Monday 20 June 2022
Arrangement of Business
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Warm Home Discount (England and Wales) Regulations 2022
Considered in Grand Committee
My Lords, these regulations were laid before the House on 12 May.
For 11 years, the warm home discount scheme has ensured much-needed support to millions of households. Since it began, it has provided more than £3.3 billion in direct assistance to households. Primarily, this support has taken the form of direct rebates off household energy bills.
The Government committed in the 2020 energy White Paper to extend and expand the scheme and to reform it better to target households in fuel poverty. These regulations provide for that expanded and reformed warm home discount scheme in England and Wales. Under the regulations, the scheme is set to last until 2026. The regulations succeed the previous warm home discount regulations in England and Wales. The Government will lay separate regulations for an expanded warm home discount scheme in Scotland, which will be debated separately.
The regulations have six main provisions. First, the expanded annual spending envelope is set in the regulations. For winter 2022-23, the spending envelope is £474 million, rising each year thereafter. Secondly, participating energy suppliers will be obligated to provide rebates directly off the energy bills of fuel-poor households. The value of the rebates for households is set at £150—an increase of £10. This means that around 2.8 million households will receive a rebate every winter. Thirdly, the scheme will continue to provide rebates to pensioners on the lowest incomes—those in receipt of the guarantee credit element of pension credit. This “core group 1” of eligible pensioners, as it is known, has been a key feature of the scheme throughout its existence.
Fourthly, there will no longer be a “broader group” of other low-income and vulnerable households. Under the former scheme, this group was required to apply to their supplier every year for a rebate. Even if eligible, these households were not guaranteed to receive a rebate, and the criteria varied by supplier. The Government are therefore creating a “core group 2” of households on the lowest incomes and with the highest energy costs. Eligible households will be those in receipt of one of the qualifying means-tested benefits or tax credits and meeting a high energy cost threshold. These households will be identified through data matching using benefits data, property characteristics data and energy supplier customer data. The Government intend to publish a statement setting out the exact details of the eligibility, including the high-cost threshold.
Fifthly, these regulations make it mandatory for suppliers to contribute to Industry Initiatives. Industry Initiatives allow suppliers to fund other financial and energy-related measures such as financial assistance payments, debt write-off, benefit entitlement checks, energy advice and energy efficiency measures. Industry Initiatives will be set at £40 million for this winter and rise each year thereafter. The regulations also set minimum obligations and caps regarding financial assistance. This recognises the value that they provide, while ensuring that other high-value Industry Initiatives measures still receive funding.
In addition, the Government are maintaining aggregate and household-level caps on debt write-off to avoid this measure being misused to reduce bad debt. The last Industry Initiatives restriction is to limit the number of mains gas-powered boilers and central heating systems that can be installed. These will still be permitted to support particularly vulnerable customers during emergencies but will be restricted to align with the heat and buildings strategy.
Sixthly, and finally, the regulations set the thresholds for suppliers participating in the scheme. The Government are lowering the thresholds so that more suppliers participate, and to reduce the barriers to customers switching suppliers. In 2022-23, the threshold will be set at 50,000 domestic customer accounts; from 2023-24, it will be set at 1,000 accounts. This means that 99.9% of the market is covered.
The Government are expanding the scheme to provide rebates to 750,000 more households. Thanks to these reforms, the vast majority of eligible households will receive their rebates automatically, without having to apply. A small minority will be contacted and required to contact a helpline to confirm their details.
The Government’s analysis shows that, by focusing support on households on the lowest incomes, the fuel poverty targeting rate will increase to 47% overall and 560,000 more fuel-poor households will receive a rebate compared with an unreformed scheme.
The Government held a consultation on these reforms last summer and we published our response in April. The consultation responses supported extending and expanding the scheme as well as proposals for reform. The Government are proceeding with the main proposals; however, we decided to make a number of changes in light of the consultation responses. We have added housing benefit to the list of qualifying benefits, and tax credits in the eligibility criteria for core group 2. Energy suppliers will be required to provide estimates of the value and proportion of spending under industry initiatives in relation to households where a person has a disability or a health condition. This will enable the Government to monitor the level of support provided to disabled customers. The Government have removed the proposed mid-year adjustment to the Industry Initiatives budget. This risked creating significant uncertainty and delivery risks. Lastly, the Government are keeping the overall debt write-off cap under Industry Initiatives at £6 million per year.
The warm home discount remains a source of critical support for many low-income households. The regulations extend this scheme, expand the support to more households and focus that support on those most in need. I therefore commend these regulations to the Committee.
My Lords, I congratulate and thank my noble friend for presenting the regulations before us, which I warmly welcome. I set out my interest on the register, as president of National Energy Action, and raise some of its concerns about these regulations—or rather, what is not in the regulations—with my noble friend and ask for his positive response.
