore decided that, in the interest of legal certainty in Northern Ireland, the UK Government will take through the necessary secondary legislation for Northern Ireland at Westminster. This was done in close consultation with the Northern Ireland Civil Service. This approach is being taken forward across government departments to make separate Northern Ireland statutory instruments which create a separate, transferable body of Northern Ireland legislation made at Westminster in the absence of a functioning Northern Ireland Assembly. This helps to keep a separate body of Northern Ireland law intact for when a functioning Executive and Assembly return.
It is common practice to have mirroring legislation in respect of Northern Ireland when legislating in the area of pensions. This is fundamentally no different. These regulations were developed in close co-operation with the Department for Communities in Northern Ireland, and it has cleared the text of the regulations. This approach is common to that being taken across government departments—that is, to make separate Northern Ireland statutory instruments which create a separate, transferable body of Northern Ireland legislation made at Westminster in the absence of a functioning Northern Ireland Assembly. This helps to keep a separate body of Northern Ireland law intact for when a functioning Executive and Assembly return.
The list of specific legislation that these regulations amend is lengthy, and I would be happy to provide noble Lords with a list of the Northern Ireland legislation that is being changed. We will continue to work closely with the Department for Communities in Northern Ireland, the Pensions Regulator and stakeholders to ensure that all parties are involved in the process where their interests are concerned. I beg to move.
My Lords, I will avoid repetition. In the debate on the previous SI, I logged my concerns about the UK leaving the EU pension cross-border regime, the protection of members’ assets and their movement in cross-border schemes, and the significance of the cross-border issue between Ireland and the UK. That particular problem triggers a concern about a wider issue.
These draft Northern Ireland regulations apply to policy areas which are a transferred matter for Northern Ireland. In the absence of a Northern Ireland Executive, the Government are taking steps to secure a functioning statute book in the event of a no deal. The UK Government are clearly taking through the necessary secondary legislation at Westminster in consultation with Northern Ireland departments. These regulations are a classic example of doing that in the absence of the Northern Ireland Executive. The Government are able to do that through the Section 8 powers in the withdrawal Act and Schedule 3, which relates to Northern Ireland in particular.
I fully appreciate and accept the problems that the Government face in Northern Ireland, but the democratic deficit that exists there, as a consequence of the problems that we face, is even more concerning in a no-deal scenario because the risks and consequences flowing from it are even greater. That will exaggerate the consequences of no deal and having no Northern Ireland Executive to express the opinion or represent the interests of the people of Northern Ireland. Could the Government look at what they can do, even with the withdrawal agreement, to have a strong relationship with the Irish regulator? The Northern Ireland Executive are not here to articulate the significant issue of pensions in Northern Ireland.
Will the Minister tell us more about what consultation there has been with the Irish regulator and stakeholders in Northern Ireland, not just about the technical details of these regulations but also on the wider implications for pensions and pension funds in Northern Ireland if there is no deal? Can she also confirm my reading of the Explanatory Memorandum and the text of the order? It is that this order went through exactly the same process as the previous one and had to be withdrawn because the defective drafting meant that it would not be possible for UK pension funds to invest in certain European assets under the changes that were first proposed. I assume that is because it was drafted in the same way as the first regulation and had to be changed in the same way. Is that the case? Was it the same defect in both regulations that had to be corrected?
Secondly, what further consultation has there been with the pensions industry in Northern Ireland since this new draft regulation has been laid? Does it have concerns similar to those which I quoted in relation to the previous regulation, and might more issues come out of further consultation? As my noble friend Lady Drake has said, there are some concerns about there not being a Northern Ireland Assembly or Executive. This has all been done at two stages removed and, since we have special duties in respect of Northern Ireland, it would be good to have reassurance that these processes have been gone through.
I will respond to both noble Lords on these issues around Northern Ireland. First, in response to the noble Lord, Lord Adonis, there was the same error when the regulations were first drafted. When that error was picked up, the situation was immediately changed. We withdrew the draft regulations and they were relaid in their current form on 3 December. It is important to stress that we have ongoing discussions. We consult with the Irish regulator and Pensions Regulator on an ongoing basis. We of course need to remove the cross-border regime that exists between two member states. We have, therefore, been in discussions with the Irish regulator and Pensions Regulator to reflect Northern Ireland and its relationship with Ireland, which will remain within the EU. These discussions will continue, as we want to make sure that we can transpose statutory instruments, doing for Northern Ireland as we do for the UK, to ensure that there is legal certainty.
