Wednesday 16 September 2020
The Grand Committee met in a hybrid proceeding.
Arrangement of Business
My Lords, the hybrid Grand Committee will now begin. Some Members are here in person, respecting social distancing, others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering except when seated at their desk, to speak sitting down and to wipe their desk, chair and any other surfaces that they may touch. If the capacity of the Committee Room is exceeded or other safety requirements breached, I will immediately adjourn the Committee.
The time limit for the debate on the first instrument is one hour.
Alternative Dispute Resolution for Consumer Disputes (Extension of Time Limits for Legal Proceedings) (Amendment etc.) (EU Exit) Regulations 2020
Considered in Grand Committee
My Lords, these regulations were laid before the House on 29 June 2020.
We want a relationship with the EU based on friendly co-operation between sovereign equals and centred on a trading relationship based on free trade agreements like those the EU has concluded with a range of other international partners. We will have a relationship with our European friends inspired by our shared history and values. These regulations form part of the important and necessary programme of work being done to ensure that retained EU legislation continues to work effectively and as intended in the UK immediately after the transition period.
Consumers in the UK enjoy a strong framework of statutory rights which enable them to enter into contracts with traders safe in the knowledge that they are protected by the law. These rights help to maintain a fair balance between consumers and business and, in most cases, help consumers to resolve disputes with traders directly. Where resolution cannot be achieved directly with the business, we know that consumers would prefer to have alternative methods of tackling disputes that do not involve the cost or complexities associated with court action.
Alternative dispute resolution, known as ADR, provides a strong alternative to court action by enabling parties to settle a dispute in a favourable manner with the help of an independent third party. ADR is often quicker and cheaper than legal proceedings and, depending on the type used, can produce binding decisions.
I emphasise that these draft regulations have no impact on our access to, or the quality of, ADR in the UK. They also do not alter wider substantive consumer rights and protections available to UK residents, which also remain unchanged.
The regulations are narrow in scope and primarily concerned with the extension of the time limit for bringing court proceedings. They will amend four pieces of legislation which implement EU ADR directives that will no longer apply to the UK following the end of the transition period. The four pieces of legislation currently provide a short extension to the statutory time limit for bringing court proceedings where a consumer is engaged in non-binding ADR with a trader. These extensions allow the ADR procedure to conclude and provide parties with a conditional eight- week grace period to launch legal proceedings if they are not satisfied with the outcome of the ADR procedure. This ensures that parties do not lose their ability to pursue legal action if the time limit for doing so expires during or just after the completion of the ADR procedure.
It is important to highlight that these extensions to the time limit will continue to apply following the transition period but, as a result of this SI, extensions will apply only where the consumer is resident in the UK and the ADR provider is approved under the UK’s ADR regulation. If both conditions are met, the time limits for initiating legal proceedings when engaged in ADR will continue to be extended for UK-resident consumers, irrespective of whether they are interacting with a trader based in the UK or the EU.
The regulations substantively mirror the changes made by the equality exit regulations, which this House has already approved, to Section 140AA of the Equality Act 2010, which provides for extensions of time limits in the case of claims of discrimination relating to consumer disputes. The instrument before the Committee today is designed to ensure that a consistent approach is taken across the statute book to all rules on extensions of time limits deriving from the ADR directive.
These regulations will have no detrimental impact on the majority of disputes involving UK-resident consumers. They also do not otherwise affect the ability of any consumer, whether living in the UK or the EU, to apply to the UK courts or to use ADR as a means of dispute resolution with a trader. Moreover, transitional provisions have been included to ensure that any extensions that have begun before the regulations come into force continue to apply.
My departmental officials have undertaken the appropriate assessment of the regulations’ impact on businesses and relevant bodies. This showed that any impact is likely to be negligible because these amendments do not bring about a wider policy change or impose any new liabilities or obligations on any relevant business, organisations or persons.
In conclusion, the regulations are a necessary and appropriate use of the powers in the withdrawal Act to ensure that this area of law continues to operate as intended after the transition period. I therefore commend them to the Committee.
My Lords, the regulations are welcome and necessary to enable consumer rights under EEC regulations to be protected before the end of the transition period. It is important to ensure that EU legislation continues to work effectively in the UK after the end of the transition period.
While 60% of consumer rights disputes are settled directly with the business or supplier concerned, where these are unresolved most consumers would still prefer an alternative to formal litigation. The eight-week grace period after a failure to settle a dispute through an alternative dispute procedure and embarking on legal proceedings is welcome. It will help to ensure that the UK and EU consumers can enter into ADR processes in good faith, without fear of strict time limits to bring a case to court.
This is a sensible approach and a good beginning to protecting consumer rights before the end of the transition period, but there is a long way to go in meeting the challenges of wider consumer protection, covering nearly 100 directives on consumer rights. This will not be helped by the recent souring of relations between us and Europe. The EU consumer protection laws, which we helped to frame over 40 years, enable us to purchase goods and services with confidence and enhance our trade with the EU. We still have a long way to go in our increasingly fraught negotiations with Europe to preserve those rights. There is also a need for more resources to ensure compliance with our new independent standards.
I close with the words of the Chartered Trading Standards Institute:
“Much has been made of maintaining the UK’s post-Brexit standards of regulation, but rules without resources for application, advice and enforcement are rendered ineffective and detrimental to the UK economy.”
My Lords, over the last 20 years I have represented many thousands of people in what would accurately be described as alternative dispute resolutions, in a range of different ways. I see nothing amiss with this very sensible proposal. However, I want to press the Minister on the current situation and some of the likely ongoing disputes, in view of experiences I have had in recent times.
One problem I have encountered is the return of goods. Some suppliers have been remarkably reticent in acknowledging electronic communication, and consumers visiting their premises to return goods find that those premises are closed—a new scenario that potentially weakens the consumer’s position. I want to ensure that there is no hidden detriment in any way to those disputes where the goods supplier makes themselves unavailable. This is obviously severely compounded by their ability to do so at the current time.
The second is much more common, and concerns services—for example, airline services—and cancellations of airline and other transport services and comparable bookings due to the current crisis and for no other reason. Again, some airlines and third-party travel agencies have been highly responsive. Others have been highly unresponsive, with huge delays even in acknowledging requests for refunds. It appears that there is a danger in some cases of this potentially going on for many months and becoming protracted. An example would be if one were to cancel a Christmas booking now. There are all sorts of issues regarding what the rules for Christmas will be, whereas the rules for airlines seem much more precise.
As regards the Government’s thinking on this, does this legislation have any impact other than pro consumer, with the additional time allowance built in, or would it be accurate to entirely phrase this legislation as an additional time opportunity for consumers seeking redress through alternative dispute resolution without the need to go to court in these difficult times?
My Lords, alternative dispute resolution regulations are being made because of the UK exiting from the EU. This statutory instrument will ensure that ADR continues to work as intended after the end of the transition period in a context in which the EU’s ADR can no longer apply to the UK. The regulation will give extra time to allow the ADR procedures to conclude, and if it has not been successful, will give the parties an eight-week grace period to commence court proceedings thereafter. This protects the parties, who are not prevented from initiating additional proceedings where the court limit expires during or just after the ADR procedures. The effect of the regulations will protect both UK and EU-based consumers buying goods and services in the EU. It will ultimately mean that UK consumers are protected by the time limit extensions only when working through ADR organisations.
