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Grand Committee

Volume 830: debated on Tuesday 16 May 2023

Grand Committee

Tuesday 16 May 2023

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.

Non-Domestic Alternative Fuel Payment Application Scheme Pass-through Requirement Regulations 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Non-Domestic Alternative Fuel Payment Application Scheme Pass-through Requirement Regulations 2023.

Relevant documents: 37th Report from the Secondary Legislation Scrutiny Committee and 36th Report from the Joint Committee on Statutory Instruments (special attention drawn to the instrument)

My Lords, this instrument was laid on 17 April 2023 and debated yesterday in the other place. Its purpose is to ensure that the financial benefits from applications to the non-domestic alternative fuel payment scheme are passed through to end consumers. I thank the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee for their consideration of and comments on the regulations.

In response to the unprecedented rise in energy prices resulting from the Ukraine war, we have delivered critical support to households, businesses and other non-domestic consumers. Moving at considerable pace, the Government brought forward emergency legislation on energy support last year, paving the way for financial support to be delivered rapidly across the entire United Kingdom. The non-domestic alternative fuel payment scheme serves a crucial purpose in ensuring that businesses and organisations which are not on the gas grid and instead rely on alternative fuels for heating are not left behind and receive comparable support to users which are on the gas grid. Businesses, organisations and other non-domestic customers that use alternative fuel are receiving £150. These payments were disbursed through electricity suppliers, in most cases as a credit into the electricity supply accounts registered at qualifying properties. The vast majority of customers entitled to a payment will have already seen this credited to their bills.

We are providing the additional top-up payment to businesses and organisations consuming a very high volume of kerosene heating oil. An application service was opened on 20 March so that eligible non-domestic customers could claim this additional payment. We also provided an application process for businesses and organisations to apply for the basic £150 payment in the limited circumstances where this would not have already been received through electricity suppliers—for example, for alternative fuel users who do not have an electricity supplier and therefore did not receive a payment through this route.

This instrument plays an important role in making sure that support reaches those who need it. We have already brought forward regulations with respect to the main part of the scheme: the £150 payments delivered through electricity suppliers. This instrument complements those earlier regulations and extends that principle of pass-through to payments made in relation to the application process that commenced on 20 March.

I appreciate that some noble Lords are already familiar with the purpose of pass-through requirements, as we have brought forward several similar instruments before, not least the previous instrument in relation to this scheme. For those who may not be so familiar, let me explain what they do.

This instrument makes it mandatory for intermediaries to pass the financial benefit of the scheme on to end- users. It takes the same approach as the previous instrument and those relating to other price support mechanisms such as the energy bills support scheme and the energy bill relief scheme. That is needed because some payments will necessarily be made to intermediaries such as commercial landlords rather than the end-users, who ultimately bear the brunt of inflated energy bills. Where support is provided to an intermediary, we need to make sure that it can be appropriately passed on to the end-user.

Perhaps it would be appropriate to clarify what we mean by “end-user”. In the case of the non-domestic alternative fuel payment, an end-user is an individual, business or organisation which consumes energy or energy products and pays for that consumption indirectly through an intermediary. An example would be a tenant business paying for its energy usage through a service charge or all-inclusive rent.

As with the other energy schemes, this instrument requires support to be passed on in a just and reasonable way. The Secondary Legislation Scrutiny Committee has previously asked about the term “just and reasonable”, so let me clarify what these regulations are working to achieve. The regulations have been drafted in this way to account for the many kinds of relationships between an intermediary and an end-user. If the Government took a narrow definition of “just and reasonable”, there is the risk of inadvertently excluding some intermediaries from the pass-through requirements. This also accommodates scenarios where intermediaries have multiple end-users to pass the support on to. The regulations also make it clear when and how intermediaries should communicate with end-users, regarding the benefit being passed on.

I now turn to enforcement. The approach in this instrument is consistent with other energy schemes. If an intermediary does not pass on the benefit to an end-user who is entitled to it, that end-user will be able to pursue recovery of the benefit debt through civil proceedings. Should a court rule in the end-user’s favour, they would be entitled to the payment plus interest. The interest is set at 2% above the Bank of England’s base rate.

The regulations also require intermediaries to provide information to end-users. For example, intermediaries must inform end-users of the amount of scheme benefit that has been received, the amount that will be passed on and the remedies available to the end-user. I thank the Joint Committee on Statutory Instruments for its comments on the enforcement of this requirement. Again, our approach is consistent with that taken in the earlier pass-through regulations for this scheme and across the other energy schemes.

With respect to that requirement to pass on information, it is important to reiterate that, in our view, there would be insufficient incentive for end-users to make use of an enforcement mechanism given the time and administrative burden involved in doing so. For that reason, the regulations do not provide a specific enforcement mechanism in relation to the obligation on intermediaries to provide information to end-users. Nevertheless, we consider that there remains value in retaining this requirement in the instrument, on the basis that we expect the vast majority of intermediaries to comply. This is aided by the Government’s publication of guidance on the GOV.UK website to ensure that requirements are clear to all parties. The guidance includes template letters to support end-users, such as tenants, that they can use to contact their landlords, should they be concerned about the application of pass-through requirements.

In conclusion, this instrument is vital to ensure that support reaches the people that it is designed to help. It is essential to the effectiveness of the non-domestic alternative fuel payment across the UK. It will ensure that intermediaries pass on the support to those who really need it, and that businesses and organisations paying for energy indirectly as tenants are properly supported at this time of high energy costs. It is with all these important reasons in mind that I commend these regulations to the Committee.

My Lords, I thank my noble friend and the department for bringing this measure forward—it is deeply appreciated among businesses. Do we know what the duration of the support will be in this regard?

I take this opportunity to thank the department for bringing forward the impact assessment as part of this, because we are very quick to criticise departments when they do not include such assessments. On this occasion, however, it is very thorough and greatly appreciated. I have learned a new term—counterfactual. I am not quite sure what it means, but we are told that the option of this support is being considered against a “counterfactual of doing nothing”. I do not know whether this is yet another Americanism that has crept into the English language.

I shall just press my noble friend on one point. He has been quite clear about how the intermediaries are responsible for identifying the end-user, yet on page 4 of the 36th report, printed on 10 May by the Joint Committee on Statutory Instruments, it is clearly stated that the committee wishes to report defective drafting in Regulation 5. This refers to the fact, stated in paragraph 3.2 of the report, that there is

“no mechanism in the Regulations for enforcing these requirements. This reflects an approach adopted in previous instruments dealing with the pass-through of scheme benefits by intermediaries”.

How does my noble friend and the department respond to that charge against them?

That is the only question that I have. I wholeheartedly welcome the regulations before us this afternoon. It is extremely important that the support is given, particularly in areas such as rural areas which are off grid.

I know I said that that was the only comment that I had, but I have one last question. On the £150 going to the smaller users, does that mean that the civil action can be pursued through the small claims court, which obviously would not significantly add to their costs, if they had to bring such a claim to which my noble friend referred? I thank my noble friend and the department for bringing forward the statutory instrument before us today.

I thank the Minister for a very familiar speech. Obviously, in principle, we very much support the statutory instrument. What struck me about it, if I am honest, is that when it arrived in my inbox I thought, “I thought we’d done all this”. If you look at the graph on the impact assessment—like the noble Baroness, Lady McIntosh, I welcome it—the big heist in energy prices was in June last year, so we are a long way through from that, by almost one year. Maybe I have misunderstood something, but it seems to have taken a huge amount of time. I realise that the statutory instrument came into effect in April, but it seems an awfully long time has been taken in managing to get this amount of money. It may not be large, but it is important to non-domestic users.

I would be interested to understand from the Minister how well the pass-through mechanism has worked to date on the other scheme. Have there been complaints and have there been any court procedures for people to claim their 2% on their proportion of the original amount of money? Have there been complaints to the department, or has the Minister found that the scheme has worked fairly well so far, as I would hope?

I would also be interested to understand the number of businesses that the department expects should benefit from this scheme. That may be in the impact assessment— I tried to find it there, but I could not, and my apologies if that is so.

I want to come back to the area of enforcement. The Joint Committee was strong on this and rightly so. Big amounts of money may not be involved here but whoever wrote this statutory instrument, as with the previous one on pass-through, must have had their tongue well in their cheek when they said that people could go through a civil claim and get 2% on the money outstanding, given that, at most, it is a fraction of £150. This is still an invitation for people to say, “What the heck? I’m not going to bother with this bureaucracy and I’m not going to do it”. For a country that takes the rule of law seriously, it is a principle that when one has a statutory obligation, there is a method of enforcement if that is ignored. It may not be used but it should be there.

I therefore should be interested to hear from the Minister on those areas, particularly on how successful the existing pass-through arrangements have been to date.

My Lords, I thank the noble Baroness, Lady McIntosh, and the noble Lord, Lord Teverson, for their repeated comments from previous similar discussions.

This instrument provides for pass-through requirements on intermediaries in respect of non-domestic alternative fuel payments in Great Britain and Northern Ireland. The Energy Prices Act enables energy support schemes to help households and businesses with energy costs for winter 2022 and future periods. As we have heard, this scheme will provide a single £150 payment to non-domestic users of alternative fuels in Great Britain and Northern Ireland. In Great Britain, payments are made to non-domestic premises in an off-grid postcode. In Northern Ireland, payments are enabled to on and off-grid postcodes.

Intermediaries are individuals in receipt of a scheme payment who, under these regulations, should pass on the payment in a “just and reasonable” way to end users. If this is less than the full amount, the intermediaries must justify the reduction to end users. This must be made in writing within 30 days of the scheme’s benefit being provided and payment made as soon as reasonably practicable. That is all well and good so far.

However, as we have asked of previous pass-through schemes, what is the remedy if this plan is not followed? How can an end user challenge the reduction in a payment or a delay in receiving either the full or reduced payment? There is no mechanism to enforce these regulations, as the noble Lord, Lord Teverson, and the noble Baroness, Lady McIntosh, said. Of course, most intermediaries will comply with the requirements built into the scheme but that does not achieve the policy objective that requires all intermediaries to do so.

We do not oppose these regulations but they fall down because no one actually has to do anything about them to ensure full compliance. There is a theoretical remedy through the civil courts, as the noble Lord, Lord Teverson, said, but how does an end user who has not been notified that they are due a payment mount a claim for such a payment to be made? Just because the Government have made corresponding regulations for other comparable schemes does not justify doing so again here. Labour and other opposition parties have previously raised this concern about effective enforcement and the Government have batted it away—and no doubt will do so again here today. But a scheme that relies upon people acting in a just and reasonable way without the means to ensure that they will do so is not a foolproof scheme but a best-endeavours scheme. Its success cannot be measured by less than 100% effectiveness. What does the Minister say on that?

I thank my noble friend Lady McIntosh, and the noble Lords, Lord Teverson and Lord Lennie, for their comments.

This instrument is necessary to ensure the proper delivery of the non-domestic alternative fuel payment scheme by allowing support to reach those who need it. The scheme is already in place and delivering much-needed support to non-domestic consumers across the UK. The scheme supports a wide range of businesses and other non-domestic consumers that are not connected to the gas grid. As I said, it is delivering a payment of £150, thereby helping businesses and organisations that rely on alternative fuels to meet their eligible costs. Most eligible customers should have already received their £150 payment by the end of March as a credit from their electricity suppliers. Where these payments were received by an intermediary, the pass-through regulations that we previously made ensure that they passed it on to the end users in a just and reasonable way. Although a relatively small proportion of businesses and organisations are entitled to a top-up payment, these payments are also important in ensuring that those consumers are not left behind and receive support comparable to those received by consumers on the gas grid and who have benefited from other schemes.

