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Venture Capital Funds (Amendment) (EU Exit) Regulations 2018

Volume 795: debated on Tuesday 22 January 2019

Motion to Approve

Moved by

That the draft Regulations laid before the House on 13 November 2018 be approved.

Considered in Grand Committee on 15 January.

My Lords, I was not able to speak in Grand Committee on these statutory instruments because the Grand Committee and the Chamber were both considering no-deal statutory instruments at the same time. Having now read the debates on these regulations, I see that the three statutory instruments that relate to alternative investment funds were all dealt with together. The noble Lord said:

“The Government have undertaken an impact assessment on these instruments, which we hope to publish shortly”.—[Official Report, 15/1/19; col. GC 82.]

This was not picked up by noble Lords in the later discussion, but the obvious point arising is this: if there is going to be an impact assessment that relates to these instruments, should not the House see it before we approve the statutory instruments rather than after? The noble Lord did not say why the impact assessment on these three instruments concerning venture capital funds is going to be published after we have been invited to approve the regulations. Will he expand on that for the House?

As I said in Grand Committee, whose debate I took note of, an impact assessment will be published shortly. The position has not changed in regard to that. But of course that was in relation to a wider debate that the noble Lord, Lord Tunnicliffe, and the noble Baroness, Lady Bowles, took part in where they recognised that we sought to transpose a body of EU law into UK law so that we avoided a cliff edge that would be damaging and very costly for financial services. The answer remains the same as I gave in Committee.

I understand the explanation, but I do not find it satisfactory. Why is the House being invited to approve these statutory instruments without the impact assessment that relates to the very statutory instruments that we are invited to approve? The Minister simply restated the fact that the impact assessment will be published after we have been invited to approve the regulations. That is unsatisfactory. Surely we should have the impact assessment before we approve these statutory instruments rather than after. He has not explained why that is not possible.

I realise that the noble Lord is pressing his point and he may find the answer—that the impact assessment will be published shortly—unsatisfactory. Of course the reality is that we are dealing with a volume of statutory instruments to avoid that cliff edge and to avoid costs, because the industry very much supports this process; we agreed it with industry because it wants to avoid that cliff edge. Because we are transposing what is already in existence into UK domestic law to avoid that cliff edge, industry recognises that if it followed those rules before it will follow the same rules thereafter, so the financial impact will be limited. That has been the accepted position throughout this process when we have been going through secondary legislation. None the less we are committed to publishing impact assessments. We are doing that. They are scrutinised by the Regulatory Reform Committee and will be published shortly.

My Lords, the Minister has not answered the fundamental question of why we cannot have the impact assessment before we approve these regulations rather than after. I think that the House knows the answer, which is that the impact assessment is not ready. Because of the very hurried nature of the no-deal regulatory planning that the Government are engaging in, he is none the less trying to railroad these regulations through the House this afternoon. I understand the reason, but it is not a satisfactory reason. In no other context would noble Lords find it acceptable to be asked to approve regulations before we have actually seen the impact assessment to which the regulations apply. All the Minister has done now, three times, with the elegance of expression that he always deploys, is simply to restate the fact that the impact assessment has not been completed and is not ready. That is not a satisfactory response.

I tried to give a response that explained the situation. Usually in this situation, we are transposing one law that is operating today and saying that that law, which is currently in EU legislation, will be brought onshore and will operate after 29 March in the unlikely event that there will be no deal, to avoid a cliff edge. Therefore, it is the same law. Our view—and I think this is the general view when this has been debated because it applies to all the statutory instruments—is that we are discussing relatively small de minimis amounts, but there is still a process that we need to go through whereby those impact assessments are prepared, submitted to the Regulatory Reform Committee and then released, and they will be released shortly.

I believe this matter came before the Secondary Legislation Scrutiny Committee. I apologise that with 300 pieces of secondary legalisation I do not always remember every detail of every one of them but, be that as it may, the SLSC often asks for changes to the impact assessment, as I believe happened on this occasion. The impact assessment has therefore been published; it is just that a further edition has been asked for.

We submit these things. First, I pay tribute to my noble friend Lord Trefgarne’s work in the Secondary Legislation Scrutiny Committee. It is doing an incredible amount to scrutinise this volume of work. In chairing those two committees, my noble friend Lord Trefgarne and the noble Lord, Lord Cunningham of Felling, are doing incredible work. They considered these regulations, as did the other place, as did the Committee, and they did not feel there was a reason to object to this SI, which is needed by the industry to prepare in the unlikely event that we leave the European Union on 29 March without a deal. That is why we arrive at this point.

My Lords, I am just about to go up to Sub-Committee B of the Secondary Legislation Scrutiny Committee. Sub-Committee A met yesterday. In the papers we have upstairs, the grand total of proposed negatives that both committees and the other place have looked at is something like 165 out of 600. After the sifting committee has dealt with a proposed SI, it goes to another committee and then it may come to the Floor of the House. Next week is the end of January. In a month’s time the sifting committees will not be able to do anything because if they do any work there will not be enough time for the other processes to take place before 29 March. If there are 600 statutory instruments, how come we have dealt with only about 165 of them?

I am surrounded by expertise and am trying to listen attentively with both ears to the guidance offered. Effectively, this position was set out in advance. It was very clear from the EU withdrawal Act. Section 8 said what must happen in preparing secondary legislation. The House then met several times to establish a procedure which would give that level of scrutiny. It involved a sifting committee, the Joint Committee on Statutory Instruments and my noble friend’s committee, the Secondary Legislation Scrutiny Committee, and we agreed that they would each have different roles. One would test whether an instrument should be affirmative or negative. Then they had to be laid. This SI was laid on 29 November. It was considered by the Secondary Legislation Scrutiny Committee on 10 December, which raised no concerns. It was then considered by the House of Commons and then by the House of Lords. That is the position. I think the system is working well, given the incredible strain which the noble Lord referred to in terms of the offices of this House. We are ensuring that an industry that is crucial to this country is protected in the unlikely event that there is no deal.

My Lords, with very great respect, the noble Lord has not answered the question, which is about the impact assessment. It is not about the wider issues to do with the—

This is a point of order. In debate it is customary for Members to speak only once. The noble Lord has made a point. The House has listened to his point. If he wishes to press his point, he has to press his point. I ask him to accept that, on what has been approved by the committees and has been presented to the House today, he should be prepared to accept the word of the Minister.

My Lords, the noble Lord was intervening on me. It is not a question of accepting the word of the Minister; the Minister has not replied to the point. Indeed, the noble Lord, Lord Trefgarne, has added further confusion because he said that the impact assessment is available and it has just not been laid before the House, whereas I took the Minister to say that the impact assessment was not available. He told the Grand Committee last week that it would be published shortly. He is clearly still not in a position to lay it before the House. The House is being expected to agree a statutory instrument that will have a vital impact on a major national industry and we do not know the basis on which we are agreeing it. There is confusion between the noble Lord who chairs the relevant committee and the Minister as to whether an impact assessment is even available. The point that my noble friend Lord Rooker made seems to be completely correct. Essentially, we are legislating in the dark this afternoon, and that is a wholly unsatisfactory situation.

My Lords, perhaps I may have your Lordships’ permission to speak once more. In fact, the initial impact assessment was, I believe, withdrawn with the promise of another one, and it is the second one that we await.

Motion agreed.