First, I point out that the regulations were drafted at a time when the scheme was very successful, prior to the Covid crisis. I will come on to that in a moment. My first concern is that the way of selecting core group 2, to which my noble friend referred, is potentially unfair. While National Energy Action supports the guiding principle that the Government should help the worst first, the proposed methodology creates a significant risk that some households that are currently eligible for support and live on the lowest incomes could miss out on rebates, if they are falsely estimated to have lower energy costs. The new core group 2 methodology also means that you cannot access a rebate without receiving a means-tested benefit. What happens to the 50% of fuel-poor households that do not currently receive such a benefit? Have the Government considered what will happen in those circumstances?
If a household is not selected as part of core group 2 but should have been, it seems very difficult to contest the decision. The customer journey is not particularly user-friendly. How does my noble friend expect to resolve issues arising from that circumstance? National Energy Action is not convinced that the funding available through Industry Initiatives is sufficient to meet the expected demand. The way that funding has been allocated for Industry Initiatives means there is significant uncertainty about the total available pot each year. The first year of the scheme could see a reduction in funding compared to 2021-22, which does not seem sensible given the energy crisis and is surely not what the Government envisage happening.
The department has still not made amendments to the scheme to ensure that, if and when there is a supplier failure, the supplier of last resort takes on the full obligation of the failed supplier. This means that there is a risk that some obligation can be lost through the process, so that the overall number of rebates is reduced and projects that have been committed to go through industry initiatives actually go unfunded. Then, there is the significant issue that I raised earlier: the scheme was designed for good times and against that background; it was not put together with an energy crisis in mind. Although it is too late to go back to the drawing board now on the warm home discount, could not the Government look at what additional protections are necessary? Given that the Treasury has agreed one-off payments this winter, and that the crisis will outlast that support, something extra might be necessary against that background.
National Energy Action would therefore like to propose a number of things that it believes the Government could do to overcome this. One is to investigate deeper price protection or a new social tariff, which I have raised with my noble friend before. This would make energy more affordable for a discrete and well-defined set of low-income energy customers. Such a tariff must be additional to existing schemes, mandatory for all suppliers, targeted at those most in need, reduce the costs of eligible households and use auto-enrolment. It might need primary or secondary legislation so that it could sit alongside the price cap.
Secondly, will the Government consider accelerating the repayment of utility debts across the UK? This would provide financial support for households that have a debt repayment plan with their energy supplier, with government matching every pound paid by the customer with £1 of Treasury funding. This would help every indebted household, but it would cost £500 million per year.
A further proposal is accelerating the improvement of energy efficiency through three possible methods, the first of which is prioritising parliamentary time for the passage of ECO4 legislation. The second is committing the remainder of the funding promised in the Conservative Party manifesto for upgrading fuel-poor homes. Apparently, the Government have committed only £1.1 billion of the promised £2.5 billion for the home upgrade grant scheme. Committing the remainder would help more than 100,000 households to save more than £750 a year on their energy bills. The third method is setting regulatory minimum energy efficiency standards for rented properties. This would help those in the private rented sector, which has some of the leakiest housing in the UK. Despite winter temperatures being as low as they are, we probably have some of the most poorly insulated housing in the whole of northern Europe.
Finally, I would like to raise the issue of the role of the regulator, which has probably not costed in, in general, the failures of existing energy companies over this past year. Will the department consider a number of measures, such as reducing the standing charge for pre-payment users by recovering SOLR costs on a volumetric basis, and better identifying and acting on the financial vulnerability of energy consumers? Will they ensure that the costs of failed suppliers are spread over a longer period, to reduce the immediate burden on consumers? Will they reduce the wider burden of energy debt on consumers by enforcing licence obligations? Finally, will they work to ensure that all prepayment users can receive a smart meter as a priority, and perhaps have a more general debate on what the role of the regulator in this market should be?
With those specific comments, which I hope my noble friend will look on favourably, I give a warm welcome to the regulations before us.
My Lords, I am delighted to follow the powerful commentary of the noble Baroness, Lady McIntosh of Pickering. I declare my interest as president of the Sustainable Energy Association, and I take this opportunity to thank the Minister for a very engaging and encouraging speech at our annual reception last month.
While welcoming the new measures, I am asked to raise the position of the more than 500,000 private renters whose landlords manage their bills. When it comes to accessing the £150 the warm home discount affords, these 585,000 people may be barred from applying as they do not pay their energy supplier directly as the WHD stipulates. There is no legal requirement for landlords to pass on the energy grant to their tenants, and there seems to be a lack of guidance on how the process should be managed by landlords. By extension, this would be the case for the £400 energy grant which the Government will be offering this October. This can be a particular problem for those living in park homes, where the site owner pays for the energy supply and passes on costs to the residents. I believe Sir Peter Bottomley MP has been in touch with the Minister on this subject. Can the Minister share plans for ensuring that the warm home discount directly supports those who are in need of its help but who do not pay their suppliers directly? Will the Government be providing any guidance to enable fair management of the moneys by the landlords involved?
My Lords, it is a great pleasure to follow both the noble Baroness and the noble Lord, who asked excellent questions, particular the question about park homes. There are some 85,000 residents in park homes in this country, and they do not always have the sort of landlords we would like them to have. They are a big issue generally.