Everything I have said today shows the huge number of consumers and organisations that will be affected by our withdrawal from the EU. The EU is our biggest market, and the withdrawal from the EU is, in many people’s minds, the biggest error and self-harm that the Government have imposed on the country. History will record how the politics of our EU exit has harmed the richness of our country. Unemployment and closures of our industries will remain scars for a very long period.
My Lords, I declare my position as a practising lawyer, and I am pleased to contribute to this scrutiny process today. As a former member of the House of Commons Secondary Legislation Scrutiny Committee, I have always been clear that the use of SIs by government is to be carefully and thoroughly monitored, and the effects of Brexit have resulted in large numbers of instruments coming before us, many of which will be rightly deemed subject to affirmative resolution and worthy of further debate or inquiry. With nearly 300 more instruments on their way, this will place an enormous burden on Parliament, but we must not allow the pressure of numbers to lessen our duties of proper scrutiny. I appreciate that the process does not permit us to reject an instrument, so it is all the more important that any concerns and inquiries about the operation of provisions are raised with our Ministers using the opportunity that occasions such as this afford us.
On the matter before us, most disputes involving consumers and businesses are, thankfully, settled amicably, but there has always been a need to try to find a middle course before resorting to court action, which is inevitably complicated and expensive and necessarily delays the outcome. That is where alternative dispute resolution has been so useful. I am pleased to hear that we are not planning to change the basics of the system through this instrument, although extensions to time limits for bringing court proceedings with eight weeks’ grace is of significance. Of course, the basis of ADR comes, as do so many other civil law initiatives, from European Commission directives, to which the UK contributed in a leading way. As a result, in the case of ADR, we have built up positive cross-border engagement covering consumer rights in a very international environment. This covers the protection of consumer rights everywhere and anywhere in the EU.
There is a complex and interwoven system in the single market, supported by nearly 90 EU directives, which has been greatly to the benefit of consumers here and across the European Union. My first question to my noble friend is therefore: the Government state that this SI changes nothing regarding the protection of UK consumers, but how will we be able to guarantee the protection of consumers’ rights when they visit the EU 27 after January next year? Secondly, how will UK consumers avail themselves of the services of agencies and the infrastructure in place across Europe, which is currently their right? Thirdly, we currently enjoy full reciprocal rights with our European neighbours, which includes investigation of breaches of consumer law. How will UK consumers obtain redress from these businesses and traders based in the EU through our UK courts, to which they will have to apply solely in future?
Cross-border ADR will presumably be lost to UK consumers. I have to say to my noble friend that in this field, a statutory instrument such as this is only one half of the post-Brexit story. To ensure ongoing consumer protection, we surely need at least mutual recognition rules within the EU 27. Without that, our UK consumers, whatever the Government may say, will be greatly disadvantaged in the future. Finally, in the time-limited extension provisions in this SI, two important groups appear to be excluded: EU-based consumers transacting business or obtaining goods and services in the UK, and UK-based consumers transacting business or obtaining goods and services in the EU. Can my noble friend offer us all the reassurances that we would like to have on these apparent omissions?
I realise that our opportunity to debate this SI is not based on the matters I have concentrated on, being of major concern to the European SI Committee, which was concerned then about the diminution of rights relating to the time limits before court proceedings and the linked legislation being primary in nature. However, I am nevertheless grateful for this opportunity, and I hope that it will be extended to many more items of secondary legislation from the very long list.
My Lords, the UK had a tradition of alternative dispute resolution before the EU ADR directive. As has been indicated by the noble Lord, Lord Kirkhope, UK MEPs played a significant part in achieving the passage of the EU legislation. It was not just an extension of the applicable territory that the UK gained through the directive. As I understood it, there was an extension of timing possibilities for actions so that, if ADR was unsuccessful, the matter could still be taken to the courts. That was a useful addition to the law and I am glad that it is being kept, although it appears it is now being reduced, so that it is applicable to UK residents only, as a consequence of Brexit.
UK-based ADR organisations will also no longer be required to act in cross-border disputes, and the UK competent authorities that approve ADR providers will no longer be required to report to the European Commission on the state of ADR activity. I note that result with sadness, for both UK consumers who will—as indicated by the noble Lord, Lord Kirkhope—lose some access, and ADR organisations, which would appear to be losing work. The reciprocal effect will happen, so EU residents will no longer be able to exercise cross-border ADR rights in the UK. I wonder whether this will promote a change in online trading patterns and possibly the reintroduction of liable inter- mediaries and higher costs, or influence trade to go elsewhere, with less cross-border trade.
Given that statistics have been collected in the past, it would be interesting to know how many ADR claims UK residents have made relating to the remaining EU member states and, conversely, what volume of ADR cases EU residents have pursued in the UK.
Online dispute resolution is also being lost and is not really covered by this instrument. That platform is run by the Commission and I understand that, at the end of the implementation period, access to it will be lost. It is disappointing that there appears to be no UK substitute. I have read that the dispute resolution provisions tend not to have been as widely displayed as they should in the UK, but that is not really an excuse to abandon them, never to be returned. Therefore, can the Minister say whether this is a long-term abandonment or if there are plans for replacement?
Coronavirus has increased the amount of online trading and much of that trend is likely to be permanent, being just an acceleration of a trend that was already under way. It makes sense, in a modern digital world, to have a modern digital way for consumer redress mechanisms. Similarly, as I asked before about statistics, does the Minister have any numbers for the volume of online disputes relating to UK consumers?
My Lords, I thank the Minister for his clear introduction of the SI. All noble Lords have taken his point that the intention is not to change the existing arrangements as they affect UK residents in relation to ADR, but to provide an additional safeguard for the extension of time because of the transition period. However, I am no different from the other speakers in that it raises a wider question about how ADR is conceived and operates in the UK, and what the future might bring.
My first point is directly related to that, because the Minister made a strong plea for ADR as a strong alternative to court proceedings and, therefore, a valuable asset for consumers and consumer rights. That depends on whether the ADR systems in place are active, efficient and serve customers well. Noble Lords will recall that, when the original directive was going through, this side of the House spent a considerable amount of time and effort trying to persuade the Government—unsuccessfully, in the end—that, when the directive is transposed, we ought to take a hard line against industries that are either slow to take up an ADR system or produce one with weak and ineffective operations. It may be wrong to require ombudsman services to be set up, but they seem to be a gold standard in many areas. Where they work well—financial services is a good example—they provide a mechanism that has the confidence of consumers and is effective in getting results for them, so they do not have to go into the aggressive atmosphere of courts.
When he responds, could the Minister give us a tour d’horizon of consumer areas, at the moment? The noble Lord, Lord Mann, mentioned some topical areas where he felt there were some doubts, and many noble Lords will be aware of the situation affecting the vouchers that have been offered by airlines and other transport operators when tickets have been cancelled. My personal experience is that this is patchy at best: some are very good and able to respond within a few days; some have been a nightmare. I am still not certain whether I have a voucher waiting to be delivered to me, even though the company—I shall not name it—keeps putting on its website that significant progress has been made in getting through the backlog and that it is all going well. It is funny that no voucher ever seems to arrive.
My second point is a narrow one about what is happening with legislation. As I understand it, this SI amends primary as well as secondary legislation, in pursuit of what is a not objectionable objective. I noticed, in the instance I was pursuing, two primary legislative issues—one in Scotland and another in Northern Ireland. However, when I looked at the consultation process, I could not see anything reflective of the sort of discussion and debate that one might have expected from legislation that affects devolved Administrations, in particular Scotland and Northern Ireland. The reference in paragraph 10 of the Explanatory Memorandum simply says that the department wrote to the Department for the Economy in Northern Ireland to seek agreement with the Northern Ireland Executive to make the instrument, and the department confirmed its agreement on 10 February.