We opened an application service for the top-up payment on 20 March, and we are processing payments as quickly as possible. In addition to the top-up payment, we provided a route for customers to apply for the basic £150 payment in the limited circumstances where it was not possible for them to receive it through an electricity supplier. These regulations ensure that in all these circumstances, where a payment is made following an application, end-users benefit from the requirement that intermediaries pass on that support in a just and reasonable way. It is a case of extending the safeguards already in place for the earlier part of the scheme to payments made following an application.

On the specific points made in the debate, the noble Baroness, Lady McIntosh, asked about the duration of the support and the latest report from the JCSI. We are providing one-off payments to eligible businesses and organisations to ensure comparable support to that received by on-grid customers who have benefited from the energy bill relief scheme, and we are in the process of issuing payments to applicants. In response to the noble Baroness’s point about the JCSI’s comments on enforcement, also raised by the noble Lord, Lord Teverson, our view remains, as the noble Lord, Lord Lennie, correctly predicted, that there is little value in establishing a formal enforcement mechanism. However, we believe that it is important to include a provision on pass-through of information, as most intermediaries will comply with this.

The noble Lord, Lord Teverson, asked how successful the existing pass-through arrangements have been. We are not aware of any significant issues in the delivery of this scheme or the pass-through arrangements. Nevertheless, the scheme remains in progress, and we will continue to keep it under review and respond to any issues as they arise. As the scheme is still in progress, we are not yet in a position to say precisely how many businesses will benefit, but we believe that around 400,000 end-users will receive some level of payment under the scheme. That is a considerable amount of support.

I am grateful to the Minister for that. To clarify, is that the number of businesses that will benefit from this pass-through, as opposed to the scheme altogether?

Is that the payment to intermediaries, who are expected to pass it on, or is it the payment received by end-users?

It would be the end-users, irrespective of whether they received it directly or via an intermediary.

As I said, we have published extensive guidance for both the intermediary and the end-user to ensure that they know their obligations and entitlements. Although we are mindful of the comments that we have received regarding these and previous pass-through regulations, in our view it is important that the non-domestic alternative fuel payment is delivered consistently as one coherent scheme. As these regulations cover only a small part of a much wider scheme that is already in place, it is right that we maintain essentially the same approach followed in the previous regulations for other parts of the scheme. Nevertheless, we will continue to update and publicise the guidance on GOV.UK to ensure that end-users and intermediaries understand their rights and obligations. I therefore commend these regulations to the Committee.

Motion agreed.

Russia (Sanctions) (EU Exit) (Amendment) Regulations 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Russia (Sanctions) (EU Exit) (Amendment) Regulations 2023.

Relevant document: 38th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)

My Lords, the Russia Sanctions EU Exit Amendment Regulations 2023 amend the Russia (Sanctions) (EU Exit) Regulations 2019. The instrument was laid on 20 April 2023 under powers provided by the Sanctions and Anti-Money Laundering Act 2018. It contains measures that we have co-ordinated with our international partners to increase the pressure on Mr Putin for waging an illegal and brutal war against Ukraine. These measures place further constraints on Mr Putin’s war machine and on Russia’s economy, adding further force to the largest and most severe package of economic sanctions that Russia has ever faced.

On Trade 6, this instrument delivers on the commitment made by the UK Government to ban the export of all items that have been used by Russian forces on the battlefield to date. It builds on extensive bans made in previous legislation, widening export prohibitions to include additional aircraft and vehicle parts, radio and other electronic equipment, biotechnology assets and 3D printing machinery. The second tranche of measures contained in this legislation prohibits the import of nearly 150 additional goods which generate export revenues for the Russian economy. It catches products as diverse as cigars, wood, tools and machinery. The third tranche of new restrictions covers the import of iron and steel products, including metal coming from Russia that has been processed in third countries. These additional sanctions underline the UK’s leadership role on Russian trade sanctions and will inflict further economic damage and constrain Mr Putin’s ability to equip and fund this war. These measures were applied from 21 April 2023, with the exception of the prohibition on iron and steel products processed in third countries, which will enter into force on 30 September 2023, on the same date as the EU’s equivalent ban.

Before I conclude my opening remarks, I hope noble Lords will allow me to extend slightly beyond the scope of this debate as I would like to take this opportunity to update your Lordships on the Government’s position on a proposed separate sanctions measure announced by the Government in April 2022, but not introduced through a statutory instrument. After careful consideration, the Government have decided not to proceed with legislation on a cap on funds held by Russian nationals in UK bank accounts. Having made a detailed assessment of this policy option, we have concluded that carefully targeted sanctions against high net worth supporters and beneficiaries of Mr Putin’s regime is a more effective way to achieve our objectives. I assure noble Lords that this follows rigorous scrutiny of the policy by relevant officials across government and, importantly and as we have done with other sanctions, consultation with key industry partners, and it is in line with our objective of ensuring that our sanctions are targeted, practical and effective.

As this latest package demonstrates, we will continue to impose hard-hitting sanctions against the Russian state and its supporters. This package alone adds a further £280 million-worth of exports and around £145 million-worth of imports to our prohibited list. As with all our sanctions, this latest package has been developed in co-ordination with our international partners, a point made by noble Lords in all previous debates, and I assure noble Lords that we will continue to work with them to identify and address any gaps or loopholes that emerge in our sanctions regimes.

To conclude, these latest measures demonstrate our determination to target those who participate in or facilitate Mr Putin’s illegal war of choice. Since Russia’s full-scale invasion, the UK has sanctioned more than 1,500 individuals and entities, including 130 oligarchs and their family members with a global net worth of £145 billion, and we have sanctioned more than £20 billion-worth of trade, 96% of the total UK-Russia goods trade in 2021.

Sanctions continue to work. Russia is increasingly isolated and out of Western markets, services and supply chains. Key sectors of the Russian economy have fallen off a cliff, and its economic outlook is bleak. I assure noble Lords that the UK Government will use sanctions to ratchet up the military and economic pressure on Russia until Mr Putin ends this brutal invasion of Ukraine, and we welcome the clear and continued cross-party support for this important course of action, for which I am grateful. I beg to move.

My Lords, I thank the Minister for introducing these regulations. As was reiterated again yesterday at Oral Questions, and as the Minister has acknowledged, there is support across the House for the Government’s stance in opposing the Russian invasion of Ukraine and recognising the threat not only to Ukraine but to the whole of Europe. We have supported sanctions on those individuals who have clearly gained by their support of President Putin and are complicit in the actions that he has taken. We have seen, too, how President Putin has used global trade to put pressure on countries that oppose him and to seek to deter other countries from opposing him. Energy prices, food crises and so on all hurt the poorest most, and Putin knows that. The sanctions we are considering today seek to put pressure on Putin’s military resources as well as the Russian economy. The Government argue that this is

“the largest and most severe package of economic sanctions that Russia has ever faced”.

Can the Minister give us a breakdown of the pre- and post-invasion proportion of trade affected by these sanctions?

The Government also say:

“As with all our sanctions, the latest package has been developed in co-ordination with our international partners”.—[Official Report, Commons, Delegated Legislation Committee, 15/7/23; cols. 1-4.]

We agree—we have discussed it many times—that sanctions are most effective when they are brought in by a number of countries, particularly the economic might of the EU and the United States. Can the Minister tell us whether we are completely in lockstep over these or whether there are any variations and, if so, in what areas?

The Delegated Powers Committee wonders why these measures were not brought in before, stating:

“We were particularly perturbed to read in the Explanatory Memorandum that UK goods are still being used by Russia on the battlefield. This prompted us to question how effective the 17 sanctions instruments we have already seen have been”.

It also asked why any trade is still being permitted and speculated that goods found on the battlefield may have been supplied by third countries. I have seen the FCDO response to these questions and concerns, but will the Minister put it on record? Perhaps he could add details of what types of products have been circumventing the sanctions that were already in place and how this was happening.

The committee also asked why the restrictions on iron and steel do not come in until September 2023. The FCDO noted that UK businesses in the sector needed time to prepare for such a ban, and that this aligned with the EU. Why was it concluded that this sector needed time to prepare while others were judged not to need it? How will these sanctions be monitored and enforced, and what happens with contracts already agreed or in the pipeline? I also note that the regulations bring in scope providing financial services to source these materials or brokering them. Are law firms also included? What assessment has been made of the effect on global supply chains of, for example, the inclusion of fertilisers? Are the EU and US also involved in this? Given the effect on developing countries of lack of fertilisers, might this depress prices and increase supplies to them, or will it have a negative effect as the West seeks other sources of supply? Have we looked at the indirect impacts and how these might be mitigated?

I am concerned about the Minister’s second announcement on large bank balances held in the UK. I hear what he says, but this seems like a potential loophole. I look forward to hearing his reply, and meanwhile I welcome in general these sanctions and certainly their intent.

My Lords, I know the Minister is fully aware of His Majesty’s Official Opposition’s position in fully supporting the Government in the action they are taking to back Ukraine in its defence against Russian aggression, including providing military, economic and diplomatic support. We fully recognise that this is a fight to maintain the international rules-based order, and such aggression cannot and should not be tolerated. As my noble friend Lord Coaker said yesterday, is not one of the greatest misjudgments that Putin made that Europe would not stand together shoulder to shoulder with Ukraine and would not support Ukraine against his illegal attack, and, even if we did, that support would be limited and short-term? It is therefore extremely welcome to see the solidarity across Europe that President Zelensky received, particularly this weekend in Italy and France. It was especially good to see the German Defence Minister commit to and promise an additional €2.7 million in military aid.

Turning to the regulations, I wish to raise the issue of £50,000 cap, which was a government commitment. I have just been looking at Hansard for yesterday’s debate in the Commons. My honourable friend Catherine West interjected to ask whether there would be an opportunity for the decision not to proceed with this to be properly debated. According to the Minister and the Chair, it was agreed that there would be an opportunity to debate that. I just want to place on record the Opposition’s view that there should be measures such as the cap. If there is a decision not to proceed, what alternative measures are we taking to restrict the flow of finance, particularly when it is so easy to circumvent the £50,000 cap with the use of family members and others? There may be good reasons for not proceeding, but there should be a full debate.

As the noble Baroness, Lady Northover, said, the regulations come into force on 21 April and on 30 September for the iron and steel bans. The Minister mentioned that 30 September was to coincide with the EU equivalent ban, but why is there that time lag? There have been plenty of occasions when we have moved faster on certain sanction measures. It is very important that we act in concert, but we have understood why other countries may move faster than us and so on. We need a better explanation of why all the measures cannot be introduced straightaway.

In his introduction, the Minister mentioned the nature of certain items in these regulations. He particularly identified items found on the battlefield in Ukraine, such as electronic equipment, vehicles, 3D-printing machinery and biotechnology. Given that the sanctions seem to cover mostly electronic items found on the battlefield, has the department or the appropriate authorities in it explored ways to restrict the use of relevant firmware in the area—for example, by blocking the digital export of the firmware necessary for running 3D-printing machines? It would be good to hear how we may be working with our allies to look at ways of dealing with that. Of course, many of the items listed are quite small and easily hidden. What sort of advice and support would be given to the appropriate officials to ensure that they can be properly identified to prevent them reaching Russia?

I turn to the 190 goods, including iron and steel products processed in third countries. I welcome the extremely helpful briefing that I received from the department. It states that they are largely in line with the action taken by our European and US partners. What does “largely” mean? What are the differences? Where have we not been able to replicate fully the measures of our allies, particularly all our NATO allies?