Although I welcome this secondary legislation in principle, it is worth noting that this is a reflection of a policy failure over decades, in that we have such a requirement to help people with energy bills because our housing stock is nowhere near the standard it should be. All this, including the £15 billion being spent by the Treasury on the cost of living, specifically around energy issues, is about standing still rather than investing in the future. I know the Minister will say that the Government are investing, but it is a trickle in comparison to what we need. Past Governments have been equally bad at resolving that. This is a symptom of a policy failure over decades in this country.
I shall ask a couple of technical questions on this and will then come on to one or two other things. The figure that rather shocked me—it may be because I misunderstand it—is in paragraph 7.2 on page 3 of the Explanatory Memorandum:
“The Impact Assessment models an improvement to the fuel poverty targeting rate of the scheme from 39% to 47%.”
Does that mean we have moved getting it wrong to 61% from to 53%? I would like to understand that. I remember going through these statutory instruments for Governments, and I understand the problem of trying to target these things correctly and that somehow the statistics or working with data from other departments does not work. But it is worth understanding whether that figure is what I understand it to be and how we improve that for the future because, my goodness, if that is it, we certainly need to improve it.
The next page refers to an algorithm that there were the largest concerns about. We all know the problem with algorithms. They can be great things but, as the Department for Education found out on A-level results, they can be disastrous. I am interested to understand what that issue was and whether it was resolved or was altered in the final prospectus.
Like the noble Lord, Lord Best, what I do not understand—the Minister will forgive me if I have missed it—is how private renters get their money back from prepaid meters. It seems straightforward when the core group are just paid the electricity on their bills. What happens in terms of prepayment meters?
I want to ask about one more thing before a more general point. This is for England and Wales; it talks about Scotland coming on later on but Northern Ireland is not mentioned. Northern Ireland has a much higher rate of fuel poverty than England and Wales—18% historically, though I am sure it will be a lot larger by the end of this year. We do not have a functioning Executive or Assembly in Belfast. Can the Minister say whether the Government will have to legislate directly regarding schemes over there or are schemes that have already been agreed carrying on? Clearly, fuel poverty is a big issue in Northern Ireland.
Lastly, I have a more general question for the Minister. We had an announcement today—it came through on the news—that, rightly, the Government wanted to protect the additional money paid by consumers to retail energy companies that tended to get washed out when they went bankrupt. The answer seemed to be—I know that news reporting is not necessarily accurate—to ensure that the balance sheets of these companies were better in order to solve it. If a company goes into administration, it goes into administration; the balance sheet is washed out automatically in that case. Why cannot we put that money into an escrow account or find some way in which that can be isolated from the company and remains the consumers’ money in trust? I do not understand why that is not a way forward. If the Minister could give me some clue on that, I would be very grateful.
My Lords, I thank the Minister for bringing these proposals, which are an improvement on the previous scheme. I also thank noble Lords for their contributions, in particular the noble Baroness, Lady McIntosh, who represented the NEA’s concerns about the core group 2 and how some of them will miss out, on the way that the scheme is set up, on the funding sufficiency—or insufficiency—and on the prepayment customer concerns, which the noble Lord, Lord Teverson, also raised. The noble Lord, Lord Best, is an expert on the private rented sector. We share his concerns about that; I will come on to that in what I have to say. The overall theme of the noble Lord, Lord Teverson, is that it represents a failure in public policy that we have to have this scheme in any place, but here we are: we have to have it and this is, as I have said, an improvement.
The Government have said that they intend to bring forward a new set of reconciliation regulations “later this year”, which is better than “when Parliament has time” or “in due course”, but can the Minister be a little more precise about when “later this year” means?
On the criteria and the algorithm used to estimate energy costs, how satisfied is the Minister that the algorithms used will not lead to an education-type embarrassment for the Government and, therefore, a failure in terms of there being lots of customers who potentially would benefit from this scheme but may then miss out? Have the Government included all eligible households, including persons with a disability, in their revised six criteria for the new scheme?
The scheme has an impact on energy suppliers, the authority and the Government. The energy suppliers are likely to recover their costs from their customers, which is estimated to be £19—a £5 increase on the former scheme. The authority and the Government are likely to incur costs of approximately £22 million for their work in issuing notices and identifying customers eligible for core group rebates. The Secretary of State will conduct a review or partial review of the scheme, and the authority will review participation of suppliers in the scheme and publish an annual report. This is welcome.
However, Labour would introduce legislation to uplift the warm home discount for 9 million working families and pensioners during the present inflationary crisis. As the noble Lord, Lord Teverson, and the noble Baroness, Lady McIntosh, pointed out, this is an extraordinary time for energy costs. I am not saying that it could have been predicted but Ukraine is upon us and, therefore, more may well need to be done in the lifecycle of this scheme.
Core group 2, which has replaced the broader group, will not now have to apply for inclusion in the scheme, which is welcome. However, there will be households beyond that group who remain in fuel poverty, such as those in rented accommodation. They may be on low incomes and with disputed levels of energy use, particularly when they have no access to what proportion of the payment they make to their landlords is for energy supply. They may not be receiving benefits, which would usually give them automatic inclusion. It may be impossible for them to contest their exclusion. The Minister’s observations on this would be very welcome.