Why is nothing mentioned about Section 14 of the Prescription and Limitation (Scotland) Act 1973, or am I missing something? There would have been a case for the Minister to be in correspondence with his counterparts in Scotland on this issue, even if it was only a courtesy. Presumably it is legislation that took place before devolution, but I think it is important to keep the niceties going on these issues.
My third point picks up that made by the noble Lord, Lord Singh, about how this works in practice. Consumers are relying on ADR but, in many cases, can do this only if the issue at hand has been subject to work, particularly by trading standards. We all know trading standards is under considerable pressure and has had additional responsibilities placed on it recently, but little additional resources flow its way. Could the Minister reassure us that trading standards is resourced effectively to do this work and will be able to pick up any additional work that results from this directive? I suspect that it will not be significant.
The point of the noble Lord, Lord Kirkhope, about consumers’ ability to get redress in the EU is important. I appreciate it is not relevant to the strict wording of this SI, but it will be an issue that people pick up. I cannot be the only person who gets nervous—this point was also made by the noble Baroness, Lady Bowles —when I buy something from a well-known deliverer of books, the name of which starts with “A”. I often find that the purchase I have made for my Kindle is delivered from Luxembourg.
I had not thought about the connection but the noble Lord, Lord Kirkhope, and the noble Baroness, Lady Bowles, made it very clear that that will be a problem if I want to exercise my rights in future about anything that might go wrong. Fortuitously, as far as I am aware, nothing has gone wrong so far, but in an imperfect world we cannot always be certain that that will be the case. Could the Minister give us some words about how he thinks this will develop? Clearly, if the noble Lord, Lord Kirkhope, is right, we are seeing a considerable diminution in the ability of UK consumers to exercise their rights when they choose to buy from our closest trading partner—the EU. Is that where this is going? Is there anything the Minister can say that would help us?
I thank all noble Lords for their valuable contributions to this brief debate.
I reiterate that these regulations are extremely limited in their scope, to only the short-term extensions of the time limit for court proceedings for consumer disputes. They do not remove the ability for any consumer, whether resident in the UK or the EU, to use ADR in the UK or to access our courts. Disputes involving consumers resident in the UK should not be affected, and the transitional provisions avoid disruption in any case where consumers have commenced ADR proceedings before the draft regulations came into force.
These amendments are necessary as a result of the ADR directive ceasing to apply in the UK when we leave the EU and to prevent inconsistency in the statute book given the changes already made by the equality exit regulations. If these amendments are not made, EU consumers may continue to benefit from the possibility of an extension which might not be available to UK consumers within the arrangements in place in remaining member states.
The Government remain firmly committed to maintaining the high standards from which UK consumers have benefited for many years, and these regulations do not hinder these in the slightest. I reassure the noble Lord, Lord Kirkhope, that our high standards are not and never have been dependent on EU membership. The UK has often led and in most cases goes well beyond the minimum requirements set out by EU consumer law. We also have many excellent consumer advice organisations that guide consumers in pursuing complaints against traders. All of this suggests that for the majority of consumers the current framework works well.
I can also reassure the noble Lords, Lord Mann and Lord Stevenson, that nothing in these regulations has any effect on existing consumer rights, whether the return of faulty goods or refunds for travel or airline tickets. They are all dealt with under separate legislation. It remains the case that many suppliers have offered vouchers for holidays, flights, et cetera, but it is entirely up to consumers whether they choose to accept them. There are separate regulatory and statutory frameworks governing those rights. I reiterate that none of that is affected by this SI.
This legislation is limited purely to the additional time for consumers seeking redress. It allows for short-term extensions to the time limits for court proceedings where that is necessary to give the parties the opportunity to resolve their differences through non-binding ADR. It enables the existing rights to an extension to work effectively after the end of the transition period. We are proud that Britain’s consumer protection regime is among the most robust in the world; the UK has a strong history of protecting consumers in its own right. UK consumers will of course continue to enjoy excellent rights after transition.
The noble Lord, Lord Kirkhope, raised the important question of how the Government will guarantee that consumers will be protected when buying from EU-based traders post implementation period. This point was also made by the noble Lord, Lord Stevenson, with his reference to “the big A”. The noble Lord raised the important point of how consumers will obtain redress in the UK courts from traders based in the EU following the transition period.
Consumers resident in the EU will continue to be able to resolve disputes with UK businesses directly, will be able to use ADR as long as the ADR provider is available to them, and will retain access to the UK courts. EU-based companies selling their products or services in UK-regulated markets must comply with all UK regulatory requirements. In the regulated sectors, this would include compliance with sectoral rules and requirements around the offer of ADR or other forms of redress to their customers. In future we want a relationship with the EU based on friendly co-operation between sovereign equals, centred on a trading relationship based on free trade agreements like those the EU has concluded with a range of other international partners.
The noble Lord, Lord Stevenson, asked about the scope of ADR. My department has announced its intention to review various areas of the consumer enforcement landscape. We intend to bring forward a package of reform to make it easier and quicker for consumers to use ADR services. On his question about engagement with the devolved bodies, this is a consumer protection measure and is reserved, except for Northern Ireland. That has driven the focus of our engagement. As I said, we want a relationship with the EU based on friendly co-operation.
The noble Baroness, Lady Bowles, asked about statistics. Over 2.5 million disputes have been resolved through ADR in the past six years. BEIS research found that 80% of consumers who used ADR procedures thought their problem would not have been resolved without it. We consider that a success story. We will always closely examine areas of the dispute resolution landscape which are not working for consumers and lay out our proposals for reform.
The draft regulations we are considering today do not dilute consumer rights and protections by any means, and merely form part of a programme of legislation required to ensure that retained EU law is workable and free of deficiencies after the end of the transition period. With that, I commend these draft regulations to the Committee.
Arrangement of Business
My Lords, the Hybrid Grand Committee will now resume. Some Members are here in person, respecting social distancing, others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering except when seated at their desk, to speak sitting down and to wipe down their desk, chair and other touch points after use. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes. The time limit for this debate is one hour, and I ask all members to keep to their time.
European Structural and Investment Funds Common Provisions and Common Provision Rules etc. (Amendment) (EU Exit) (Revocation) Regulations 2020
Considered in Grand Committee
My Lords, the EU regulations for structural funds and the cohesion fund are designed to reduce social and economic disparities in the EU and are the main funding tools designed to deliver the EU’s cohesion policy. They come under the wider family of European structural and investment funds. These EU regulations set out the rules governing these funds and give powers to the member state to ensure the operability of eligible projects.
More than half of EU funding is channelled through the European structural and investment funds. They are jointly managed by the European Commission and the EU member states. BEIS sets the policy and co-ordinates the management of four of these funds across the UK: the European Regional Development Fund, ERDF, which includes European Territorial Co-operation funding—ETC; the European Social Fund—ESF; the European Agricultural Fund for Rural Development—EAFRD; and the European Maritime and Fisheries Fund, or EMFF.
The UK has been allocated about £9.5 billion of funding under structural funds for the 2014-20 period. The funds currently support growth, low carbon, transport, research, innovation, small businesses, employment opportunities and social inclusion. Structural fund programmes are managed and delivered by government organisations designated as managing authorities—MAs—which in essence are delivery bodies for the funds in England and the devolved Administrations and are responsible for drawing up operational programmes. These programmes set out the levels of funding available for certain activities and how the programmes will be run within the parameters set by the EU regulations.