The provision of services was a key part of trade before the Russian invasion. The December 2022 regulations banned the export of advertising, architectural, auditing, engineering, IT consultancy and design services to Russia. That is quite a comprehensive list of banned services. What assessment has been made on the extent of that service ban and its impact? I understand from the briefing that the department may be looking at the provision of legal services and how they may be brought into the scope of those sanctions. Can the Minister give us an update on them?

The briefing also touches on the exceptions for goods that are essential for humanitarian assistance activity. I fully support the need for that, but how are we actively monitoring those exceptions, and how can we be confident that the goods are going for the purpose intended? Obviously, pharmaceuticals and pharma products are important for humanitarian purposes, but they can be used in other ways.

The G7 summit is coming up later this month, and the briefing covers how it will be an opportunity to collaborate with all our allies to increase economic pressure. Will the Minister tell us how we are working towards a much more comprehensive agenda at that meeting?

It is one thing having regulations and laws on sanctions, but another is how we ensure compliance. That is a major issue. I hope that the Minister can tell us how Whitehall departments are working together to ensure compliance. I was thinking about the iron and steel trade and the reasons for the delay in implementation. Has the department looked at how we can incentivise faster implementation of sanctions, not simply giving time for firms to adjust, but considering other options to ensure speedy implementation?

What steps are we taking to raise awareness of the sanctions that we are imposing, so that they become an effective deterrent to those who may be tempted to circumvent them? Whenever sanctions are introduced, people look at every possible way to avoid and circumvent them, particularly with flows going into other countries.

What capacity do we have across Whitehall departments to ensure compliance and to police these sanctions? It would be good to know whether there has been an increase in the relevant staff. There have been stories in the media recently about countries— I mention Cyprus in particular—that have brought in sanctions but then ignore violations for one reason or another; it could be a capacity issue. I hope the Minister can give us an update on those issues and on how we provide support to ensure that our allies fully implement these sanctions.

I have raised the British Overseas Territories with the Minister before, and I know that he has assured the House that all the territories are fully compliant in terms of the relevant sanctions, but it would be good to hear exactly how we are ensuring that the BOTs have the capacity properly to police and ensure that these sanctions are effective. With those few comments, I reassure the Minister that we fully support the Government’s actions and these regulations.

My Lords, I thank the noble Baroness, Lady Northover, and the noble Lord, Lord Collins, for their strong support of the Government’s actions. Once again, it demonstrates the unity of purpose and, importantly, the unity of action on these important measures. I thank them for their careful scrutiny and consideration of the various measures. I will certainly seek to answer some of the specific questions and issues that have been raised in the time allocated. I will also follow up in the usual customary way with specific responses, particularly to some of the technical questions that the noble Baroness, Lady Northover, raised.

Both noble Lords raised the issue of legal services. I will not speculate on that particular issue, but I note the fact that both the noble Baroness and the noble Lord have raised it, and I totally understand the wider context of application. When we look at key industries and sectors, we need to look at the wider context of how these sanctions can be effectively implemented.

The noble Baroness, Lady Northover, pressed slightly further on the impact of the sanctions, asking for a kind of compare and contrast of what the impact has been. I have a raft of statistics, including that there was a 99.1% reduction in UK goods imports from Russia in September to November 2022 compared to the same period in 2021. There have been various studies, including one by Yale University, for example, which showed that more than 1,000 foreign businesses have withdrawn, undoing the vast majority of foreign investment made in Russia not just since the war but dating back to the fall of the Soviet Union. There was a 79.7% reduction in UK goods exports to Russia in September to November 2022 compared to September to November 2021.

Export bans have contributed to the long-term downgrading of Russia’s military and high-tech industry and prevented oligarchs accessing even luxury products. For example, UK exports of machinery and transport equipment decreased by 98% between February and August 2022. Russia’s Transport Minister has admitted that Russia’s logistical infrastructure is now broken as a result of these sanctions. Additional sectors have also been impacted, and I would be happy to share the facts and figures with the noble Baroness, but I hope that gives at least a sense that the sanctions are having a direct impact.

The noble Baroness and the noble Lord, Lord Collins, both raised, rightly, the importance of alignment. I assure them that we are on the same page here. I have said time and again that measures work best when we are aligned. Indeed, the delay to 30 September on one of today’s proposed measures is reflective of that co-ordination. I will elaborate further: because of the complexity of supply chains and the interconnectivity of the global world that we live in, it is important that those sanctions are applied in the most effective manner. We have taken that decision with our key partners.

The noble Lord, Lord Collins, raised a broader point about co-ordination with those countries—he mentioned a number of them—where the sanctions may be introduced or even talked about but are not implemented effectively. With those key partners to us who are not implementing sanctions, I believe there are opportunities to change this, as I saw as recently as Saturday when I was in Stockholm. We focused in on Ukraine and there were countries present from the Indo-Pacific region who perhaps do not share the same objectives behind sanctions as us. This allows us and other key partners—including the US, which was in the room, and, importantly, our EU partners—to demonstrate the why: the need for these sanctions to be implemented. We will certainly avail ourselves of other opportunities in this respect. Indeed, after I finish here today I will go to the airport to attend the Council of Europe meeting in Iceland where, again, the focus will be on Ukraine specifically.

A question on fertilisers was also raised. Our sanctions are designed to minimise unintended consequences for critical supply chains, including for the important areas of food security and pharmaceuticals. Both the noble Baroness and the noble Lord acknowledged that in any sanctions we impose, we still have to address the false narrative that is sometimes put out by Russia that somehow these sanctions do not allow essential goods—such as humanitarian support and medicines—to get through. They do, and there are humanitarian carve-outs for that.

On some of the points that the noble Lord raised about the overseas territories, I assure him that we work very closely with them. Although some may legislate for themselves, a number require support in terms of legislative capacity. We are very much in lockstep to ensure that these sanctions are implemented, and they have the resources and support required to implement them. Of course, we review our general relationship with the OTs over a raft of areas, as we have done recently, including through the joint ministerial council. Many overseas territories were represented at the coronation a couple of weeks ago.

On whether we are going far enough, quickly enough and whether we have enough staffing, in December 2021 there were 48 substantive roles in the sanctions unit, which has now become a sanctions directorate. My work in government allows me to say that when a unit becomes a directorate and a directorate becomes a department, you can see where the trajectory is heading. It is not quite a department, and one hopes we will not need to get to that stage. However, we have now doubled the number of officials focused on our response and have over 100 permanent staff delivering our response. That does not include those working across the FCDO and its overseas network, who are also part of some of the wider roles that we undertake.

I have already talked through some of the detailed impacts of the sanctions themselves. The noble Baroness, Lady Northover, and the noble Lord, Lord Collins, referred to the debate yesterday which was also about the issue of the cap on UK bank funds. I would certainly be happy to have a discussion about that, but I assure the noble Lord and the noble Baroness that, as I said in my opening remarks, we are looking at all these measures to ensure that they are effective and implemented in a way that will allow for the most practical outcome. It is certainly the Government’s view that a proposal to introduce an indiscriminate cap on funds that Russian nationals are allowed to hold in UK bank accounts would in effect punish those Russians in the UK who do not support Mr Putin and his illegal actions.

To give a personal anecdote, I remember when I started in banking many years ago in 1991 and the Iraq war happened. One of the places where I was doing my training had the highest net worth of Iraqi clients, and when restrictions were imposed, they were also imposed on the very people who were opposing the regime. We have reiterated time and time again— I know the noble Lord, Lord Collins, and the noble Baroness, Lady Northover, share the same sentiments—that our dispute is not with the Russian people or ordinary Russian citizens, or indeed the many Russians who have made their lives in the United Kingdom. It is with Mr Putin and his illegal war in Ukraine. We believe that in our approach—again, I am grateful for the support on this—we are targeting those who support Mr Putin and his illegal actions in Ukraine. The measures debated today are targeted specifically at those who participate in, facilitate and support this illegal war.

I assure both noble Lords that the UK is committed to using sanctions to keep up the pressure until Mr Putin ends his brutal and senseless war. We stand resolute in our firm support: indeed, the recent visit of President Zelensky underlined our commitment not just in terms of the support we give in the markets but also our support for Ukraine’s direct defences. As I have intimated already and said yesterday, my right honourable friend is already in Reykjavík meeting some of our key Council of Europe partners. Equally, I hope during the course of my engagements there once again to make the case very strongly about the need for unity, purpose and action. Sanctions are one of the key instruments that allow us to ensure that Mr Putin realises the real cost to him, to those who support him and to the Russian economy if he continues with this brutal and senseless war.

As I said earlier, a number of smaller technical questions were raised, particularly by the noble Baroness—I will of course write to her in this respect. I put on record again my sincere thanks to the noble Lord, Lord Collins, and the noble Baroness, Lady Northover, and indeed to all across your Lordships’ House, whichever party they represent. Today, once again, through the debate on these important measures, we have sent a very consistent and unified message that this House and this country stands with Ukraine.

Before the noble Lord sits down, I just want to be clear. In yesterday’s debate on the Commons, it appears that the Minister was suggesting that there would be an opportunity to debate and vote upon the decision not to proceed with the cap. There may be good reasons for that, but can the noble Lord clarify what that means?

I think I sought to clarify part of that. A vote would come on something that is there already: a statutory instrument was never introduced in that respect and of course the Government, when various announcements were made by the previous Prime Minister and Foreign Secretary, were alluding to a raft of different measures that we would look to evaluate. I know the noble Lord appreciates that, consistent with our approach, we would talk to industry and look to consult effectively to ensure that these are practical measures. As I said in my opening and concluding remarks, the view of the Government, after consulting across government and with industry, is that the most effective way is to target through our sanctions the specific individuals and organisations who directly support Mr Putin.

Just to be clear, although announcements were made on a range of measures, the key votes—I am thankful, again, that we have not had to take any votes on sanctions introduced—are on those measures that have been introduced through statutory instruments. I hope that clarifies the position.

Motion agreed.

Insider Dealing (Securities and Regulated Markets) Order 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Insider Dealing (Securities and Regulated Markets) Order 2023.

My Lords, this statutory instrument updates the UK’s criminal insider dealing regime to ensure that all market participants are held to high standards and that there are meaningful consequences for those who break the law. As noble Lords will be aware, insider dealing is a form of market abuse. In broad terms, it is where an individual trades in a financial instrument based on material, non-public information about a company. Insider dealing compromises the integrity and orderly functioning of financial markets. For this reason, it is both a criminal and civil offence in the UK.

The Financial Conduct Authority is responsible for identifying and taking enforcement action against cases of insider dealing. The FCA can impose a variety of criminal and regulatory sanctions under the criminal and civil market abuse regimes. The intention of this framework is to enable the FCA to take action against market abuse in a way that is commensurate to the seriousness and market impact of the abusive behaviour.

The legislation that defines the current criminal offence for insider dealing was first introduced in 1993. The Criminal Justice Act 1993 lists the securities and regulated markets to which the insider dealing offence applies. However, financial markets have evolved since the lists of instruments and regulated markets were last updated. As a result, these lists are narrower than the more recently updated civil market abuse regime.

The Government believe that this gap between the civil and criminal insider dealing offences needs addressing, and this SI does that by aligning the list of securities in scope of the criminal insider dealing offence with the civil insider dealing regime. The SI also replaces the named regulated markets in scope of the criminal insider dealing offence. The use of general definitions will future-proof the list going forward, avoiding relevant markets inadvertently falling out of scope. Closing this gap between the criminal and civil insider dealing regimes implements one of the recommendations from the Fair and Effective Markets Review, a joint review by the Treasury, the Bank of England and the FCA into the structural risks in the fixed income, commodities and currency markets.