If an energy company goes into administration or disappears entirely, will the supplier of last resort take on the full obligation of the failed supplier or are there now no small-enough energy suppliers left—that is, those with 50,000 customers—that can go bust? Have they all gone bust already? The recovery of the scheme from customers will mean that, in some cases, energy companies will be recovering money from those who have received the warm home discount, thus giving with the one hand and taking away with the other. Would Minister like to comment on that?
The overall scheme is likely to add to the rise in the socialisation of the expenses of suppliers of last resort, resulting in a probable £100 contribution to the increased price cap. Have the Government considered whether the scheme should be covered by Exchequer funding or by a wider group of people contributing, not just individual customer payers?
In welcoming the progress the Government have made with these changes to the scheme, there are a number of observations on which I would welcome the Minister’s response.
I thank all noble Lords who have contributed to this debate. The context is that, this year, as we all know, we have witnessed an extraordinary increase in the cost of energy. The Government recognise that millions of households across the UK may need further support with the cost of living, in particular energy bills. That is why the Government have so far announced additional support this year worth more than £37 billion, including targeted support for many of those in the groupings we are talking about today—those on the lowest incomes.
All domestic electricity customers in Great Britain will receive £400 off their bills from October through the energy bills support scheme. Meanwhile, more than 8 million households across the UK in receipt of means-tested benefits will also receive £650 as a cost of living payment. Further payments will be made to pensioners and disabled people. The Government remain committed to helping low-income and vulnerable households heat their homes over the coming winter. Although energy efficiency measures provide long-term assistance in reducing energy bills, as the noble Lord, Lord Teverson, reminded us, there is a clear need for direct financial support now. In this context, the warm home discount remains a key part of our overall approach to tackling fuel poverty.
This is the largest expansion of the scheme since it began. In 2021-22, the energy envelope was worth £354 million across Great Britain; in 2022-23, it is rising to £523 million. This scheme will ensure that 2.8 million households in England and Wales receive a rebate off their energy bills each winter right through to 2026. That means that around a third more households than previously will receive a rebate each year. In addition, most will receive their rebates automatically. This means that households will have much more certainty about receiving the payments when they need them most. A large part of my postbag has been people writing to their MPs and then on to me if they have not been selected as part of the core group 2 element; people do not understand how the scheme works.
The Government have recognised the need for certainty about the support to households in Scotland. We recently consulted on an extension and expansion of a separate warm home discount scheme in Scotland. That was as a result of the Scottish Government not being able to make their minds up about whether they wanted to be part of this scheme, not because of any delays on our part. The Government will publish the response shortly and lay the regulations for the scheme in Scotland as soon as possible.
These are also the most ambitious reforms better to target households in fuel poverty. The reforms enable the Government and energy suppliers to focus the support on those most in need and provide that support automatically to households in England and Wales.
I turn to the points made by noble Lords. First, in response to my noble friend Lady McIntosh, we will have a comprehensive challenge process. People who believe that they should be eligible will be able to check online and challenge any decision not to include them via the call centre.
On the point about targeting made by the noble Lord, Lord Teverson, 69% of fuel-poor households are in receipt of means-tested benefits. These reforms use the best data available to improve the fuel poverty targeting rate and will ensure that most households can receive their rebates automatically without having to apply. As I said earlier, these changes will be introduced alongside the £37 billion that the Government have announced to help with energy bills and the cost of living this year.
A number of noble Lords mentioned failing suppliers and the SoLR process. All suppliers of last resort have so far honoured the warm home discount rebates. The reforms we are making will, in fact, make it easier for them to do so in future. As I said, we are expanding the eligibility criteria.
In response to my noble friend Lady McIntosh’s point about social tariffs, the warm home discount replaced social tariffs in 2011, as it was considered a more transparent and consistent way of supporting households.
In response to the points made by the noble Lord, Lord Best, first, I thank him for hosting me at his event a couple of weeks ago. Where a tenant is named on the electricity bill or account of a particular participating supplier, they may be eligible to receive the warm home discount. This rule was adopted as the named billpayer is responsible for any payment issued on the electricity account and it ensures that we are able to verify customers’ eligibility and therefore reduce the risk of fraudulent claims. In the case that the noble Lord mentioned, where a landlord is supplied with the electricity, we encourage tenants to speak to their landlords and see whether they can also be listed on the electricity bill or account, which would enable them to receive the discount.
In the case of park homes, residents will be able to apply for a rebate under a special scheme called the park homes warm home discount scheme, which has been set up specifically for permanent residents living in a park home. Separately, many of our energy efficiency schemes around insulating properties apply specifically to park home residents. The special park homes scheme is funded by energy supplier contributions as part of the industry initiatives spending.
In response to some of the points made by the noble Lord, Lord Teverson, I am afraid that it is the case that, without perfect data, it simply is not possible to target fuel poverty 100%; I only wish it were. For that, we would effectively need household income data for all households, as well as data about the energy efficiency of every household. I am sure that many of my officials in BEIS wish that we had that data—it would make a lot of our schemes a lot easier—but, of course, we do not have it at the moment. This is an important first step, and we will always look to improve the targeting rate in future.