The Department for Business, Energy and Industrial Strategy—BEIS—is the co-ordinating body for ESIFs in the UK. In England, the managing authorities for the European Regional Development Fund and the European Social Fund are, respectively, the Ministry of Housing, Communities and Local Government and the Department for Work and Pensions. The devolved Administrations and Her Majesty’s Government of Gibraltar administer ERDF and ESF in their respective areas. The Department for Environment Food and Rural Affairs manages the agricultural funds—EAFRD—in England, and the devolved Administrations in their areas, apart from EMFF which is run across the UK by the Marine Management Organisation, an executive non-departmental public body sponsored by Defra. Gibraltar receives a small allocation of about €10 million —£8.8 million—from the European Regional Development Fund and the European Social Fund for 2014-20 and has agreed operational programmes with the European Commission to implement them. It also takes part in two transnational programmes.
The need for continued regional investment in the event of a no-deal exit and the nature of the projects supported by these funds led to the introduction of legislation so that these funds could operate domestically under a no deal until their planned closure, even though they would cease to be funded by the EU in such circumstances. As the UK subsequently signed the withdrawal agreement, which maintains the EU regulations for European Structural and Investment Funds until programme closure, which could be until 2026, given that programmes run until 2023 and then generally take two to three years to wind up, SI 625 contradicts the intent and purpose of the withdrawal agreement.
This instrument is being laid in order to revoke the aforementioned SI 625/2019, which was made on 18 March 2019. That SI disapplied retained EU law in relation to the European Regional Development Fund, the European Social Fund and the European Territorial Cooperation Fund to ensure that the programmes could continue in a no-deal scenario. Under the withdrawal agreement, these regulations can still apply in the UK, despite the UK not being a member state. Now that the withdrawal agreement has been signed by the UK and made into law through the European Union (Withdrawal Agreement) Act 2020, the original statutory instrument, 625/2019, is therefore no longer required and should be repealed in order not to confuse the statute book.
The EU withdrawal agreement Act 2020 allows the UK to continue to apply EU Regulation 1303/2013, supplementary funds, specific regulations and associated delegated and implementing legislation for the European structural and investment funds through until the end of the current programme. It is proposed that the UK shared prosperity fund will be set up as the domestic successor to the European structural and investment funds for new programmes.
In conclusion, it is therefore necessary to revoke the original no-deal statutory instrument 625/2019 to remove conflict with the provisions of the EU withdrawal Act. The UK will continue to participate in European structural and investment funds programmes until their closure, and delivery continues through the managing authorities and devolved Administrations. Therefore, in order to remove any confusion from the statute book as the no-deal guarantee for funding is now not required, I commend this regulation to the Committee.
My Lords, I welcome the opportunity to speak on these regulations. Particularly as a Scottish Peer—indeed, a former Minister of State for Scotland—I am only too aware of the important role that ESIFs have played in reducing disparities across Scotland over the past four decades. Indeed, under the current 2014-20 programmes, Scotland benefits from more than £780 million of funding through the European Regional Development Fund and the Social Fund, in addition to £1.5 billion through the European Agricultural Fund for Rural Development. Indeed, more than two years ago, I spoke here about the importance of continuing these funds to support communities and regions not just in Scotland but throughout the UK, saying that I was concerned that they would be lost in the Brexit void.
Nevertheless, while I welcome the UK shared prosperity fund as the domestic successor to ESIF for new programmes after 2020, I am concerned that with government cuts, it is in danger of becoming a shared austerity fund rather than a shared prosperity fund. Indeed, we are still no clearer on how the funding will be allocated or when a final decision will be made. The Government have said that they will not confirm the allocation until after the cross-departmental spending review in the coming months. However, these are challenging times and we need to provide both Scotland and the whole of the UK with clarity on the allocations from this scheme, so will the Minister explain why we are having to wait and how soon after the spending review the Government will make the announcement on this? Will it be by the end of 2020, or will they kick the can down the road into 2021?
Finally, the Explanatory Note says that BEIS originally laid an SI in March 2019, as we know: SI 625. That removed the EU regulations for structural funds from UK law in the event of a no-deal exit. However, as the UK signed the withdrawal agreement, which maintained the EU regulations for ESIF until programme closure, as the Minister said, SI 625 contradicts the intent and purpose of the withdrawal agreement, which is why it is now being revoked. However, is it not ironical that the Government are now considering overriding parts of the withdrawal agreement, so will we have another SI in a few weeks’ or months’ time? Perhaps the Minister could tell us. No wonder the noble and learned Lord, Lord Keen, could not stand the heat in the kitchen and has left it—going back, no doubt, to make some money at the Bar. Nevertheless, I support the regulations.
My Lords, I thank the Minister for introducing the instrument. I have no disagreement with the redundancy of the revoked legislation, given that the funding has been agreed and is to be paid out for parts of the programmes that are yet to be completed—at least, that is the agreement, although, given that the UK may go back on the backstop details of the withdrawal agreement, I feel I should point out that one of the Commission’s general retaliations for misbehaviour is the retention of structural funds from an erring member state.
Leaving that aside, we are coming to the end of the EU structural funds and, as the noble Lord, Lord Foulkes, said, there is great anxiety about the replacement fund, the UK shared prosperity fund, and how closely it will replicate not just the EU funding but the matching national funding, and the method of calculation and distribution. It has often been a criticism that structural funds were cumbersome and expensive in their distribution mechanisms. I do not dispute that, but wherever I asked questions about it in the UK—that is the sort of thing that MEPs got up to—the answer I got back from the regions was that they preferred to have the funds allocated by the EU, because otherwise they could not guarantee getting the money from a Government of any stripe. That was probably true, and if getting the maximum bang for your buck is applied, as the Treasury has in the past, it does not favour the less developed areas. But that is potentially not how it is to be in the future. I believe I heard the Chancellor say that the methodology of funding more generally was to be looked at as part of levelling up. If that is the case, can the Minister categorically reassure us that the basis of need will be retained as the key feature?
My other question is: how granularly will the areas be looked at? I am very conscious of conflicting pulls here: when large areas are deprived, there can be cumulative effects, but it is also the case that highly deprived pockets within rich regions also suffer exaggerated effects. Can the Minister shed any light on that?
My Lords, this statutory instrument revokes legislation laid in 2019 that would have guaranteed structural funding in the event of a no-deal exit. Under Article 138 of the withdrawal agreement, the UK will continue to have access to the ERDF, ESF, EAFRD and EMFF until the end of the current multiannual financial framework, the term 2014-20. Funding cycles typically last up to three years, with closure taking up to another three years, so some ESIF projects will continue expenditure through to December 2023.
The UK will not be pursuing participation in future ESIF programmes, including ETC health, in the MFF 2021-27 period. The UK will participate in ETC peace plus for 2021-27. The UK shared prosperity fund, the UKSPF, will succeed the ESIF for new programmes. BEIS originally laid an SI in March 2019, SI 625, which removed the EU regulations for structural funds from UK law in the event of a no-deal exit. Unreplaced, it would now come into force on the last day of the transition period. BEIS is seeking to revoke that no-deal regulation because it is not compatible with the arrangements set out under Article 138 of the WA.
As already pointed out, the no-deal SI 625 disapplies the regulations for ERDF, the ESF and ETC when it comes into force at the end of the TP, while the WA maintains the same regulations until the programme closure. If SI 625 were kept, it would confuse the statute book. It is currently planned that the UK shared prosperity fund will replace the EU structural funds with funding realigned to match domestic priorities. At a minimum, it will match current levels of funding to each nation from the EU structural funds.