In a no-deal situation, the UK cannot participate in the EU’s authorisation regime for cross-border activity, as we will no longer be a member state. However, we are working with the Pension Regulator, Northern Ireland and industry stakeholders to see what can be done to support members of cross-border schemes, including where employees or Irish employers are across the border and contribute to a UK occupational pension scheme. Notwithstanding the reality that these regulations do not address that, we are cognisant of the fact that we need to do all we can to work across border in relation to Northern Ireland and Ireland to ensure that, in any event, the proper protections can be put in place and we can reassure employers and employees with regard to occupational pension schemes. I hope that that goes some way to reassure noble Lords.
It is common practice to have mirroring legislation. These instruments do not make policy changes but are designed to ensure that UK law in the field of occupational and personal pensions continues to operate effectively in the event that the UK exits the EU without a withdrawal agreement in place. I hope that noble Lords will support these regulations.
Services of Lawyers and Lawyer’s Practice (Revocation etc.) (EU Exit) Regulations 2019
Motion to Approve
My Lords, the House will be aware that the Government have been publishing a series of technical notices to outline the implications of a no-deal exit for citizens and businesses. On 12 October, the Government published a technical notice titled, Providing services including those of a qualified professional if there’s no Brexit deal. This notice set out the implications of a no-deal exit for professionals in scope of the two EU directives on lawyers’ services and lawyers’ establishment. The draft instrument that we are discussing today makes changes to the arrangements in England and Wales and in Northern Ireland relating to these directives. It remedies deficiencies in the relevant retained EU law arising from withdrawal from the EU. Scotland will be taking forward its own legislation on this matter, as it pertains to a matter of devolved competence.
I thought it would be prudent for me first to set out how these EU directives are currently applied in the United Kingdom and across the other members of the EU. The lawyers’ services directive allows specified lawyers to provide regulated legal services in a member state other than the one in which they qualified—termed a “host state”—without the need to register with a host state regulator. Lawyers provide services under their existing professional title, otherwise termed their “home state” professional title. The directive clarifies the regulatory rules applicable and the conditions for providing services in a host state.
The lawyers’ establishment directive allows specified lawyers in one member state to practise reserved legal activities on a permanent basis in another member state, under their home state professional title, and provides the conditions for doing so. It also allows lawyers who are practising in another member state to be admitted to the profession in that member state, after three years of practice in the law of that member state, without having to go through the usual qualification routes. European lawyers practising in the United Kingdom under the establishment directive must be registered with a UK regulator as registered European lawyers. As registered European lawyers, they have the right to own a legal business without a UK-qualified lawyer.
If we leave the EU without an agreement, the lawyers’ services directive and the lawyers’ establishment directive will no longer apply to the United Kingdom and there will be no system of reciprocal arrangements under which EU and European Free Trade Association lawyers can provide regulated legal services and establish on a permanent basis in the UK—and, likewise, UK lawyers in the EU. It is the deficiency in retained EU law caused by this lack of reciprocity that we are seeking to remedy.
First, EU and EFTA-qualified lawyers who have already successfully transferred into the English and Welsh or Northern Irish profession will be able to retain their qualification and related practice rights—but arrangements will be different in future. In the event that the UK leaves the EU without a deal, our services trading relationship with the EU will be governed by World Trade Organization rules. The General Agreement on Trade in Services prohibits signatory states giving preferential market access to any other signatory state in the absence of a comprehensive free trade or recognition agreement between them. We therefore need to fix the deficiencies in the relevant retained EU law caused by the lack of reciprocal arrangements with the EU, while also meeting our international law obligations. As such, we will revoke the legislation that currently implements the EU framework, and EU and EFTA lawyers will be treated in the same way as other third-country lawyers.
The draft instrument will also provide a transition period to allow registered European lawyers time to comply with the new regulatory position. The transition period will run from exit day until 31 December 2020.
Yes, of course. I am obliged to the noble Lord for prompting me to go straight to that point. There are 680 European lawyers registered with the Solicitors Regulation Authority and up to 20 who are with the Bar Standards Board: far fewer in the latter case because, of course, most European lawyers who come to practise tend to find themselves practising in London’s large firms, rather than seeking to establish themselves as independent barristers at the Bar. I hope that that meets the noble Lord’s concern on that point.
As my noble friend is aware, I worked in the other way: I qualified under Scots law and then went to practise in Brussels. Under the new arrangements, what will be the reciprocal rights of those who wish to do precisely what I did after we leave the European Union?