The universal credit rollout will allow some improvements, as will more comprehensive coverage of energy performance certificates—EPCs—which are also gradually being rolled out. Nevertheless, all the people benefiting from the scheme will be low-income households, even if they are not necessarily in fuel poverty, although, clearly, many of them will be.
On the point about Northern Ireland, the primary legislation for the warm home discount does not cover it. It is part of a different, all-Ireland energy market, so it would be very difficult for the scheme to be directly replicated.
On the point about prepay customers on smart meters, they can be credited directly. Those who are still on analogue meters are usually paid in vouchers, which enable them to access credit to top up their meters.
Moving to the points made by the noble Lord, Lord Lennie, we will lay the reconciliation regulations in the autumn—I am sure the noble Lord awaits them—ahead of the first reconciliation exercises conducted towards the end of the year.
With regard to the famous algorithm, the Government will apply a model that estimates households’ energy costs using property characteristic data. These characteristics are property type, property age and property floor area. They allow us to estimate energy costs accurately while, as far as possible, attempting to keep the process simple and transparent. This enables us to ensure that low-income households with the highest energy costs receive a rebate and that the vast majority of households receive those rebates automatically. The Government have been working with external experts to review and improve the algorithm and other statistical processes that we use in this system.
In reply to a related point from the noble Lord, Lord Teverson, we should accept that the scheme’s targeting will never be perfect, but it will be much improved. As additional data become available, we will attempt to improve it further in the future.
That is a very useful explanation, but will the department look at how accurate it was in retrospect? Will it take a sample of properties and see whether the scheme reflected how things were on the ground to check the effectiveness of the algorithm?
Yes, of course we will conduct a process of constant improvement. As more data become available, as universal credit is rolled out, and as EPCs are increasingly rolled out and more properties have one, it will make targeting easier. We will modify the scheme as we go forward, using new and improved targeting data.
I thank noble Lords for the useful points they made. I am pleased that virtually everyone who spoke was in broad agreement that the scheme should continue at this time because it has been very successful at providing householders on the lowest incomes with critical support.
Before my noble friend takes his seat, there seems to be a discrepancy in the figures. My noble friend said that 69% of the fuel poor are in receipt of means testing, which means that 31% are not. The NEA said 50%. I would be interested to know, however many there are, how those who are not in receipt of the means-tested benefit under core group 2 will qualify. Is it the Government’s intention to commit all the funds that were highlighted in our manifesto at the last election?
My noble friend has asked me a number of difficult questions. Yes, we want to ensure that as much of the funding as possible is committed to this scheme, perhaps all of it will be. I am not sure what my noble friend is referring to by the funds we promised in our manifesto. Is she referring to energy efficiency? In that case, the majority have already been allocated.
On the targeting of those in fuel poverty, I default to the information that I have been given as opposed to the NEA figures, but if there is a mistake in those numbers, I will write to my noble friend.
National Health Service (Integrated Care Boards: Exceptions to Core Responsibility) Regulations 2022
Considered in Grand Committee
My Lords, this statutory instrument seeks to ensure operational continuity as the changes under the Health and Care Act 2022 are implemented. It relates specifically to the transfer of functions from clinical commissioning groups, or CCGs, which were abolished by the 2022 Act, to newly established statutory integrated care boards, or ICBs.
Under the National Health Service Act 2006, amended by the 2022 Act, NHS England must set rules so that integrated care boards have “core responsibility” for every person who is provided with NHS primary medical services through registration with a GP practice in their area of England and every person usually resident in their area who is not registered with a GP practice. This means that, where a person is seeing a GP in an area, the relevant integrated care board is responsible for commissioning secondary health services that that person may need. This instrument provides an exception to this obligation for individuals who are usually resident in Scotland, Wales or Northern Ireland but are registered with a provider of NHS primary medical services in England.
This SI does not prevent those who are resident in Scotland, Wales and Northern Ireland accessing healthcare services in England. Instead, it simply makes clear where the commissioning responsibility sits for these patients. It promotes autonomy for devolved Governments to commission secondary care services for their residents, while still allowing these patients to continue to access secondary healthcare services in England. It is about which authority commissions and pays for a patient’s care, not the patient’s right to access care. This instrument is vital to ensure consistency and clarity between authorities in England and those in Scotland, Wales or Northern Ireland regarding who commissions and pays for a patient’s secondary care.
This statutory instrument allows for the continuation of the approach to devolved health policy introduced by the disapplication regulations 2013, which are being revoked as a consequence of the Health and Care Act 2022. Just to be clear, this instrument does not change existing cross-border commissioning arrangements; it simply transfers existing commissioning exceptions from CCGs to the new ICBs. We hope that these regulations will ensure operational continuity of services for patients as the English health system implements ICBs and are supported by the devolved Administrations, providing clarity on the role of integrated care boards within the existing cross-border arrangements.