I apologise for reading out the abbreviations for the titles of various bodies, but there is not time to read the whole lot in full.
The noble Earl, Lord Clancarty, has withdrawn, so I call the noble Lord, Lord Naseby.
My Lords, my first point has already been made: that the regulations assume that we will not have a no-deal exit. As someone who saw a whole lot of SIs when I was in the other place, as chairman of Ways and Means, I have to say that it was normal with something of the scale of this SI for the Commons to have a look at it first, but the Commons have not considered this SI, so I become as suspicious as my noble colleague opposite about why something different is being done this time. Of course, it may be entirely innocent, but I have my doubts.
On paragraph 2.4 of the Explanatory Memorandum, headed:
“What will it now do?”
and the various funds set out there, is it the UK Government’s policy to apply for new projects in the remaining three and a half months of the period 2014-20? Or have we put in for all our projects and are just running down in this period? Are there to be any new projects in the remaining three and a half months?
“Matters of special interest to Parliament”
is followed by a paragraph that refers to
“English Votes for English Laws”
and then by a paragraph:
“The territorial application of this instrument includes Scotland and Northern Ireland.”
One asks the question: what happened to Wales, other than that paragraph 3.3 says that the instrument applies to all the UK? Is there something in the Welsh devolution arrangements that precludes it from doing something in relation to this SI?
We then come to what I call the run-off period. With no deal yet agreed and three and a half months left, are we in a position whereby we will not apply for anything else or, if we did, we would be treated rather frostily for doing so?
Is the £9.5 billion referred to in paragraph 7.2, which is a hell of a lot of money, a guaranteed amount, or is there any wriggle room for the EU to get out of that?
That takes one on to left-over projects, of which paragraph 7.4 says
“even though they would cease to be funded by the EU.”
One assumes, but we would like confirmation, that all the projects going on now, which at some point the EU will cease to fund, will be picked up by the UK Government.
On “Monitoring & review”, I am a passionate believer in monitoring—it is my own little analysis—but, increasingly and rightly, the time limit on reviews has been coming down. It is now almost quite normal to have a three-year review. I hope that in this case we will have a three-year review.
The noble Lord, Lord Liddle, has withdrawn, so I now call the noble Baroness, Lady Ritchie of Downpatrick.
My Lords, I thank the Minister for his explanation of this SI, which we have to consider against the background of that other disputatious legislation, the internal market Bill. While I obviously welcome that there will be a progression towards the shared prosperity fund, I want to provide some context and then ask the Minister some questions.
Like the noble Lord, Lord Foulkes, I was a Member of the other place, so I want to ascertain why the other place has not considered this legislation. As a former Minister in the Northern Ireland Executive, I am only too aware of the great benefit that the European Regional Development Fund, the European Maritime and Fisheries fund and the European Social Fund provided to our local communities. In fact, the European Union provided a levelling-up process through financial assistance for fisheries, infrastructure and social development projects in areas where funding would not necessarily have been provided by the national Government, notwithstanding that the UK Government were a net contributor to the EU. As a consequence, regional levelling-up was provided which mitigated against disadvantages and regional imbalances and ensured that projects which brought benefit in construction jobs and new facilities could come to realisation.
What resource has been allocated to the new shared prosperity fund? Will it be centrally resourced and then allocated to the devolved Administrations, or will they set up separate funds to deal with that? Will the shared prosperity fund have more resources than the EU to allocate to projects? Will it still address the deficits in marginalised communities, particularly in isolated, rural and coastal communities? Will it deal with and address those regional imbalances to which we have already referred?
What discussions have taken place with devolved institutions regarding the replacement money through the shared prosperity fund? As I asked earlier, will they receive that money over and above their annual block grant allocations to compensate for the loss of these European funds?
My Lords, I recognise, as other noble Lords have done, that this SI is necessary to revoke the previous no-deal planning because the withdrawal agreement continues Regulation 1303/2013 and associated legislation with respect to the European social investment fund. The no-deal funding guarantee therefore appears no longer to be required, but as the noble Baroness, Lady Bowles, and the noble Lord, Lord Foulkes, mentioned, if there is a problem with the withdrawal agreement, could the sums agreed under it be withheld? Is there any view in the department on that and could my noble friend comment on it?
It is clear that the ESIF has aimed to reduce social and economic disparities and support communities and regions and has generated over the years many useful projects: national programmes, local initiatives—including on biodiversity, energy efficiency, micro- generation and brain imaging—and help for rural areas that might not have been prioritised in a UK national policy. While I welcome the new UK shared prosperity fund, can my noble friend answer some of the questions already posed by other noble Lords, such as: when will the cross-department spending review happen and how much will be allocated? Will the amounts that the UK has invested be replicated in addition to the amounts that we have received from other EU nations? Will the shared prosperity fund still have as its driver need around the country rather than other priorities?
I am concerned to make sure that we do not lose some of the valuable initiatives that we had as a member of the EU. I know that the Government are committed to ensuring that Britain supports its own projects as required rather than being directed by the EU, and I respect that, but a little more clarity on how the shared prosperity fund might operate would be gratefully received.
My Lords, my questions are not dissimilar to those from colleagues, which I am sure will help the Minister a great deal. Obviously, it seems a little odd that we are considering revoking an instrument when we still have not reached a trading deal, so I do not know whether this instrument before us today is a little premature.
I will ask the Minister a couple of questions. Of the £9.5 billion of funding under the structural funds for the 2014-20 period to which my noble friend referred, how much of that is still left to run and what is the distribution of the amount left between the four nations? Can he assure us today that the cost of administering them up to 2023-25 will be less than these sums of money involved? Presumably, match funding will still apply, and that money will have already been allocated, so no new money will be required.
Specifically on the European agricultural fund for rural development, I understand that €100 billion has been allocated overall to the whole of the EU for the period from 2014 to 2020. As the clue is in the name—this refers to the rural development programme—I place on record how much the north of England, North Yorkshire in particular, has benefited from this fund. However, this raises the question on which we have not yet had clarification: how will the UK shared prosperity fund function? I would like confirmation from the Minister, if possible today, that a significant element of this fund will go towards rural areas and, in particular, that it will carry forward many of the strands set out in the rural development programme, which has benefited the UK so much, not just in the 2014-20 period but overall. As we have learned that the original SI we are revoking aimed to reduce social and economic disparities across the UK, can we be sure that the Government’s levelling-up programme will continue to do what this SI has done in the past?
My Lords, sparked by the noble Lord, Lord Foulkes, let me say how refreshing it is that we are debating a part of the European withdrawal agreement that the Government intend to uphold—there is a positive note to start on.
Of course it makes sense to repeal SIs that are redundant and potentially confusing, and we support the changes before us today. However, this debate gives me the chance to press the Government with the same kind of questions that the Minister has heard from other speakers. By the end of this year, EU funds will go into a run-off process over the subsequent few years, supporting existing or agreed projects but not investing in new ones. Like everyone else, I am remarkably short on detail for the UK shared prosperity fund that will replace them. Frankly, that seems a little extraordinary, because we are only three months or so from the end of transition. I thought there would be a major consultation on this. Have I missed it? It is possible that I have, but I attempted to find it and, frankly, I could not.
A number of bodies have raised quite a few issues around the UK shared prosperity fund. One of the hopes is that it will be transparent, simple and flexible—you could accuse the European structural funds of not meeting that test—to enable it to respond to local needs. I ask this because centralisation rather than devolution seems to have become a theme of this Government. I would also like to understand what role Parliament will play, particularly compared to the European Parliament, in holding the Government accountable for what happens with these funds. I am afraid I do not understand that either; perhaps the Minister could enlighten me.