This SI will reinforce the UK’s reputation as a fair and transparent place to invest, with robust regulatory standards and serious consequences for those who do not comply with our laws. I beg to move.

My Lords, this SI seems admirably straightforward and uncomplicated. We support it and I can be brief. I have only a couple of questions and one observation.

The first question relates to paragraph 7.7 in the EM. Why is it necessary to keep NASDAQ and the successor to the SWX Swiss Exchange explicitly in scope, and to add the New York Stock Exchange for that matter? Are they not already brought into scope by this SI’s adoption of the definitions in Article 4? I am sure that there is a good reason but I would be grateful if the Minister can explain what it is.

My observation concerns paragraph 7.8 of the EM. It points out that

“the set of securities to which the criminal offence of insider dealing applies to is narrower than the securities covered … in MAR”.

It goes on to give examples of the missing securities. It lists currency options, credit default swaps and units in collective investment undertakings, such as exchange traded funds—and says that the list is not exhaustive. It rather coyly says that this is “not optimal”. I agree entirely. I understand that this SI corrects that but, given the historical absence of these securities in the list of activities that may be pursued in the criminal courts for insider dealing, today’s SI rather looks like having just noticed that the stable door has been left open for 20 years and hastily closing it. It is good that no more horses will be able to bolt but that invites the question of how many have already bolted and how many, if any, were caught by the civil procedures in MAR. Does the Minister have an assessment of how many criminal cases would or could have been brought had the missing securities categories been within the purview of the Criminal Justice Act and how many were taken forward instead under the MAR provisions?

Finally, why does this instrument not come into force immediately? Does not the 21-day delay provide a further window for possibly unactionable criminal malfeasance? I look forward to the Minister’s reply.

We agree with the Minister’s assertion that there should be serious consequences for those who break the law. We also agree with the comments from the Liberal Democrat Benches and echo the comments about the seriousness of insider dealing. We share the curiosity shown in the other place when this instrument was considered about the length of time it has taken to bring in this measure, given we understand that it came about as a result of a review that took place in 2015. I am not asking this to be facetious, but what assessment have the Government made of the number of criminal offences that would have been caught had this measure been in place sooner, which were treated under the civil regime because this instrument had not yet been brought? We want to highlight the consequences of leaving things quite this late, because we are concerned. That underscores our support for this measure. The Government are right to address this gap between the two regimes and we support this instrument.

My Lords, I thank both noble Lords for their support for this statutory instrument.

On the time it has taken to deliver this measure and the potential impact in the meantime of not having the criminal regime and the civil regime aligned, it is important to note that since the Fair and Effective Markets Review was published, considerable work has been undertaken to modernise the UK’s market abuse legislation. For example, the civil regime for market abuse was updated in 2016 by the EU market abuse regulation and the Government and UK regulators have implemented the majority of the recommendations from the Fair and Effective Markets Review, including making changes in the Financial Services Act 2021 to increase the maximum sentence for criminal market abuse from seven to 10 years, bringing it into line with comparable economic crimes such as fraud and bribery. The Government have also recently completed a broader review of the criminal market abuse regime as part of the 2019 to 2022 economic crime plan. While this measure has taken longer to implement, there has been other action in this space in the meantime, including delivering on other recommendations from that review.

On the impact of the length of time in which the scope of the criminal offences has been different from that of the civil offences, it is important to note that the FCA has a number of tools available to tackle market abuse, of which the criminal insider dealing offence is only one. In addition to prosecutions under the criminal regime, between 2013 and 2022 the FCA has had 36 regulatory outcomes relating to market abuse, with regulatory fines totalling more than £70 million in that period.

The Government do not have data on the number of criminal prosecutions that have not been pursued due to the difference in the scope of the regimes. The FCA does not routinely record and track cases that it cannot take forward. This includes cases taken forward under the civil regime that could have resulted in a criminal prosecution with the changes made by this SI. Moreover, it is important to remember that there are a number of reasons why the FCA may choose to pursue a civil rather than a criminal prosecution other than the scope of the two regimes. For example, the FCA will consider the severity of the offence in question and whether the evidence meets the higher legal threshold needed to secure a criminal conviction.

It is not possible to say with certainty whether the FCA’s decision not to pursue criminal proceedings in a particular case was due to the issues that this statutory instrument addresses or to other factors, and we do not believe that attempting to determine that retrospectively would be a good use of government legal resources. It is a perfectly legitimate question to ask but, given that other mechanisms were available to the FCA to tackle market abuse under the civil regime—and it has also continued to bring prosecutions under the criminal regime—we can be reassured that it has been able to take action in this period. The Government are confident that the FCA has a strong track record of identifying, investigating and prosecuting insider dealing.

The noble Lord, Lord Sharkey, asked why we include specific US and Swiss exchanges and why they are not covered under the more general definitions that have been used in this SI to avoid the need to update this list again as specific named instruments change. My understanding is that for the more general definitions there are commonly understood definitions used in the UK and EU markets that this can work for, but that when you are looking at other exchanges further afield outside that scope, there remains a need to name those trading venues. That is the difference between continuing to need to name some trading venues versus going for the more general definition-based approach that this SI has done.

As to why we have chosen to include specific US and Swiss exchanges in addition to the UK and EU exchanges that will be covered by this measure, the FCA has seen a persistent trend of organised crime groups recruiting UK insiders to disclose inside information relating to securities traded on those markets. While of course this abusive behaviour is also possible for other third-country venues, this SI includes the third-country markets where the FCA has observed the greatest risk of harm. With regard to other third-country trading venues, and indeed in respect of these ones too, you would expect the home regulator to take action to tackle market abuse in those cases.

I hope that with those remarks I have answered the questions put forward today.

I can write to the noble Lord on that. It is probably the standard implementation period for a change of this nature. As I said in answering on the assessment of the FCA’s tools and track record on being able to tackle market abuse before this update was made, we do not think that will have a substantial impact on the ability to tackle these issues in that implementation period. I think that that addresses the point but, if there is anything further to add to that, I shall also write to the noble Lord.

Motion agreed.

Public Service Vehicles (Accessible Information) Regulations 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Public Service Vehicles (Accessible Information) Regulations 2023.

My Lords, these draft regulations are being made to require audible and visible announcements on local bus and coach services across Great Britain. The powers to make these regulations were conferred by the Equality Act 2010, as amended by the Bus Services Act 2017.

The Government believe that everyone should be able to use their local buses confidently, safely and independently. For many disabled people, however, this can be incredibly difficult. Despite the strides made since the Public Service Vehicle Accessibility Regulations were introduced in 2000, certain stubborn barriers continue to frustrate, deter and in some cases prevent disabled passengers travelling by bus. Not least among these is the lack of information on board some buses. Using the bus might be straightforward enough for many passengers, but if you do not know where you are or where your stop is, your experience can quickly turn into a significant challenge.

Consider visually impaired people, for example. A survey by the charity Guide Dogs found that 70% of visually impaired respondents had missed their stop because the driver forgot to tell them when to get off. Faced with having to guess where to get off or to rely on strangers, many visually impaired people are understandably deterred from using the bus. On the London Underground, London buses and trains across Great Britain, noble Lords will have seen audio-visual announcements in action. This is not new technology: on-board announcements have been required on new trains since 1998. For more than 15 years, most bus services in London have provided on-board information, and certain operators, such as Brighton and Hove Buses and Transdev Blazefield, have led the way in their own areas. However, as noble Lords will be aware, there is still much more to be done.

Despite some good work by the industry, only 25% of vehicles in England outside London have the necessary equipment installed. This figure is 22% for Scotland and 34% for Wales. It cannot be right that from one town to the next the experiences of disabled passengers can be so radically different. Buses support people to lead fuller lives, connecting them to their communities. Unlocking the benefits of buses for everyone is key to this Government’s mission to level up and spread opportunity across the country. We want everyone to travel with confidence, whether they board a bus in London or Leeds, Edinburgh or Elgin, Cardiff or Carmarthen.

This is why we have introduced these draft regulations, which will require operators of local bus and coach services in Great Britain to provide audible and visible information on board the vehicle. They specify that this must include information about the route, the next stop, route termination, diversions and hail-and-ride sections. The regulations will establish a minimum standard of information that passengers should expect across the whole country. The Government’s goal is to see audible and visible information provided on virtually every vehicle used on local services, and we want to see it used to its full potential, not turned down or switched off. With this in mind, the regulations specify minimum requirements for text size and volume.

Since Ofcom research has consistently shown smartphone ownership to be lower among disabled people than non-disabled people, the regulations also prevent operators requiring passengers to use smartphones to access information. For the most part, however, these regulations are broadly “technology neutral” and focus on the information that must be provided. Operators will be able to choose the solutions that suit their services best. The emphasis on outcomes means that the regulations will make a clear and obvious difference to passengers, regardless of the technology used. For disabled people, this will mean the ability to travel much more confidently and independently, no matter where they are in Great Britain or which operator they travel with.

I think noble Lords will agree that all passengers stand to gain from having this information on board. Under the new regulations, any passenger will no longer have to rely on the goodwill or memory of a driver or passenger to tell them whether they are on the right bus or, indeed, when to alight, particularly when they are in unfamiliar territory.

In developing the regulations, we have struck a careful balance between the benefits to passengers and the costs of compliance to operators. Our extensive consultation with representatives of passengers, the industry and the devolved Administrations since 2018 has been vital to achieving this. As a result of this dialogue during the consultation period and subsequently, we have exempted certain types of services and vehicles from the new requirements, which will help keep them on the road and serving their communities. However, these exemptions are very limited.

By October 2026, the vast majority of local buses and coaches will have to provide audio-visual information to comply with these regulations. We have prepared guidance which will help the industry to understand the new requirements and go even further in capitalising on opportunities to enhance and promote upgraded passenger experiences for everybody.

As we look to achieve the aims of the national bus strategy, onboard information will have an important part to play in attracting those with a disability, and indeed those without one, back to buses. On enforcement, we know that operators will want to do the right thing; we will give them the information they need to comply. However, bus passenger groups such as Bus Users UK and London TravelWatch will be involved from day one in arbitrating on passenger complaints and referring them to the Driver & Vehicle Standards Agency where appropriate. If the DVSA identifies sustained, negligent, or intentional cases of non-compliance, the cases will be referred to the traffic commissioner. This measured, proportionate approach will empower passengers to secure and enjoy the benefits of these regulations. This will help to establish accessible information as a staple of the Great British bus user experience.

In summary, these regulations will drive significant improvements to the accessibility of local transport in this country. They will bring us closer to realising our vision of a country where local services truly work for everyone and nobody is left behind. I beg to move.

My Lords, I declare my interests in that I have a son with learning difficulties, and have trusteeships of charities in the register and lots of past interests in the accessibility industry and public transport.

This is an excellent statutory instrument filled with good ideas that will be helpful to a range of people with many different disabilities. However, I gather that consultation for it started in June 2018. Presumably work in the department started some time before that. Can my noble friend tell us when? After consultation, how can it possibly have taken five years to bring this statutory instrument in? Surely, if the consultation confirms that the idea is good, it must become a priority for the department to achieve it.

This is not particularly original technology; as my noble friend mentioned, it is available in many different countries around the world and in London. Yet a mature plan copying the system in other countries has taken five years to bring in. Is not the pride in having done so eclipsed by the shame that it took so long? Does the department consider five years to be reasonable in this matter? Can my noble friend say how many other disability measures are now outstanding? How long does the department expect it to take for them to be brought into action?