I commend these regulations to the Committee.
I thank the Minister for his clear explanation. One can see from the number of noble Lords who wish to take part in this debate that this is not very controversial.
The instrument appears to tidy up the problems of people in different countries in the UK who may need to use NHS services in a neighbouring country and of who purchases those services. However, despite Ministers telling Parliament repeatedly that noble Lords could not vote on certain amendments because they had pre-agreed the legislation in the then Health and Care Bill 2022 with the Scottish Parliament, the Welsh Senedd and the Northern Ireland Assembly, it now appears that they had not made arrangements to continue the status quo—the very basic—of who commissions cross-border issues. These regulations enable that to happen. It would have been easier if such amendments had been allowed when the Bill was going through, rather than Ministers telling noble Lords from across the parties that such amendments around cross-border issues could not be voted on.
Many in the House along cross-party lines complained that, as the Health and Care Bill was progressing through the House, Ministers were taking considerable powers on themselves to create regulations. The Bill was enacted only two months ago yet we are already seeing their errors in the legislation being tidied up by this statutory instrument. How many more are still to come to ensure that all tidying-up arrangements are in place by 1 July? Would it not have been better for hard-working civil servants, both in the department and in Parliament, for the Bill not to have been brought out when there was still considerable focus on Covid and the omicron outbreak? Errors such as this are basic and waste civil servants’ and Parliament’s time.
A slower timescale for the Bill, including pre-legislative scrutiny, would have given everyone time to consider it in more detail and make appropriate amendments. I am sure that the Minister will argue that the Bill was needed urgently because the reforms needed to be put in place, but NHS England and the Government decided this timescale via centralised diktats to NHS regions and providers. This lack of basic cross-border provision in the Bill is a sign of either incompetence or not having enough time to get basic issues correct. As I said, the Secretary of State is already talking about further legislation to sort out social care delivery, which again shows that the Government, by rushing things through, did not get the basics right.
While we are discussing cross-border issues for the NHS, clearly IT and data systems are sometimes not interoperable. An example of this are pharmacy systems between Wales and England. Will the new £360-million contract for the proposed federated data platform, or FDP—a new data tool to connect and integrate patient and other data sources from across health systems—deal with this type of problem?
One of the favoured providers for this contract, Palantir Technologies, is trying to give itself greater chances of getting the contract by hiring two former senior NHS officials in recent months: Indra Joshi, the NHS’s former head of artificial intelligence, and Harjeet Dhaliwal, a former deputy to Ming Tang, NHS England’s data chief, who is responsible for the FDP contract and for Palantir Technology’s previous contracts with the NHS. Indra Joshi was present at a number of meetings on NHS data, as the health Bill was going through, with the Minister and other noble Lords such as my noble friend Lord Clement-Jones, the noble Lord, Lord Hunt, and the noble Baroness, Lady Brinton.
Does the Minister agree that, for the individuals in these two senior NHS roles, who were directly associated with the FDP contract and NHS data use, to be poached and then immediately work for Palantir Technologies raises serious ethical issues that will give Palantir an unfair commercial advantage, and raises issues about senior NHS staff working for commercial companies immediately after leaving the NHS—more or less allowing a revolving door to a career with these companies and creating issues with the letting and award of multi-million-pound contracts?
My Lords, I start by thanking the Minister for his extremely helpful introduction to these regulations. It is a pleasure to follow the noble Lord, Lord Scriven; I want to pick up some of the points he made. Let me say at the outset that we on these Benches support the regulations, which we accept are consequential and will not change services for people.
The words that have been used are that this is a “tidying-up exercise”. I want to dwell for a moment on the general point that there has been considerable time for this. The Health and Care Bill was introduced in July 2021 and we all know how long it spent in Committee, both in this House and in the other place. We also know how extensive the consideration of it was so it seems strange for us to find ourselves back discussing what are described as “consequentials”. This may be a simple tidying-up exercise—I accept that is what these regulations are—but calling it that ignores how we could have avoided the need to tidy up and, therefore, the amount of bureaucracy, time and effort that has been spent, not least in the department, in having to make these changes. Perhaps the Minister could address the general point that has been made in the course of this debate about why we find ourselves in this situation.
In the debate in the other place, the Minister talked about five more consequential statutory instruments that we should expect as part of this so-called tidying-up exercise. Perhaps the Minister can advise us on those. It is important that everybody, including system managers, knows what is coming down the track. I say that particularly given the record waiting lists and waiting times that the NHS is seeking to manage, yet we are talking about regulations that must be in place for 1 July so that everyone has certainty about what needs to be put in place and to be done. I accept the Minister’s assurance that this does not affect services to patients in a practical sense, but whenever we discuss regulations there is always an air of uncertainty around. Patients need to be assured that they will have a seamless service wherever they live or wherever they are. Therefore, knowing that we will be considering similar consequentials raises questions about certainty.
We hope that the regulations go through and that the Minister will respond to the points of concern that have been raised today. I hope that the regulations will ensure that the NHS can get on with the job that it is here to do.