Will the objectives that the Government have articulated for this new fund, such as boosting prosperity and tackling inequality, be adjusted as a result of Covid? That matters because of areas that might not have qualified under the original definitions but which are dependent, for example, on hospitality, the airlines or on public transport. I pick up the point made by my noble friend Lady Bowles that sometimes a small sector or area can be deprived within an area of overall prosperity, but that still matters. Will those areas that might not have made the original list but now, because of Covid, may be very much in need, be looked at as recipients for this fund?
We could better understand the impact on geographies. My understanding—the Minister can correct me—is that however you look at the analysis, it looks as though areas such as Cornwall, for example, which benefited from the cliff-edge approach inherent in the European funds, will be serious losers in every approach that has been discussed for the new fund. Is that right? Perhaps the Minister can help us.
Again, to pick up on issues raised, the Conservative manifesto promised that each nation would receive as much funding as if we had not left the EU. For how long will that be true? Areas are desperate to know how much money will be available, particularly as we go into very rocky economic times.
To pick up a point made by both my noble friend Lady Bowles and the noble Baroness, Lady Altmann, will we continue with the needs-based criteria or shift, as some have suggested, to outcomes-based criteria? It makes a very big difference to which parts of the country and which kinds of projects receive funding rather than others.
Generally, I join noble Lords in saying that this is a great opportunity for the Minister to tell us much more about this new future—it would be exceedingly useful.
My Lords, as other noble Lords have said, I am grateful to the Minister for his clear and focused introduction, which allowed us to understand better the importance of the SI with regard to clearing up the statute book, but also to point out some of the transitional difficulties that the Government will face as they see the end of these substantial schemes, which, as other noble Lords have said, have had such a huge impact across the country. They are a significant investment, many communities are involved, they connect all parts of the United Kingdom, and it is vital that we get this right. That would be true even if it were not also the case, as the noble Baroness, Lady Kramer, pointed out, that the impact of Covid-19 stresses every aspect of that and will bring it very much to the forefront of our thinking.
The noble Lord, Lord Naseby, went through the Explanatory Memorandum and asked a number of detailed questions. I just wanted to ask one or two questions related to consultation. The extent and territorial application of this is clearly a United Kingdom issue, and the Minister has made it clear that these funds are and always have been reserved items. However, there is a tension regarding the local impact; other speakers made points on how the further you go from the centre of Whitehall with this, the easier it is to see the discrepancies and differences that need to be addressed, with funding of this nature coming, as it does, with a focus on trying to level up rather than reinforce existing divisions.
I was therefore intrigued to see in paragraph 4.3 of the Explanatory Memorandum:
“Devolved Administrations were involved in the preparation of this instrument.”
Can the Minister indulge us by explaining what that meant? Were they shouted at, engaged, and were there meetings or a discussion? I would really like to know. Contrast that with paragraph 10.1 in particular, which says that there was “no formal consultation”—presumably this was done with ties off, in an informal situation—but:
“Devolved Administrations have all provided consent letters from their ministers to the laying of this SI.”
That is a novel way of doing it. I am intrigued by this; it is a new process, which I have never seen before. Perhaps the Minister would be prepared to share those letters with the Committee. If he is not able to, perhaps he could explain in another letter what was going on here. I am not interested in prying into confidential details but I would like to know how the process works in practice.
All speakers mentioned it, but my noble friend Lord Foulkes and the noble Baronesses, Lady Ritchie and Lady Bowles, went into some detail about how we are going to be fed information about the shared prosperity funds that replace all the existing funding. As I said, £9.5 billion is a lot for even this Treasury to find on the money tree. The case has been well made for early notification about the thinking behind this and the consultation process going into it. Tying it to some feature of the calendar that allows a Minister to say something more concrete than just “It’s coming soon” would be good.
It is important to get assurances from Ministers that there is going to be a fund of this nature, size and reach, to understand better how constraints will apply to how much it is expected to do and how that will be done, whether there will be partnership arrangements—as was expressed by the noble Baroness, Lady Ritchie—and whether there will be a bidding process or top-down delivery. We do not need firm details, but it would be interesting to know which way the Government are thinking.
I follow that with the astute observation of the noble Baroness, Lady Bowles, that we might need to think harder about what might happen to us if the situation affecting the withdrawal agreement continues and the EU takes sanctions against the UK for its approach so far. If the first port of call is the retention of previously allocated structural funds, perhaps not this SI but the previous one will need to be repealed and we will have to go back to the first version. SI 625 may indeed have a longer life than we originally thought. I do not expect the Minister to go all the way down the track on this, but it would be helpful or reassuring to us if we knew that he had thought this through and that there are plans in place.
As I said at the beginning, we are talking about substantial sums of money, hard-wired into the way our country operates. It may not be the best or a long-term solution, but I appeal to the Government to think carefully about changes, as they come forward. It is important that we learn the lessons from the ESIF and its various formulations over the years. Bringing it all into one fund might be attractive, but the appetite to stop term funding is not there, and they will need to think carefully about how to share this money in a way that is effective and efficient, in terms of its overall goals, and that does not cut out partnership and local intelligence in how it is best applied.
I thank noble Lords again for their valuable contributions to this short debate. Now that the UK has left the European Union, one of the opportunities that we have is to design and implement our own regional funding programmes. Through the UK shared prosperity fund, the Government can cut out bureaucracy and create a fund that invests in UK priorities and is easier for local authorities and areas to access.
I know that there have been queries on our future participation in EU programmes but, to reiterate, the UK will not participate in any future ESIF programmes, apart from the PEACE PLUS programme mentioned by the noble Baroness, Lady Ritchie. The UK Government have committed to contributing to PEACE PLUS until 2027, as part of their unwavering commitment to uphold the hard-won peace in Northern Ireland following Brexit. PEACE PLUS will succeed the current PEACE scheme, which has helped promote economic and social progress in Northern Ireland and the border region of Ireland since 1995. The current programme, run with funding from the UK, Ireland and the EU, will end in 2020. The Special EU Programmes Body will continue to act as managing authority for these PEACE PLUS programmes. Discussions around shaping the proposal and the wider regulations are ongoing and the UK is participating in these.
The noble Lord, Lord Foulkes of Cumnock, in his usual combative tone, asked about timings for the allocations. I assure him, the noble Baronesses, Lady Bowles of Berkhamsted and Lady Altmann, and other noble Lords that the 2019 Conservative manifesto—of which the noble Lord, Lord Foulkes, is a strong supporter —committed to at least matching the funding for EU structural funds to each nation in the United Kingdom. In response to their questions, I say again to the noble Lord, Lord Foulkes, and the noble Baronesses, Lady Bowles, Lady Kramer and Lady Ritchie, that final decisions on the allocation of the UK shared prosperity fund will be taken following the cross-government spending review, which is in progress. When that is completed, we will have further announcements to make. The Government have been working closely with interested parties across the UK, while developing the fund.
In response to my noble friend Lord Naseby, who asked whether it is the Government’s intention to apply for new projects for the remaining three and a half months, I say yes. The Government will be signing new projects during 2020 to make the most of the available European funding, which is recycled British funding in real terms. On the question from the noble Lord about Wales, I assure him that the SI indeed applies to Wales. On his question about ERDF and ESF, £9.5 billion is the agreed amount of EU funding for ERDF and ESF for the 2014-20 multiannual financial framework.