My Lords, it is a pleasure to speak in support of these regulations. I congratulate my noble friend the Minister on the manner in which she introduced them. Were it not for her assiduity, we might still be waiting for them. Perhaps, if the regulations were a bus, we might all have chosen to walk by this stage. Having said that, the bus is such a critical part of public transport. Public transport is transport for the totality of the public. As we have already heard, seven in 10 guide-dog users say that they have missed their stop for want of the driver remembering to tell them. It should not be on the driver. This technology could have been in place years ago. Public transport should and must be inclusive.

It is more than just inclusion; it is inclusion as the golden thread to levelling up. Some 98% of buses in London have audio and visible devices, but the figure falls to less than a quarter of that in many other parts of the country. I was privileged to launch the Manchester talking buses, not this year or last year but in 2016, and in London buses had audio and visible displays before then. It cannot be that if you happen to be a person with access needs outside a major metropolitan area and you want to use the bus, it is a case of, “Good luck getting on board and getting off at the correct stop”.

Buses have the potential to connect people and places, but they must be built on inclusive design. Audio and visible displays are a critical part of that. The explanatory notes to these regulations are good—they highlight the benefits for disabled people, but would the Minister agree that these are benefits for all people? The critical point to understand about inclusive by design is that if you make a change that benefits disabled people, everybody benefits.

If you had access needs and you wanted to go to work, the shops or the pub, or to meet a mate, why would you do that if you thought the bus might not stop? You may not have any way of knowing when it is the correct stop to get off at—if you manage to get on board. All that anxiety and stress can and must be taken away by buses being inclusive by design. Audio and visible displays are critical to that.

I have a number of questions for my noble friend the Minister. First, in terms of extent, the regulations cover England, Scotland and Wales. What will the situation be for those with access needs, and indeed for people who may just not know the area, in Northern Ireland? Secondly, can she update the Grand Committee on where the proposed guidance currently is and what progress is being made on that?

Thirdly, will bus companies be able to see how they can go further, beyond the requirements of these regulations, and potentially look at opportunities to give more information to passengers, not by crowding the audio and visible displays but through other allied means, potentially giving more information on history or sites of interest to make the bus journey not only inclusive but more interesting and engaging?

Fourthly, can the Minister inform the Grand Committee what research has been undertaken on the impact of journeys moving from cars, taxis and other modes of transport to the bus? What economic analysis has been undertaken, and what does that mean when one balances those modes of transport with the hopeful increase in bus travel that these regulations will deliver?

Fifthly, the Secretary of State has an obligation to review the regulations within five years. Does the Minister agree that, particularly in that first five-year period, it would be critical to have a review far sooner than that five-year end point?

As we are on the subject of buses, will my noble friend tell the Committee what the Government’s current position is on eradicating the mistake of floating bus stops from our public realm? They are inaccessible, unsafe and a planning disaster.

These are positive regulations. They will make a difference to disabled people and to all people. Does my noble friend agree that all bus companies should be encouraged to get on side with the RNIB’s charter, which simply says “Stop for me. Speak to me”? In so many ways that sums up the right way to start any bus journey. “Stop for me. Speak to me”, and then the potential of the bus can truly be realised. These regulations could be a key part of inclusive buses connecting people and places, unleashing potential, and being part of the next chapter of positive bus travel for all members of our community.

My Lords, I apologise for missing the beginning of my noble friend the Minister’s journey as she introduced her remarks. I very much welcome the regulations before us, which build on the PSV regulations 2000 and use modern technology to bring in improvements for those with a sight or hearing impairment. I particularly commend the department on its very thorough analysis on pages 4 to 42, looking at all the various options. I only wish that every government policy was subjected to the very thorough analysis that the Department for Transport has subjected this proposal to.

Building on what my noble friend Lord Borwick said, I do not propose to chastise the department quite so violently as he did, but page 4 in the department’s defence refers to the high volume of consultation responses and the technical subject matter as reasons for the delay—but there were only 101 responses, apart from the supportive campaign by Guide Dogs, which produced 229. Like my noble friend Lord Borwick, I wonder whether the technical matters needed to preoccupy the department for quite so long. Perhaps my noble friend the Minister could address that.

The document refers to the risk of what is called network contraction due to the cost of implementation impacting on smaller bus operators and thereby services being withdrawn. It goes on to say that the accessible information grant of £3.5 million rising to £4.5 million might mitigate this. Is the grant meant to cover all the installation costs for smaller bus operators or will they have to fund part of it themselves? If it funded all the costs, the network contraction issue would not arise, but it is not quite clear from the document whether the grant will cover all the cost or only part of it.

My noble friend the Minister said that the instrument is technology neutral. It is not quite clear from reading it whether the bus driver simply announcing the next stop would qualify. The regulations state:

“Passengers must be given the following information … at each stopping place on the route”.

It is not clear whether if the driver just announces that over the intercom it would qualify or whether there has to be some technology-based system to make sure that, as my noble friend Lord Holmes said, the driver does not just forget to announce it. Perhaps my noble friend the Minister could clear that up.

I have two final points. First, on enforcement, how would we know whether bus operators have done what they are meant to do? Will the department rely on feedback from customers? Will the traffic commissioners be proactive in going out and making sure that the bus routes in their area have the necessary kit?

Secondly, the regulations will provide information while you are on the bus, but in London at any rate, at many bus stops there is a visible sign telling you when the next bus is going to arrive. That is quite useful and I wonder whether the department has any plans to roll out that information at bus stops, which would again encourage use and build up confidence in the system. At the moment, some bus stops in London have this but not all of them. Does my noble friend the Minister have any strategy for improving the information available at the bus stop, as well as that provided on the bus? Having said that, I very much welcome this as an important step forward and I endorse what my noble friends Lord Borwick and Lord Holmes said in welcoming these regulations.

My Lords, I thank the Minister for her explanation, and congratulate the speakers so far on raising a whole range of important information that we really need from her. I strongly welcome these regulations, which flow, as noble Lords have already said, from commitments made in the Bus Services Act 2017—which is, of course, back in ancient history, as the noble Lord, Lord Borwick, made clear to us. It is five years since the consultation. I know we have had Covid in between, which possibly interrupted things, but that did not last five years and it is very unfortunate that we have waited so long, because we have another three years to wait in some cases before full implementation. I recall that there was a Secretary of State recently who had a penchant for complaining about audible announcements on public transport, and I wonder whether that is why it has taken so long for these regulations to come forward.

The point I am making in relation to Covid is that if these regulations had been in place more quickly, I think we would have attracted people back on to the buses much more quickly. We have to attract new passengers to deal with congestion and emissions. It is easy, of course, to take what is in the regulations for granted, if you spend a lot of time in London—as the noble Lord, Lord Holmes, said, 98% of buses and all Tubes have notification of this nature—but there is a failure rate, and I will come to that point later on. Outside London, it is only 25%, and in some areas there is nothing at all.

I draw attention to Regulation 7(3), which specifies what information should be provided, and I am very pleased to see details on volume. Noble Lords may not be aware, but I wear two hearing aids and actually I have very little residual hearing. Without the hearing aids, I would not understand a word anyone was saying here today: even with them, I often miss things. I know the Minister often thinks I do not listen to what she says, but it is not for lack of trying. I am also pleased to see details on hearing loop in priority seats and the wheelchair space, and I am very pleased to see specification on character height for visible information.

I have one point though: the issue of contrast is specified in Regulation 14(5)(b) on page 7. There are good practice guidelines on contrast, which organisations representing people with visual loss are very well aware of, and I am hoping that the Government will take advice and pass it on in terms of the use of the best possible contrast for written information.

There is clearly a public information job to be done as well as training for drivers on these issues, and I would be grateful if the Minister could give us some details about what the Government plan to do to spread this information and good news and raise public awareness of things such as priority seats on buses. We take that for granted on the Tube in London, but that would not necessarily be the case in every part of the country, especially because you cannot see the hearing loop. For someone to have to sit in those seats, public information would need to be available.

I am pleased to see the support from the Scottish and Welsh Governments. It is good to see something on which the Governments across the UK can agree wholeheartedly. It is logical that these regulations exclude demand-responsive transport, but my question to the Minister is about ensuring that any vehicle used on a variable basis—in other words, sometimes for scheduled work and sometimes for demand-responsive work—would have the capacity to provide that information.

My final question relates to something raised by the noble Lord, Lord Young. What happens if the system breaks down, and what happens about the failure by the driver to switch on the information system or to update it from one route to another? What are the penalties for non-compliance and what are the mechanisms to ensure that all bus companies do comply and, if the system has broken down, that the driver makes the announcement? What is the process by which passengers can make complaints if they believe that this is not being implemented properly? Having said all that, the sooner this is introduced, the better.

My Lords, I, too, thank the Minister for introducing this SI. For 10 years, I was managing director of the Underground and, as such, was part of the top team in LT. It is nice to see my former boss smiling at that point rather than frown. For two years, I was chief executive of LT and chairman of London Buses, and programmes from that period resulted in the 98%, of which I am personally proud and proud on behalf of the institution.

I want to introduce an idea of how to make these things happen. The reason why we were so successful is that we would have rules, standards and all that sort of stuff, but we also had a cultural issue. I will get the title wrong, but essentially we had a disability tsar, which meant that whenever hard-nosed people were trying to do things, they were asked whether they had taken account of all sorts of disabilities. It was not just about audio-visual disabilities; it was about things such as stairs, handrails and so on. If you can do that activity from a customer-focused point of view, you get to a cultural difference.

I hope that, insomuch as the department can have some influence in this, it will encourage operators to try to think from the point of view of the customer because there are things that can be done beyond this. One of the most difficult things that we found was the invisible disabilities. The most obvious one is deafness, but you also have intellectual capacity and mental health problems. The more you think from the customer’s point of view, the better results you get .

So I am not going to criticise this too much but I have two little question areas. One is the issue of marginal non-compliance. Regulation 14(4) states that the letters must be a minimum of 22 millimetres high, which sounds to me awfully like just under an inch. If a fleet happens to have a good working system but the letters are only 20 millimetres high, do we tear it out or is there a mechanism for discretion? Is there some way in which common-sense solutions to inherited equipment can be catered for?

The second question is can operators add to the elements of information in this package? I think that the answer is yes but I should like that to be confirmed. In other words, if operators think that they want something else—perhaps to do with emergency situations or whatever; I am not going to guess what they may be—it would be useful if it were clear that the information that operators would like to use in the audio-visual systems is allowable. I think that it is. If some area over time is found to be valuable, is there a mechanism for introducing a new element into the information and making it mandatory?

I am getting old and I have done literally hundreds of SIs. I do not know what the number is, but I shall tell noble Lords one number that I know—the number where I have made any impact. It is zero. It has often been a painful zero because I have struggled with the paperwork and poorly written Explanatory Memorandums. While it is attractive to leap on the bandwagon of know-all Ministers’ friends and bash Ministers about the head regarding delays and all that, I praise the paperwork associated with this SI. It is well written, comprehensive and sets a standard—I say this loudly to the Minister—that in future I will expect all DfT SIs to meet.

My Lords, I am extraordinarily grateful for all the comments from my noble friends and all other noble Lords. They mostly welcome this SI because there is nothing in it that cannot be welcomed. I also welcome the enormous experience of the noble Lord, Lord Tunnicliffe, and his description of the time when he was working at TfL and the Tube. I agree with him; it is about culture, and one of our challenges is to inculcate that culture onto the buses. I do not know how many bus operators there are—the number 140 is in my head but I cannot remember—but it is a lot. Some operators are extremely small with fewer than 20 vehicles. This is about making sure that we bring everyone along with us, although I have to say that I expect some of the big operators in the larger metropolitan areas to be very much on the front foot with this. I expect that disability campaigners and representative groups will be on their cases— I hope that they are—to get dates for implementation from those companies that, frankly, have the wherewithal to do so quickly and set an example that others might follow.