My Lords, I thank both noble Lords who have spoken in this debate. The noble Lord, Lord Scriven, said this statutory instrument is not controversial, as reflected in the attendance at the debate, but when I saw that the noble Lord, Lord Scriven, was present I thought, “What’s controversial? I’d better look into it.” The noble Lord did not disappoint in that way. He quite rightly holds the Government to account.
Before I conclude I shall try to address some of the points that were made. The department has laid eight instruments so far to support the ICBs for 1 July. They ensure the continuation of the existing policy and provide the supporting legislative framework. The Health and Care Act 2022 (Commencement No. 1) Regulations 2022 were made on 6 May to commence a small number of preparatory sections from 9 May to enable preparatory steps to take place for the establishment of ICBs on 1 July. There are six negative resolution statutory instruments and one affirmative instrument—this regulation. The Health and Care Act 2022 (Commencement No. 2) Regulations 2022 are planned to be made by 30 June. This SI will commence major elements of the Health and Care Act on 1 July, including, but not limited to, ICBs, ICPs—integrated care partnerships—and the merger of NHS England Improvement, TDA and Monitor. We will be laying a further consequential statutory instrument which will amend redundant references to previously existing bodies and update legislation to support the implementation of ICBs.
On the point that the noble Lord, Lord Scriven, made about the federated data platform, I assure him that I have been in conversation with NHS England, particularly the transformation directorate, and it has been quite clear with me that it is an open tender. There is no preferred bidder. It has seen all the speculation in recent press articles and I have asked it directly about it. I will be quite clear: this is a very difficult for me to walk because as a Minister I do not want to interfere too much in those technical solutions and favour one or the other, but at the same time I have to warn about the politics around this. When I was speaking to the officials, they were very clear about that. We have to be clear about this. Whatever you chose, there will be some story out in the press, so we must make sure it is as open as possible.
I hope that the Minister takes it in the spirit in which I asked the question, but this is an example of senior officials in the department—not for the first time—being involved with a commercial company and there being a revolving door going into that commercial company when specific multi-million-pound contracts are made. Do the Government feel comfortable that that is correct or do they feel that rules such as those for the Civil Service—where there are rules about revolving doors and taking this up—should also apply to NHS England employees? If not, does the Minister think that it should be looked at and that such rules should apply as they do for the Civil Service?
I thank the noble Lord for that clarification. My initial reaction was that I wanted to take this back to the NHS and ask. If the noble Lord will allow me, I will make that point directly, as the noble Lord made it so eloquently, to the NHS officials. Of course, as he rightly says, it is not just about the reality; we also have to address perception. We know that in a number of areas, for politicians but also officials, people are very concerned about revolving doors for those who have recently left and potential conflicts of interest. If the noble Lord will allow me, I will talk to NHS officials about this and get back to him.
On the particular issues, there will be more SIs. I am advised, but I will clarify it once again, that these regulations are made under the powers of the 2022 Act; it was previously done by regulation, and this will replace previous secondary legislation on disapplication from 2013. However, I take the point about whether this could have been done in the Health and Care Act. I will get a clear answer for noble Lords from my officials, if that is acceptable.
To conclude, I reassure the Committee that this instrument will not change how residents from devolved nations can access healthcare services in England. It is right that patients from Scotland, Wales and Northern Ireland continue to access secondary healthcare services in England as they do now, in a seamless way. Nor will there be any adverse financial consequences for devolved Governments or newly established ICBs, relative to the previous CCGs, in developing these regulations. This will continue the existing arrangements, which have been in place for several years and have the support of the devolved Administrations.
Given the outstanding questions, I hope that noble Lords will accept that I will write to everyone who took part in the debate—that should not be too difficult. I commend these regulations to the Committee.
Animal Welfare (Miscellaneous Amendments) Regulations 2022
Considered in Grand Committee
My Lords, this instrument makes several minor, technical amendments to retained EU regulations, correcting deficiencies so that the legislation operates effectively. These regulations relate to the protection and welfare of animals during transport and to official controls on the imports of animals, animal products, plants and plant products, including food and other imports relevant to the agri-food chain.
In Great Britain, the Animal and Plant Health Agency issues authorisations to commercial transporters of animals which can show that they meet the regulatory requirements, such as having appropriately trained and competent staff. For long journeys, the Animal and Plant Health Agency also approves journey plans, known as journey logs, prior to the journey beginning. Approval of a journey log depends on the transporter demonstrating that it can meet the welfare needs of the animals being transported, through providing appropriate rest, food and water. The requirement for an APHA-approved journey log extends to EU transporters that wish to import animals to Great Britain.
This instrument clarifies the role and powers of the competent authority to grant or refuse requests for journey logs and transporter authorisations needed for the transport of live animals into, out of and through Great Britain. This will allow for better enforcement, as the role and powers of that authority would otherwise be unclear in some circumstances, resulting in possible confusion on the ground.
It also clarifies a power of the competent authority to recover the costs of enforcement action where appropriate; that is, it provides the competent authority with the discretion to decide whether to recover costs. The powers of the competent authority are not affected, and the change is intended to make it clear that cost recovery is an option for the regulator. The power to recover costs, without an obligation to do so, enables the authority to take into account circumstances and make decisions regarding cost recovery on a case-by-case basis.