The noble Baroness, Lady Ritchie of Downpatrick, asked how it will be resourced. The intention is for the fund to be resourced centrally and then allocated to the devolved Administrations. The noble Baroness and other noble Lords also asked about co-operation with other devolved Administrations. It will operate across the UK, and UK government officials regularly speak to their counterparts in the devolved Administrations to discuss any updates to their concerns or queries about the proposed fund. Similarly, Ministers also meet their counterparts in the devolved Administrations. I assure all noble Lords that these matters are raised regularly, and that Ministers from the devolved Administrations regularly air their concerns.
The noble Baroness, Lady Altmann, asked whether the sums agreed under the withdrawal agreement could be withheld. The answer is no. Article 138 of the withdrawal agreement states that the UK will continue to have access to European structural funds until the end of the current multiannual financial framework funding cycle. Funding to the UK SPF will be realigned to match domestic priorities, with a focus on investing in people.
There were also multiple queries about how the new fund would be operated and whether it would target by need. As I said, it will be driven by domestic priorities with a focus on investing in people. It will, at a minimum, match current levels of funding to each nation from the structural funds. We strongly believe that leaving the European Union provides us with a fresh opportunity to create a fund that invests in our priorities and targets funding where we decide it is most needed, while maintaining support for businesses and communities.
My noble friend Lady McIntosh of Pickering asked about rural areas. The European agricultural fund for rural development is outside the scope of this SI. The original SI, which it revokes, repealed regulations for the European regional development fund, the European Social Fund and the European territorial co-operation fund only.
The noble Baroness, Lady Kramer, asked about the impacts of Covid-19. We will continue working closely as one United Kingdom to understand the changing needs of local and regional economies. In our response to the impact of Covid-19, including the role the UK SPF will play, we have a great opportunity to design a fund driven by domestic priorities. As I said earlier, the decisions on the quantum of the fund will be made through the spending review.
I know that all queries have been about the shared prosperity fund. I have tried to aid noble Lords by responding to them, but they have nothing to do with the statutory instrument, which revokes the original no-deal instrument to ensure that our legislation is compatible with the arrangements set out under Article 138 of the withdrawal agreement. If the original no-deal SI were not repealed, it would confuse the statute book and cause potential conflict with these provisions. The Government fully recognise the role that structural funds play in supporting vital jobs and growth opportunities across the UK. I commend this SI to the Committee.
Arrangement of Business
Good afternoon, my Lords. The Hybrid Grand Committee will now resume. Some Members are here in person, respecting social distancing, others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering except when seated at their desk, to speak sitting down and to wipe down their desk, chair and any other touch points before and after use. If the capacity of the Committee Room is exceeded or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
Sentencing (Pre-consolidation Amendments) Act 2020 (Exception) Regulations 2020
Considered in Grand Committee
My Lords, this draft instrument will ensure that the victim surcharge payable by an offender sentenced under the forthcoming sentencing code will not be higher than the amount which would have applied at the time they committed the offence.
For those not familiar with the surcharge, it is imposed by the court on offenders following sentence to ensure that offenders hold some responsibility for the cost of supporting the victims and witnesses of crime. The amount imposed varies, depending on the age of the offender and the type of sentence they received. Income from the surcharge contributes to the victims and witnesses budget, which funds support to help victims and witnesses of crime.
The sentencing code is a consolidation of sentencing procedural law in England and Wales. It will bring much-needed clarity and accessibility to this area of law by providing sentencing courts with a point of reference for the procedural provisions which govern the sentencing process. The Law Commission’s Sentencing Bill, which creates the sentencing code, is currently before Parliament.
Let me turn to the purpose of this instrument. In April, the Criminal Justice Act 2003 (Surcharge) (Amendment) Order 2020 came into force. That order increased the surcharge payable by an offender in particular circumstances. Importantly, these increases apply only where a court deals with someone who committed an offence after that order came into force. Since then, the Sentencing (Pre-consolidation Amendments) Act 2020 received Royal Assent on 8 June. That Act makes amendments to existing sentencing legislation to facilitate the consolidation of sentencing procedural law in the sentencing code. The pre-consolidation Act gives effect to a clean sweep of sentencing law. This removes the need for sentencing courts to identify and apply historic versions of sentencing law and, as a result, the current law as enacted in the sentencing code will apply to all sentencing decisions when an offender is convicted after its commencement, irrespective of the date that the offence was committed.
To protect the fundamental rights of offenders, the clean sweep is subject to certain exceptions. They are set out in Schedule 1 to the pre-consolidation Act. The Act also allows for further exceptions to the clean sweep to be made by statutory instrument. These regulations are made under that power. In accordance with the provisions of the pre-consolidation Act, the clean sweep will apply to the 2020 order unless steps are taken to exempt it. This would mean that the increased surcharge amount specified in the 2020 order would apply to certain offenders sentenced under the sentencing code who committed offences before that order came into force. That is clearly unfair and would run contrary to the aim of Article 3 of the 2020 order, which states that those increases apply only where a court deals with someone who has committed an offence after that order came into force.
This draft instrument therefore exempts Article 3 of the 2020 order from the clean sweep, meaning its effect will be preserved after the sentencing code is commenced. As a result, whenever a court deals with an offender under the sentencing code for an offence committed before the 2020 order came into force, the amount of surcharge payable by the offender will remain the amount that applied when the offence was committed.
It is in no way to disrespect the noble Baroness, who has made a good fist of explaining this very simple measure, to say that I am extremely sorry that the Advocate-General, the noble and learned Lord, Lord Keen, was not able to be with us, for reasons we understand. I put on record that it is critical that we applaud those who show such a principled and moral stand. I have no idea what the response will be from Downing Street, but our thoughts are with him.
I am participating in this very simple instrument because I took part in the debate on the consolidation Act and raised one or two questions about whether it would be possible to use the exemption facility we are debating this evening to deal with one outstanding anomaly. I do not expect the Minister to respond in detail, but I would be very grateful if she would take this back to the Ministry of Justice with a view to trying to examine it.
Taking the regulations before us, I am slightly mystified as to whether someone who commits or committed an offence that duly warranted a surcharge under the sentencing code before the measure came in, and committed a similar offence afterwards, would be charged two different rates. Perhaps that is an esoteric point, but it seems to me that there was some ambiguity in how it was outlined in the Explanatory Memorandum.
I particularly want to raise IPP prisoners with indeterminate sentences. I was responsible for both the surcharge and the subsequent mistaken implementation of the IPP. The surcharge has held; the IPP sentence was abolished eight years ago. However, people are being sentenced now for minor breaches of the terms laid down by the Parole Board under the previous legislation and are therefore subject to exactly the same terms of incarceration as they were prior to the abolition of the Act in 2012, even though the minor offence or breach might warrant a very small sentence—including, perhaps, regulations of this sort, with surcharge and reparations. Could the noble Baroness go back and see whether some of the outstanding issues here could be resolved in this way?
Finally, as everyone here and online knows, today the Government published a White Paper on sentencing. It included some of the things I talked about 17 years ago, such as the importance of a victims’ code, which also went through the Domestic Violence, Crime and Victims Act in the same year. It talks about trying to sort out issues relating to low-level offences, as we might call them, and the sentencing appropriate for them, and the strengthening of sentences for more heinous crimes. We went through all this, and I would like the noble Baroness to take back to the Lord Chancellor and Justice Secretary one simple thing: is any sentencing code to be left to those participating in the judiciary, with the Lord Chancellor chairing that, or is it to be laid down rigidly? This was quite a contentious issue 17 years ago, and I erred on the side of allowing the Sentencing Council to determine the guidance and therefore the terms on which the law would be implemented. Having been severely rapped over the knuckles since for not having been more prescriptive, I put on record that I hope the present Justice Secretary gets the balance right.