In the event of us exiting without any deal, there will be no reciprocal rights—which was one reason why, as I indicated, these regulations are required. They are necessary in order that we can establish a position in which all third-party country lawyers will be on the same standing in the absence of a free trade agreement or other agreement with a third-party country. There will be no reciprocity—that will be a matter for the relevant EU country to consider—but clearly it is a matter that we would wish to address in future negotiations consequent on our exit from the European Union. This is dealing with the position in the United Kingdom in light of the existing regulatory regime under EU law. Clearly, and quite patently, you could not address the question of how the EU 27 are going to treat our lawyers going forward.
I just wondered if it might be helpful if it were on the face of the regulations, because this situation keeps arising on many of the other ones as well. The problem is that these things have a tendency to drift on, and in the event that there was not a no deal but there was some other kind of deal, would the regulations that we are considering at the moment have some kind of half-life or a continued life of some kind or another? That is why I put the question: I am concerned that in this and in other statutory instruments that I have been considering, there is nothing on the face of the instrument that actually says that this will fall by the wayside in the event that there is any kind of deal other than a no deal.
The terms of the instrument make it perfectly clear that it is to apply in the absence of a deal. My department is certainly well aware of the scope and application of the instrument, which is why I made it clear in opening that this instrument will apply in the event of there being no deal. However, in the event that there is a withdrawal agreement of some kind, clearly that would not be a situation in which the instrument would be required.
It does not refer to the transitional period as proposed in the withdrawal agreement: it refers to a transitional period that will apply for the purposes of this particular instrument in order to ensure that there is no immediate cut-off for EU lawyers in the United Kingdom. It is for that particular purpose that this particular regulation allows that, and it is considered that that is allowable under the GATS regime as well—in other words, we are allowed a period of time to transition to a point where European lawyers registered in the United Kingdom come to find themselves in the same position as third-party country lawyers.
I am sorry to belabour the point, but I am slightly confused about why we are being so nice and kind to EU lawyers—the non-British lawyers who are working here—and not seeking to protect the rights of British lawyers who are working in Brussels, Denmark, Sweden and other EU countries. Are we not trying to be reciprocal now?
Clearly, over time we will address the ability of the United Kingdom to agree with the EU the possibility of reciprocal rights for United Kingdom lawyers in Europe, but it is not something that we can dictate by our legislation. What we can do, however, is facilitate the position of EU-registered lawyers who are already in the United Kingdom and contributing to the legal services in the United Kingdom so that they can be secure in the knowledge of what their position will be in the event that we exit without any agreed deal.
The Minister may have said this before I came in. I apologise: I was held up at a meeting outside. He mentions the United Kingdom, but paragraph 2.1 of the Explanatory Memorandum says:
“The purpose of this instrument is to end the preferential practising rights of EU and EFTA lawyers in England and Wales and Northern Ireland”.
What is the position in relation to Scotland?
The noble Lord is quite right: he was not here when I began. I said that with regard to Scotland, this is a devolved issue and the Scottish Government are addressing that matter. However, in taking forward negotiations with regard to reciprocal rights in the future, we would have in mind the interests of all lawyers within the United Kingdom, wherever they qualified. But for the purposes of determining the rights of registered European lawyers in the United Kingdom, we will deal with it by way of this instrument for England and Wales and for Northern Ireland, and the Scottish Government are undertaking to address it in the context of that jurisdiction. That is where we stand. As the noble Lord is aware, this is a devolved competence.
The Minister has been particularly helpful in relation to that. I know that he knows Scots law very well, as do a number of other noble Members present. What is the current state of play in relation to this being dealt with in the Scottish Parliament? Is it running parallel with us? Is it ahead of us? Is it behind us? Will it be able to get it done in time? I know they are not very keen on no deal—in fact, they are not very keen on coming out of Europe at all—in the Scottish Parliament so I wondered what the state of play was in relation to dealing with this in the Scottish Parliament.
In relation to this particular instrument, I am not in a position to say where the Scottish Government are in processing such a proposal. That is a matter for them and it is not a matter that they would, as a matter of course, disclose to me. But, as I say, I have confidence that they are aware of the issue and they have decided that they will take it forward. If they had wanted to utilise the provisions of the Scotland Act to have the UK Parliament legislate for them in regard to this matter, they would of course have said so. The very fact that they have not is indicative that they are making progress to legislate for this on their own behalf. That is where we stand.
Perhaps I might ask the Minister to tidy up the point that was raised earlier. What ensures that if there is some kind of deal, the provisions of this instrument fall away? Does it require some further statutory provision to do so—in effect, revoking the instrument—or does it fall away if there has not been an exit day? But surely if there is a deal, there is still an exit day.