This instrument removes defunct references to various EU systems and organisations—contact points, mutual assistance schemes and an oversight committee. It also removes the legal requirement to report annually to the European Commission on long journeys and animal welfare inspections. Multiple references to “EU member states” are replaced with “Great Britain”. An outdated requirement to provide rules on penalties for infringements of animal welfare in transport regulations by 5 July 2006 is removed, as those rules were laid by that date and are currently in force. Finally, outdated references to other regulations, relating to training for competent authority staff, other veterinary legislation and animal welfare inspections for animals destined for slaughter, are corrected, ensuring that the regulators’ ability to enforce welfare standards is maintained.
The amendments contained in this instrument are necessary to ensure that, in line with current government policy, we can enforce our high animal welfare standards and protect the UK’s biosecurity. I beg to move.
My Lords, I thank the Minister very much for that introduction. We agree that these changes are broadly technical in nature but, once again, we have an SI before us which, in its own words, corrects failures and deficiencies in retained EU law which should and could have been spotted earlier. First, can the Minister say how these errors came to light and why they were not identified earlier? Has there been any detriment to animal welfare controls since the adoption of the withdrawal Act in 2018, as a result of this incorrect wording?
Secondly, the Minister explained the rationale for changing mandatory cost recovery to discretionary cost recovery. On the face of it, this seems sensible, but can he say something more about the types of cases where it would not be in the public interest to pursue cost recovery? Is there a danger that, if we now switch to what he described as a “case-by-case basis”, it could lead to a broader fall in enforcement action, with many authorities making a financial calculation that the cost is just not worth the effort, particularly if it is a marginal benefit? Could there be an overall drop in enforcement as a result?
Finally, paragraph 7.5 of the Explanatory Memorandum says that the outdated references have been updated to refer to current legislation, and the Minister gave some examples of that. Are the current standards now in place equivalent to or better than the old ones that were there before? As this is quite a complex area of regulation, will it potentially be revisited as part of Jacob Rees-Mogg’s bonfire of EU regulations? If so, what will the process be and when will we hear more about how he intends to conduct that review? I look forward to the Minister’s response.
I am very grateful to the noble Baroness for her questions and her understanding of the need for this. She rightly identified a number of areas that need clarification. I absolutely reiterate that these regulations do not reduce any current animal welfare standards. As the noble Baroness pointed out, they make technical but necessary changes to ensure that existing legislation on animal welfare during transport can continue to operate effectively in practice.
In answer to the noble Baroness’s first question, no detrimental effect nor operational issues have arisen since our EU exit but this legislation enables operational delivery. However, there is a need, met by this SI, to ensure that the role of the competent authority is clarified to avoid any points of confusion. There is also a need to ensure that the definition of the competent authority is consistent with that set out in the retained form of the official controls regulations. The other corrective measures in the SI, such as the removal of any obligations to report to the EU Commission and references to defunct legislation, are tidying-up requirements and so have not created any impact.
Leaving the EU was never going to be an easy job. The legislation that took us through the retained EU competence process left a number of anomalies, for which there is a time limit for us to sort out. This is one of them and is relatively minor. It could have been done earlier but is being done now. I hope that the noble Baroness understands.
The noble Baroness talked about the importance of recovery of costs. By providing discretion for costs recovery, we are allowing for situations where such actions would be impractical, uneconomic and not otherwise in the public interest. It is our view that this measure would enable money-saving decisions to be taken by the regulator or at least to ensure that the costs are net zero. We are not amending the powers available to the competent authority; this change is intended to make it clear that recovering costs is discretionary for the regulator. Currently, the competent authority is required to attempt to recover the costs of any and all enforcement actions undertaken. This relates to expenses incurred and there will be a de minimis where the activities exceed the monies recovered. We want to make sure that we are protecting businesses, not imposing costs on them. Giving that discretion to authorities is important.
The noble Baroness asked about making sure that the competent authority has the skills. Any references to other regulations related to training for competent authority staff, other veterinary legislation and animal welfare inspections for animals destined for slaughter have been deleted. They have been replaced by references to current legislation, which maintain the standards already in place. The training requirements for competent authority and veterinary staff are now set out in the retained versions of the official controls regulations. I hope that this gives the noble Baroness comfort that the new standards are at least equivalent, if not better.
On her point about the Government’s deregulatory drive, this is a key area in which we want to retain high standards. We want this country to continue to have the highest animal welfare and environmental standards, which is why it is important that we take this forward. I do not see that changing in this Government and I think that there is cross-party support for Britain remaining a beacon for animal welfare standards, constantly raising the bar and improving what we are trying to achieve. The Government’s animal health and welfare pathway is an example of that and has been broadly welcomed by the farming industry. It is just part of this picture.
We are proud of our world-leading standards on animal welfare. As I have outlined, these amendments will ensure that existing regimes for animal welfare during transport continue to operate effectively.
Committee adjourned at 4.54 pm.