My Lords, I add my personal tribute to the noble and learned Lord, Lord Keen of Elie, the Advocate-General for Scotland. Over the past number of years, he has held some very difficult briefs and has done so with great professionalism and aplomb. I have admired him for it, although I must say that I have not envied his position. It so happened that a year ago, when I was ill at home, I had the opportunity of watching the whole of the Prorogation proceedings before the Supreme Court, when he was in charge of a very difficult and, ultimately, losing case and he did that very well. On a personal level, he has always been extremely polite and pleasant, and I am glad that he has taken the route of honour, which I hope will be followed by the Lord Chancellor, Robert Buckland, who I also know to be, both personally and professionally, a very decent man. I imagine that he will be tortured in the same way as the noble and learned Lord, Lord Keen, has no doubt been in the past few months.
I must confess that I am a little puzzled by the regulations, as is the noble Lord, Lord Blunkett. We all applauded the clean sweep provisions of the Sentencing (Pre-consolidation Amendments) Act 2020. The regulations appear to maintain the level of a surcharge ordered by the court at the level which was appropriate at the time of the offence. As I understand it, the surcharge was designed to transfer some of the costs of a court hearing, including support for victims, to an offender, and it varies according to the nature and seriousness of the offence and the overall sentence passed. It seems that under the regulations the clerk of the court will have to maintain a record indefinitely of the level of historic surcharges as they apply from time to time, and thus lose the benefit of the clean-sweep principle. Since the cost to the public purse of the court hearing and of support for victims is at the time the court hearing takes place, not at the time of the offence, I fail to see the logic of this.
My understanding of the situation has not been helped by the fact that my search for the Statutory Instrument 2020/310, the effect of which this order purports to retain, produced a nil return on the government website. I hope, therefore, I will be forgiven if my understanding is at fault, but it seems to me that the simple question is: why should an offender not contribute towards the current cost of a court hearing and of support for victims, rather than the cost at the time they committed an offence? In any event, what discretion does the court have in fixing the amount of the surcharge and does it vary in accordance with the offender’s ability to pay? I would be grateful for a response from the Minister on these points.
My Lords, I, too, pay a personal tribute to the noble and learned Lord, Lord Keen, who has always been extremely courteous and helpful to me.
These regulations relate to the Sentencing (Pre-consolidation Amendments) Act 2020, which is a precursor to the introduction of a sentencing code and consolidates all previous sentencing legislation into a single code for the ease and convenience of both the judiciary and the public. There are, however, some exemptions, to which the noble Lords, Lord Thomas and Lord Blunkett, have referred. This instrument creates a further exemption in relation to victim surcharge, which has recently been increased by 5%. Specifically, this instrument means that any offence committed before the change to the victim surcharge should be charged at the old rate. I have a few questions for the Minister.
First, why has this instrument been created after the passing of the sentencing Act? Could it instead have been included in the Bill and thus afforded further scrutiny? Secondly, the revenue from the victim surcharge forms part of the Ministry of Justice’s victim and witness programme, which is largely sent directly to the police and crime commissioners. Can the Minister confirm that the changes in this instrument have been communicated to the PCCs so that they can better budget how much they will receive from the programmes?
As some noble Lords may know, I also sit as a magistrate, so I regularly apply the victim surcharge to various cases I sentence. It is very unclear—certainly from the court’s point of view, or, I suspect, from the Government’s—where the money goes for the victim surcharge. We know that it goes to the PCCs but, as far as I know, there is no central government assessment of the effectiveness of the money spent to support victims and witnesses. I have pursued that in other forums through the Magistrates’ Association and more widely in London. It is very unclear how this money is spent, and it seems that there is no central assessment of the effectiveness of using it to support victims.
I therefore hope that the Minister will undertake in some way to look at the effectiveness of the victim surcharge and making the PCCs accountable for the money passed through to them.
My Lords, I am grateful for the limited but good contributions to this debate. Before I answer some of noble Lords’ questions, I reiterate that the purpose of this instrument is to ensure that offenders sentenced under the sentencing code for offences they committed before the Criminal Justice Act 2003 (Surcharge) (Amendment) Order 2020 came into force will not be liable for the increased surcharge amounts specified in that order.
I will address a couple of the points. In response to the noble Lord, Lord Blunkett, I will look at Hansard, particularly the outstanding issues that he brought up from previous debates, and I will ask the department to look at how we might respond to him.
There is a difference between this and the sentencing White Paper, which I believe was published yesterday. This paper will look at sentencing policy. The Government are serious about fighting crime and protecting the public from its devastating consequences. Under this Government, the most serious offenders are more likely to go to prison and for longer, helping to protect the public and keep communities safe. That is what the White Paper will hold, and we expect that it will eventually come through as legislation. However, the legislation we are talking about that this instrument applies to is the Law Commission’s Sentencing Bill. That will consolidate all the sentencing procedural law in England and Wales into a sentencing code, which will provide courts with a point of reference for procedural provisions which govern the sentencing process. The Sentencing Bill does not introduce any new sentencing law, amend the maximum penalties available for criminal offences or increase the scope of minimum sentencing provisions. They are therefore very different pieces of legislation. It is important to understand that, and that this small instrument needs to be laid just before the sentencing code comes in so that we are fair to all offenders in future.
I am sorry that the noble Lord, Lord Thomas of Gresford, is puzzled but I am sure we can help. He says that there is a discrepancy over surcharge levels. A factsheet on surcharge levels is available and we can let him have it; it makes it very clear that, depending on the type of sentence, whether you are a young person, an adult or an organisation, there are different amounts and the courts will use those surcharge levels to determine how much has to be paid by the offender.
On the point of the noble Lord, Lord Ponsonby, I talked about the sentencing Act—not the Sentencing Bill. On the PCCs, the whole issue of what happens to the surcharges is important—I asked the same question. However, the Government feel that it is an important charge on offenders, both individuals and organisations, by the court. It is collected alongside all other criminal impositions by the National Compliance and Enforcement Service, which is part of HMCTS.
The purpose of the victim surcharge is to make sure that offenders hold some responsibility for the cost of helping the victims cope with and recover from the impact of their crimes. The level of surcharge imposed is dependent on the severity of the sentence the offender receives, whether they were under the age of 18 or an adult when the offence was committed and whether they are an individual or an organisation.
The victim surcharge contributes, as I have said, to the victim and witness budget, which is used to fund support services for victims and witnesses of crime. In 2019-20, about a third of the victim and witness budget, which was just over £92 million, came from the victim surcharge.
The noble Lord, Lord Ponsonby, asked about the ability to pay. We estimate that around 65% to 70% of all victim surcharges imposed are collected. However, collection rates vary considerably from year to year. In 2018-19, £46 million of the victim surcharge was imposed on offenders and £34 million was collected. Therefore it differs, but the Government feel that it is important for offenders to understand their responsibility to victims and witnesses. However, this is a small piece of regulation that will also be fair to the offender as we move forward into a different way of working.
With that, I commend this instrument to the Committee.
That completes the business before the Grand Committee this afternoon. I remind Members to sanitise their desks and chairs before leaving the Room. The Committee stands adjourned. Good afternoon.
Committee adjourned at 5.24 pm.