I turn to some of the comments from my noble friends. The first was from my noble friend Lord Borwick. He was duffing me up a little. The “violent chastisement” of my noble friend Lord Borwick were the words of my noble friend Lord Young. I should like to say in mitigation that I was the Buses Minister for a vast period when we as the Government were considering this SI. I was pushing for improvements and to move things faster. It was disappointing every time when, as a Minister, I had to decide whether to reprioritise and re-timeline various things.

Covid has faded into the rear-view mirror, but it is extraordinary to me how, for more than two years of my life, it was all-consuming. For that time, as Buses Minister, saving the bus at all was my absolute priority, and it was a priority for the sector. I think there were two issues why the delay due to Covid happened. First, there was reprioritisation within my department as we were coming out of Covid—and we could potentially see the endgame—and we tried to get the national bus strategy out there to help in that recovery and to provide that strategic framework that we needed. Secondly, there was the ability of the operators to be able to give headspace to the very technical and detailed arrangements that they needed to consider to make these regulations right. Frankly, they were more concerned about keeping the buses on the road, keeping the drivers trained and recruiting drivers—all of the challenges that have either happened during Covid or subsequently.

While it is always regrettable when one has to deprioritise anything because there are other more pressing issues, having a stable bus network was the right priority at the time. I wish that we had been able to do everything at once but sometimes in Government, one just cannot. When it comes to these regulations and the technicality around them, it is because buses are not standard, and they can come from all sorts of manufacturers in various parts of the world. Therefore, there had to be a reassurance that whatever we put in the regulations worked on the buses that were available. Of course, the older buses are not particularly standard at all—some of them have very random seat configurations —and they often operate on the rural routes, the less profitable routes, or sometimes the supported routes by local transport authorities. They are the ones with the greatest vulnerabilities—so it is about getting that balance right between implementing those very important changes while making sure that we maintain all the benefits of buses which all noble Lords have already discussed today.

This was particularly reflected in the comments by my noble friend Lord Holmes in the way that buses can be the most inclusive form of transport and they are the best-loved form of public transport in our country. I thank my noble friend Lord Holmes for his positive remarks; he has been an assiduous campaigner in this area for many years. I completely agree that these benefits are for all people. There cannot be a noble Lord in this room who has not forgotten to get off the bus at some point or another. Our reflections in our analysis show that we do believe this will encourage more people on to buses—not just those with disabilities, but other people too as they feel reassured about the information provided on their journey. This is part of the mitigation for the cost of putting it in place in the first place.

My noble friend Lord Holmes also mentioned Northern Ireland. The matter of equalities is devolved to Northern Ireland. However, Translink, the bus operator there, has got audio-visual equipment widely deployed on its buses. I would encourage anybody to go to Northern Ireland, because it is a fantastic place for a holiday. Extra information can be added, but that is up to the discretion of operators. As I said previously, we expect some sort of increase in patronage as a result of this. It is difficult, obviously, to put a firm figure on it, but we do think it will be a positive outcome.

On floating bus stops, the Department for Transport is undertaking some research to ensure that they do the job they are intended to and can be operated safely. My noble friend Lord Holmes also mentioned bringing forward the review of the regulations. It is our intention to review them after five years, but noble Lords will be able to see our progress due to the annual bus statistics. This is a key document issued by the department, which collates all sorts of interesting information about buses, whether they are zero emission et cetera. One of the stats that we will put in that will be the extent to which this is being rolled out. I think that will enable the Government to think about whether it is going quickly enough.

My noble friend Lord Young mentioned support for smaller bus services. It is envisaged that the roughly £4.5 million will cover all the costs of implementation for those operators with fewer than 20 vehicles, which is incredibly welcome. He asked whether the bus driver could just shout, but visual information needs to be provided as well and the two often go hand in hand, so I do not think it would fulfil the requirements in the regulations for the bus driver just to shout.

I am looking at Regulation 13, which is entitled “Requirements regarding audio information”. There is a lot about the volume, but it does not say that the information must come from a machine; it seems that it could come from the driver. I do not see where Regulation 13 excludes the driver providing the information.

This might be one of those grey areas. My officials say that it is right that the driver could provide the information, but there is a minimum and a maximum volume for that information. I suppose that the driver could provide it, but I do not think this would be widespread across the bus industry, given that much of the technology links audio and visual together and the computers behind it project that information at the same time.

Information at bus stops is a key part of the national bus strategy. It is not the responsibility of the operators; they provide the information that is used for those real-time scoreboards at bus stops, but bus stops are operated by local transport authorities, as I am sure my noble friend knows. The BODS is the DfT’s means of collating as much real-time information as is available and making it available to local transport authorities, which can then put it into bus stops. Some of the BSIP funding we issued to successful local transport authorities recently will go into boosting the information at bus stops. I agree that it is very helpful to know when your bus will arrive.

The noble Baroness, Lady Randerson, mentioned contrast. There will be further information on that; we have discussed it with campaigners and representative groups in this area. It will be in the guidance, which will come out this summer. There will be training for drivers; it will not be centralised as such, but the operators will be encouraged to make use of the REAL training syllabus and can sign up to the inclusive transport leaders scheme to make sure that staff have the knowledge and skills to support all disabled passengers.

The regulations apply to a service and not a vehicle. Therefore, if a vehicle is being used in different services—it might sometimes be running a scheduled service and sometimes be doing something else—it would still have to provide the information set out in the regulations.

I shall finish on enforcement, as I am conscious that I have spoken a fair amount. There are two main ways of enforcement. First, the Government will be able to check progress via the annual bus statistics, which come from industry, so we can chivvy people along as such. However, if elements go wrong for a certain customer or there is persistent non-compliance on a particular route or vehicle or by a particular operator, we would expect that passenger to escalate a concern to Bus Users UK outside London and to London TravelWatch inside London. That is the standard method; in my experience, passengers are very good at escalating concerns, particularly as this is such an important issue. We expect that bus operators will want to make their passengers aware of when they have fitted this technology in their area.

It can then get bumped up the chain from Bus Users UK and London TravelWatch to go through alternative dispute resolution or a complaints handling process. Eventually it gets bumped up to DVSA and if it thinks it is serious enough, it goes to the traffic commissioner. If it gets to the traffic commissioner, that is probably a bad thing for the operator, and I imagine that that will not happen very often because the traffic commissioner has the ability to take away its operator licence or to put other sanctions in place. It is not the Government’s ambition to enforce this heavily. We want operators to comply so that this does not have to be heavily enforced because at the end of the day, if you end up with traffic commissioners taking licences away, essentially they are taking buses away, and we do not want that.

I will conclude now, but I will write with any further information that I have.

Motion agreed.

Houses in Multiple Occupation (Asylum-Seeker Accommodation) (England) Regulations 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Houses in Multiple Occupation (Asylum-Seeker Accommodation) (England) Regulations 2023.

Relevant document: 37th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)

My Lords, there are currently more than 50,000 asylum seekers living in hotels, given that our asylum system has been overwhelmed by the large volume arrival of asylum seekers by small boats. Hotels are neither intended nor adequate to be used as long-term accommodation. This is also burdensome on local communities and expensive for the taxpayer. It is important to recognise the significant challenges we are grappling with. The Home Office is working tirelessly, along with other government departments, to reduce the Government’s dependency on hotels by introducing a suite of short and longer-term measures. It is not right that the country is spending millions of pounds a day on hotels, and we are determined to put the asylum accommodation system on a far more sustainable footing. This reform is one of the many measures being taken to provide adequate and cost-effective accommodation in line with our statutory duty.

The Home Office is also bringing forward a range of alternative sites, such as disused holiday parks, former student halls and surplus military sites, to add thousands of places at half the cost of hotels. All local authority areas in England, Scotland and Wales became an asylum dispersal area in April 2022, thereby increasing the number of suitable properties that can be procured to accommodate asylum seekers across the UK.

Currently, the Housing Act 2004 requires all houses in multiple occupation—HMOs—where five or more people from two or more households share facilities to be licensed. Local authorities can also introduce additional licensing in their area. This requires all HMOs housing three or more people from two or more households to be licenced. Home Office service providers have reported that these additional conditions set by local authorities present a challenge when procuring cost-effective, suitable and safe accommodation for asylum seekers. The Home Office is therefore seeking to remove this barrier.

These regulations will temporarily exempt from the HMO licensing HMOs used by the Home Office to house asylum seekers. This means that HMOs which begin use as asylum accommodation before 30 June 2024 will not need to be licensed for a period of two years. These regulations will cease to be in force on 1 July 2026, and after this point all HMOs used as asylum accommodation will require licences.

I am aware of the concerns that noble Lords and the Local Government Association have raised. I assure noble Lords that the Home Office asylum accommodation and support contract—AASC—standards are broadly equivalent to mandatory HMO licence conditions. This alignment between contracts and national housing standards is deliberate and was developed in consultation with the local authority property inspectors via their professional body, the Chartered Institute of Environmental Health.

Home Office service providers are contractually required to provide safe, habitable, fit for purpose and correctly equipped accommodation for all asylum seekers. The contracts also require providers to comply with the law and a host of best-practice guidance. Consequently, matters that stand to be enforced by local authorities in respect of unscrupulous landlords can also be enforced contractually by the Home Office via its service providers.

All asylum accommodation will continue to be subject to wider private rented sector regulations, including the duties set out in the HMO management regulations, and local authorities will retain their power to enforce these standards and take action against landlords who fail to meet them.

The Home Office contracts for housing also set out a minimum standard for all asylum accommodation, including conditions relating to gas and fire safety requirements, as well as compliance with wider private sector minimum standards. The Home Office is doubling the size of its inspection team to ensure that its service providers are maintaining minimum standards in all its accommodation, and specifically all HMO properties that benefit from this exemption.

This dedicated assurance team is responsible for testing and reporting on providers’ performance. In addition to the provider’s monthly inspections, the Home Office inspects properties on a targeted basis, as well as testing providers’ monthly performance against the contractual key performance indicators and conducting assurance reviews. The Home Office will ensure that the assurance regime is commensurate with existing arrangements for HMO licensing to avoid the risk of reducing quality. Where a provider fails to meet contractual obligations, financial penalties can be applied.

Separately, Migrant Help is contracted to provide a free, round-the-clock helpline and online portal available 365 days a year which asylum seekers can use to raise issues, request help, give feedback and make complaints. Maintenance issues raised via Migrant Help are referred immediately to the AASC—asylum accommodation and support contract—provider for action within contractual timescales. If a service user reports that a defect has not been fixed and they remain dissatisfied, it is escalated to a dedicated Home Office complaints team to adjudicate. In addition, the Home Office will put measures in place to allow local authorities to report poor standards or safety issues with any of the housing provided for asylum seekers. The Home Office will also take up the offer from the Local Government Association to enhance joint working to deliver suitable and safe accommodation for asylum seekers under its care.

The Home Office dispersal policy will focus on ensuring the fair and equitable placement of asylum seekers, as we recognise the strain on public services, including housing. The Government will do everything they can to mitigate the risk of homelessness in support of the existing cross-government commitment to end rough sleeping within this Parliament and to fully enforce the Homelessness Reduction Act.

We also recognise the general strain on public services in local authorities, and for this reason existing funding has been doubled for those local authorities which take on new accommodation and do so quickly. Subject to conditions of a grant agreement, this money is not ring-fenced and will incentivise co-operation and ease pressures on local services. However, payments will be subject to the conditions of a grant agreement.

The Home Office will develop a monitoring plan, which will cover service provider data in relation to the accommodation acquired as a result of this reform, reporting on quality and compliance/assurance to measure its effectiveness as well as to inform the assessment of wider homelessness impacts. More broadly, Home Office engagement with local authorities has significantly increased and improved since the introduction of an engagement strategy which is designed specifically to ensure that impacts on local services can be raised, discussed and mitigated through the multi-agency forums. Regular meetings are held between the Home Office and local authorities’ key strategic fora, including the asylum and resettlement council senior engagement group and the strategic oversight group. The Home Office will also arrange an open forum for local authorities to attend, which is a further opportunity for local government colleagues to discuss issues of concern with senior Home Office officials. I beg to move.

My Lords, I thank the Minister for introducing this SI, but this is yet another chapter in a book that is about dehumanising some of the most vulnerable people in the world seeking asylum in this country. It is bizarre that the Minister says that the reason why we need this SI is because the contract that providers of asylum accommodation have is exactly the same. In a moment, I shall go through what a mandatory HMO is licensed for, and I seek from the Minister an absolute assurance that every single clause that I give is covered in that contract. If not, the Minister has not been quite correct at the Dispatch Box.

It is not necessarily the case, as the Minister tried to portray, that the reason for the cost of accommodation for asylum seekers is because of the number of small boat arrivals. The House of Commons Home Affairs Select Committee reported recently that the reason for the strain on accommodation is the incompetence and inefficiency of the Home Office in dealing with the backlog. Some 68% of those waiting to have their claims assessed in March 2023 had waited more than six months. Even though the number of case workers has doubled from 308 to 614 since 2022, productivity has not changed at all. The number of people being dealt with or cases that have actually been closed in a month is exactly the same: one case per caseworker per month. That is what is causing the strain on accommodation, not the number of people arriving. It is clearly the incompetence and lack of productivity from the Home Office.

In her introduction, the Minister said that the number of those who are available to investigate will double in size to see whether the contractual arrangements are being carried out. How many individuals, full-time equivalent, will be available? On average, how many does that equate to for each local authority area?

The Minister also said that getting rid of these arrangements for HMO licensing and adopting the statutory instrument will create “safer accommodation”. I shall just go through the mandatory HMO licensing conditions that are being done away with in this statutory instrument, and I shall ask the Minister, as I said previously, to confirm that every single condition is in the contract that the Home Office has with the suppliers of accommodation for asylum seekers.

“The following conditions must be attached to all HMO licences”—

provided by a local authority.

“A gas safety certificate must be presented annually to the authority if there is a gas supply. Electrical appliances and furniture supplied by the landlord must be maintained in a safe condition. Smoke alarms must be provided for each storey of the property containing living accommodation and kept in working order. The landlord must provide the authority, on demand, with declaration as to the safety of electrical appliances and furniture in the property and the condition and positioning of smoke and carbon monoxide alarms … For licenses granted after 1 October 2022, a carbon monoxide alarm must be installed in every room used as living accommodation in which there is a fixed combustion appliance other than a gas cooker, and kept in working order. For licences granted before this date, carbon monoxide alarms were required to be installed in rooms with a solid fuel burning combustion appliance. The license holder must also ensure that every electrical installation in the house is in proper working order and safe for continued use; supply the local authority with a declaration confirming the safety of the electrical installation if the authority requests one”.

“Additional mandatory conditions for licences granted after 1 October 2018. For HMO licences granted on or after 1 October 2018, minimum size requirements should be included for all rooms used as ‘sleeping accommodation’ … The particular minimum sizes specified in the licence are a matter for the local authority to decide. However, they cannot be smaller than 6.51 square metres for a room used by one person aged 10 or over; 10.22 square metres for a room used by two persons aged 10 years or over; 4.64 square metres for a room used by one person aged under 10 years”.

Can the Minister confirm that the same conditions that I have said so far are in the contract with the provider of accommodation for those seeking asylum?

Also, the suitability of the landlord and the property manager come into consideration in the licensing of an HMO. The landlord must be seen as a fit and proper person. So, in terms of the suitability of the person, are the same conditions provided as for the granting of a licence to those within the local authority HMO licence scheme?

“In deciding whether a person is ‘fit and proper’ to be a licence holder or the manager of an HMO, the local authority must have regard to any evidence available that the person has: committed any offences involving fraud, other dishonesty, violence, drugs, or any sexual offence that attracts notification requirements; acted other than in accordance with any code of practice approved under section 233 of Housing Act 2004; practised unlawful discrimination e.g. on grounds of sex, colour, race, ethnic or national origin or disability; contravened any provision under housing or landlord and tenant law; had a banning order made against them”.

There is a lot in these licensing requirements. The Minister developed the reason why they are being put on temporary hold in this statutory instrument—the contract for those providing asylum seekers with accommodation has exactly the same provisions. I look forward to her confirming, line by line, whether everything I have said is in the contract. If not, it is clear that the chapter of the Home Office and government departments dehumanising some of the most vulnerable people is continuing.

My Lords, I too thank the Minister for her introduction. I was not aware that my noble friend was going to speak. Fortunately, what I have made a note of is not inconsistent with what he said. I will try to edit as I go so that I do not repeat too much. I recognise the issue that the Government seek to address, though I am unconvinced that this is the solution, but I made my views on their asylum policy quite clear to the House last week. My noble friend has also given the context quite clearly.

HMOs under the current system are hardly luxury accommodation but the licensing requirements in force since 2004, I think, ensure certain standards. As my noble friend has said, these are not just about physical standards but the standards of conduct, and so on, of those involved in the provision—licence holders and managers must be fit and proper persons. I am making a foray away from Home Office debates into DLUHC ones, but in Home Office discussions I have expressed my concern several times that the people who run the hotels are not fit and proper. I have raised the question of disbarring orders and so on; we are all aware of the history of children going missing. Unaccompanied asylum-seeking children may not be placed in this accommodation, though perhaps we ought to get a confirmation from the Minister that they will not be placed in it by themselves. However, children will be; I gather that it is intended for families.

I have also gained a very clear impression that the providers of hotels have been quite distanced from what is happening on a day-to-day basis. I assume their contracts contain some requirement regarding the people who run the hotels, but it does not seem to be well enforced. The current assessment for a licence relates to compliance with housing, landlord and tenant law and codes of practice. Will we have codes of practice relating to this accommodation? My noble friend has mentioned the issue of discrimination on a number of grounds. When one thinks about asylum seekers, it is obvious how relevant that is.

The Minister has mentioned dispersal. There are different ways of looking at this. I understand the point she has made about the strain on different local authorities, but there is also an important advantage to placing people with similar backgrounds within what they might well regard as their community. It helps towards settlement, though I recognise that the Home Office is not particularly concerned about settling asylum seekers—probably the contrary. The people who live in HMOs are often vulnerable and not likely to complain. I would guess that this is even more the case with asylum seekers, who will not naturally have much trust in authority figures.

My noble friend talked about physical safety standards and the obvious concern about fire risks and so on. The Home Office may be doubling its personnel, but there are the questions of numbers and training. What inspection and monitoring arrangements will be in force? I do not have a picture of how often it will be. Will they carry out their work only at the start of a contract, or before? The scheme looks too much like a blank cheque for less scrupulous landlords and providers of asylum accommodation. We know that hotel accommodation is now being charged at rates unrelated to its standards.

Reading about how the temporary exemptions from licensing will operate, I wondered whether the administration will be cumbersome because of the varied start dates involved. Inevitably, I wondered what consultation there had been with local authorities. We are told about future work between central government and local authorities, but this sort of scheme, which is a significant change, should—perhaps I am too idealistic—have been one whereby local authorities were satisfied that they had had good involvement with the work of DLUHC.

I received briefings, as other noble Lords will have done, from the LGA, London Councils and Shelter, for which I am grateful. They did not give me the impression that the Government had met their concerns or of how they could do so in future. There is understandable concern that, even if a property is not brought into the scheme until it has been inspected by the Home Office, the conditions will deteriorate and we will end up with a two-tier system. Landlords will surely be incentivised to switch properties away from their existing use to Home Office contracts because they are potentially rather more profitable.

What consideration has been given to continuing the current licensing arrangements but with lower standards? I am referring not to matters such as fire safety but the numbers of people who share bathrooms and kitchens—not that the standards are that high now. If a property is designated as asylum accommodation, what is to stop the landlord letting it to non-asylum seekers? I mentioned tenants being unaware of their rights and frightened to complain. That will be so much more the case than it is now.

Finally, there is the issue of the resourcing of local authorities, whose work in this area is part funded, I understand, by licence fees. Once an HMO is exempt, the local authority will not know where the potentially dangerous HMOs are. Would money not be better spent on inspections and enforcement than on going hunting for HMOs? As the Secondary Legislation Scrutiny Committee rightly suggests, will the Home Office make publicly and regularly available the numbers of asylum seekers placed in unlicensed accommodation? It defies logic to suggest that nothing significant will change in terms of standards—if that were the case, why have this statutory instrument?

My Lords, I thank the Minister for her introduction. I start by saying that my comments will mainly be directed at the Home Office. I am sure that the Minister, with her experience in local government, will be quite sympathetic to some of the things that I will say, even if she cannot say so here. I thank the noble Lord, Lord Scriven, and the noble Baroness, Lady Noakes, for their comments, much of which I totally agree with.

Coming as they do on the back of the complete disregard the Home Office afforded local government and other local stakeholders in the procurement of hotel accommodation for asylum seekers, the provisions in this statutory instrument represent another potential catastrophe as the Home Office once again rides roughshod over the asylum seekers directly affected— I agree with the noble Lord, Lord Scriven, about the dehumanising effect of successive actions that have been taken in this regard—the neighbours and communities of the housing this impacts and the local councils and other agencies that will once again be left to pick up the pieces. Why should our communities be subject to this turbulence because the Home Office has abysmally failed to tackle the weaknesses in its asylum processing capacity and capability? The noble Lord, Lord Scriven, gave the figures, so I will not repeat them.

The impact of government procurement of hotel space at such short notice and with little, if any, liaison with local authorities continues. Local tourism and events have been left short of hotel space. Some events have had to be cancelled or postponed. Weddings and other family celebrations have been cancelled. Staffing has been disrupted because of the need for different service levels. Unsuitable locations have been chosen, leaving asylum seekers stranded with no access to vital services. Local public services have found themselves, without warning, faced with the pressure of tackling complex needs and demands with no chance to prepare or assess the resources they need to deal with them.

Removing the protections in the HMO licensing requirements, which ensure the safety and quality of accommodation, by exempting for up to two years HMOs taking asylum seekers is potentially dangerous and divisive. It risks stacking up long-term problems for asylum seekers in terms of their mental and physical health, their safety in the properties and their recourse where conditions do not meet acceptable standards. The protections the licensing requirements afford around occupancy rates, compliance with safety requirements, sound management practices and the fit and proper test for landlords are essential protections. Councils take them very seriously as they carry out their inspection and enforcement duties.

We could potentially be creating a two-tier system here, where asylum seekers, many of whom are already suffering from trauma and other stress-related conditions, will be relegated to substandard accommodation. We note that the Government say that every property will be inspected by a Home Office contract inspector. What checks will be done to ensure that these contracts are carried out consistently by experienced and qualified inspectors? Will those inspectors be independent of the Home Office and, given current Home Office pressures and capacity, will there be enough resource in the department to manage this process as it rolls out across the UK?

What assessment will be carried out of the capacity of local areas that may already have high numbers of asylum seekers located there to cope with the additional numbers, and how will the potential for community tensions be assessed? Who will do that? The noble Baroness, Lady Noakes, referred to dispersal. How is this being monitored and managed? Can the Minister tell us what the minimum standards will be for this HMO accommodation in terms of, for example, space standards to avoid overcrowding, access to kitchen and bathroom facilities and the location of properties to enable access to other services that asylum seekers may need, such as health facilities?

The noble Lord, Lord Scriven, went through some of the other provisions, which I will not repeat, but a detailed statement of what is included in the Home Office inspections would be extremely helpful. Is it the intention that these HMO facilities will be used only for single adults or are they to be used for families as well? If the latter, can the Minister tell us what minimum level of provision the Government would expect to see for children living in HMOs? How are the Government liaising with local authorities about the potential impact on their existing supply of affordable housing and homelessness provision that may be exacerbated by government procurement of HMO capacity?

London Councils has data from 25 London boroughs showing that they procured 26% fewer private rented sector properties for homeless households in February 2023 than in the same month in 2022, and the total number of temporary accommodation properties requested back by landlords was 150% higher over the same period. As a result of this, the number of households in unsuitable bed and breakfast accommodation in London was 167% higher in February 2023 compared to February 2022. Data provided by 23 councils show the number of families in bed and breakfast accommodation for longer than six weeks was up 823%. Those figures were for London. Have the Government done any assessment of how these figures are increasing outside London and what impact the policy in this SI may have on the availability of homeless accommodation? I am pleased to hear about the additional funding for local government, but it does not help with the availability of housing provision that it will be losing.

Can the Minister tell us what local liaison will be in place for asylum seekers placed in HMO accommodation when they need to raise issues of poor standards or health and safety? I hear what the Minister said about Migrant Help, but I remain to be convinced about the consistency of provision of that on a 24-hour basis, when there may be problems with properties. What engagement structures have been put in place with local government and other public services to ensure that they are able to do all that they can to make this work properly? If councils are not involved, will the Home Office take direct responsibility for safeguarding, health and safety and well-being?

The LGA has requested in its excellent briefing— I agree with what noble Lords have said about how good it is—that there is a commitment from the Government about the timescale with which they expect this provision to be in place and that they have requested that local government be involved in the ongoing review. I am pleased to hear the Minister’s comments on this, but it is telling that the LGA had to write to us all on this issue to give its point of view. It should have been engaged from the very start of this process so that it worked with the Home Office on what the processes would be. Is that something that the Government will now put in place? I hope that that was the assurance from the Minister.

Both the LGA and London Councils—the latter also provided noble Lords with an excellent briefing—have questioned what evidence there is to suggest that this change in regulations will speed up procurement of accommodation. This is already a high-risk part of the housing sector, and the potential to undermine safety and standards seems very risky if there is not clear evidence to suggest that it will achieve the Home Office’s intended outcomes. Can the Minister clarify how this proposed transfer of responsibilities away from local teams will speed up the assessment of properties?

There are so many questions—too many questions to make me feel comfortable that this is going to work at all. One has to ask, just who is this policy for? It is not for asylum seekers, who it seems are to be relegated to some lower-tier housing division which removes any protections, safety and security they may have had while their applications are processed. It is not for local authorities, or other public services, which are left in the dark again and then expected to pick up the pieces of a policy which it seems no one except the Home Office thinks will work. It is certainly not for the communities, which are being asked to pay the price for years of the Home Office’s failure to act. You have to ask—just what is the Home Secretary thinking of?

In my enthusiasm to speak, I forgot to put on record my interest as a vice-president of the Local Government Association.

I thank noble Lords for their contributions to this debate today. Much of what has been discussed is obviously for the Home Office; in my responsibility as a Government Minister, I shall attempt to answer everything I can, but there will be things that I will have to come back to. I hope that I can persuade noble Lords to join me in supporting these regulations, which are a necessary step to accelerate moving asylum seekers from what is not suitable—we have had this debate many times in this House, and hotel accommodation is not suitable—into more suitable accommodation for them.

This is not dehumanising; this is actually giving them a better place to live, and trying to get people out of hotels as quickly as possible. Both the noble Lord, Lord Scriven, and the noble Baroness, Lady Taylor of Stevenage, asked why we are doing this. We are doing it because the asylum accommodation service people are telling us that they have identified that the whole process of licensing requirements is really a challenge to swiftly bring on board the properties that we need in order to get people out of the hotel system.

I think either the noble Lord, Lord Scriven, or the noble Baroness, Lady Noakes, I cannot remember which, asked whether any thought was given to improving the resources for local government to take this on, rather than setting up a whole new system. Is the Minister able to comment on that?

I will go through the support we are providing to local authorities, but I do not think the local authorities could have moved as fast as was necessary to do this: it takes training, et cetera. It is about getting people out of hotels and into better accommodation.

The noble Baroness, Lady Taylor of Stevenage, and the noble Lord, Lord Scriven, brought up the Home Office contracts. I have listed all the requirements under the licensing. I am sorry I have not got an answer to everything. Gas and safety requirements are there in the contracts for the Home Office, as well as compliance with wider private rented sector minimum standards, but I will go through each and every requirement in the licensing and we will send a letter explaining what is there and what is in the contract so that we are absolutely transparent about that.

Therefore, the Minister, at this point, even though we are being asked to accept the statutory instruments, cannot give an assurance to the Grand Committee that it is like-for-like and that housing standards of quality and safety will be exactly as asylum seekers now have in accommodation in HMOs if they are licensed by a local authority? That is what is actually being said: that guarantee cannot be given on a like-for-like basis.

No, I am not going to give that guarantee from this Dispatch Box, because there is a complicated list of things, and if I say, “Yes, it is”, there will be a tiny bit that the noble Lord will come back and quite rightly say, “You have got this wrong”. I am going to make sure that I look at that licensing requirement, look at the contract, and see what differences there are.

Will the Minister therefore give a commitment that that answer and letter will come before the statutory instrument hits the whole House? I think it is really important that we get it before the statutory instrument is before the whole House and agreed by the whole House.

No, I cannot do that because I am not in control of when the statutory instrument comes before the whole House, but we will get it to noble Lords as soon as we possibly can from the Home Office. I am sorry, but that is as much as I can do.

The noble Baroness, Lady Hamwee, brought up the issue of the dispersal policy. I have to say, I hate that word. The noble Baroness, Lady Taylor of Stevenage, brought up the pressures on local authorities; she mentioned London specifically. We need to make sure that asylum seekers are located across the UK, not just in one or two areas. We know the pressures on public services, and we need to make sure that those are not overtaken by larger numbers. It is important that we look at that. Equally, we need to make sure that we do not put asylum seekers away from family, friends and their communities, so we have to do both.

The noble Baroness, Lady Hamwee, asked why there was not any consultation. This is because we think that this is just a necessary step, and we want to get people out of hotel accommodation and into more suitable accommodation. It is not second-class accommodation. We are making sure that it is inspected, checked, safe and appropriate. We thought that it was important not to wait eight to 12 weeks, but to get on and actually deliver this further movement of people out of hotels.

The money for local authorities that the noble Baroness, Lady Taylor of Stevenage, brought up is important. The Home Office has worked and engaged more and more with local authorities. It is increasing that engagement even further. There are fora now for local authorities to work with senior people from the Home Office. As we go move forward through this strategy, I thank local authorities for the amount they are doing. I know just how much the local authorities have been doing and how they were impacted when the Sudanese refugees came in recently. Home Office engagement with local authorities is increasing and will continue to increase at higher levels to ensure that the Home Office knows what the impact on local authorities is.

Councils are receiving £750 per person for each and every existing asylum bed, and £3,500 for each new dispersal bed that comes online. In addition, as part of a four-month pilot, councils will receive a further incentive payment between £2,000 and £3,000 where a bed is brought online within an expedited timeframe following identification. We are supporting local authorities in funding to deliver this important move from hotels to better accommodation.

The noble Baroness, Lady Hamwee, asked if there will be codes of practice. The Home Office contracts require providers to comply with the law, obviously, with local authority licensing requirements, and with a host of best practice guidance. There are many checks and balances on those contracts and contractors to deliver decent homes.

The Minister really confused me then. She just said that the providers of this accommodation will have to abide by the licensing conditions of local authorities on HMOs. Does not the statutory instrument actually remove the requirement on them to do that? Is that not its sole purpose?

No, it removes the requirement for them having to get a licence, which takes time. The letter I am going to write to the noble Lord, and to all noble Lords, will then give the specifics to make sure that there is nothing missing between those two issues. That is what he wants to hear, I think. We will get that to him—that is what he is asking for.

It is, but the logic behind this statutory instrument is to speed up the process of getting accommodation. However, if the accommodation has to be exactly the same as the HMO licensing conditions of local authorities and the Home Office does not have the number of people to be able to do the assessment of the properties, how does it speed up getting the properties? The number of properties will be the same in each area and they will have to be inspected before they can be brought on board to house asylum seekers. I do not understand the logic of how this will speed that up.

The whole process of licensing takes time and, I have to say, a bit of paperwork and bureaucracy. Noble Lords know that these things take time, whereas, if we can get people out and into accommodation that is properly regulated and tested, and people go in there and check it on a regular basis, that is a quicker way of getting people into communities and out of hotels.

The noble Baronesses, Lady Taylor and Lady Hamwee, asked about unaccompanied minors—a really important point. I assure the Committee that they will not be placed in HMOs, which is extremely important.

I know I have not answered everything, but the difference between the licensing regime and the quality regime of the contracts and the Home Office is important, and I want to get it absolutely right and make sure that the detail is correct for noble Lords.

The question that I and the noble Baroness, Lady Taylor of Stevenage, asked was: if the number of people enforcing from the Home Office is going to double, what will that number be and what is the average per local authority area?

I asked for an answer on that, but I do not think it has come forward. I am really sorry; I will get these answers to noble Lords as quickly as I possibly can. I am conscious of what they are asking me to do.

I know it is not the tradition of the Committee to not vote for SIs, or to vote against them, and I understand that—I will not do anything like that—but had this come before my council, with the lack of information that we have about why it is being done, not just what is being done, I could not have supported it. Whether local government could do this job equally well was never assessed. If the Home Office can recruit more inspectors, local government can do so too. If the Home Office are going to look at the same things that local government looks at, why is local government not looking at it? Can we have some clarity about what will be looked at? I am happy to have that in writing.

Before I sit down, I profusely apologise to the noble Baroness, Lady Hamwee, whom I called by the wrong name. I had written the wrong name on my papers, which is completely my fault, and I apologise profusely. I will not get it wrong next time.

I cannot let it go that we are not making it clear why we are doing this. I want to make it very clear that we are doing it to speed up the movement of these people from what the House has clearly said many times is unsuitable hotel accommodation, which is not right over a long period of time, into better accommodation. That is why we are doing it. We want to do it as quickly as possible, and we fell that, in the short term of two years, the licensing regime was slowing that movement down.

I will tell the noble Baroness, Lady Taylor, a tale about mixed-up names when we finish this Committee.

We have focused very much on safety standards. As I understand it, and I may be wrong, the standards of bathroom and kitchen facilities, and possibly the amount of space per person, will be different. I think that is covered by what the Minister has said she will find out about, but I do not want to lose that.

No, absolutely not: I have written down everything that the noble Lord, Lord Scriven, asked to be checked against the Home Office conditions, and we will make sure we check Hansard. I know that things such as bathrooms, kitchens and room sizes were in that list because I have written them down. If there are no further questions, I assure noble Lords that these regulations are an important part of the Government’s asylum dispersal plans—although I do not like that word. I thank noble Lords for the challenge and scrutiny they have given to them, and I will make sure that I get answers to them as soon as possible.

Motion agreed.

Committee adjourned at 6.40 pm.