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Grand Committee

Volume 830: debated on Tuesday 13 June 2023

Grand Committee

Tuesday 13 June 2023

Arrangement of Business


My Lords, shall we begin with the usual proviso? I will let noble Lords know if there is a Division in the Chamber; we do not anticipate one in the next hour or so.

REACH (Amendment) Regulations 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the REACH (Amendment) Regulations 2023.

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

My Lords, this statutory instrument was laid before this House on 20 April 2023 and makes technical amendments to UK REACH. UK REACH is the retained version of EU REACH and is one of the key pieces of legislation that regulates the use of chemicals in Great Britain. This instrument is being made pursuant to powers in the Environment Act 2021. In accordance with the European Union (Withdrawal) Act 2018, UK REACH maintains the core approach and key principles of the EU REACH regulation. Its primary objectives remain focused on safeguarding a high level of protection of human health and the environment.

This SI introduces two changes. I should make it clear from the outset that the changes do not affect the key principles of UK REACH. The first change this SI introduces is that it amends Article 127P(4B) of UK REACH. This provides an additional three years for businesses to submit technical information on the hazards and risks of their substances to the Health and Safety Executive. This extension applies to all grandfathered registrations and chemicals being imported from the EU under the transitional arrangements. Industry will now be required to submit technical information on the hazards and risks of substances that it manufactures or imports by 27 October 2026, 27 October 2028 and 27 October 2030, depending on the tonnage and toxicity. These dates are changes from 27 October 2023, 27 October 2025 and 27 October 2027 respectively.

This SI supports the work that we announced in December to explore an alternative transitional registration model for UK REACH in order to address the significant potential cost, estimated at between £1.3 billion and £3.5 billion, of obtaining or accessing the full hazard information required to meet UK REACH registration requirements. Work on the alternative transitional registration model is ongoing. In response to concerns about the potential costs, we are currently engaging with stakeholders, including NGOs, to develop an alternative transitional registration model for UK REACH that will help reduce the costs associated with obtaining hazard information, including from expensive EU REACH data packages, while still ensuring that industry remains responsible for the safe use of chemicals throughout the supply chain.

The model also aims to place more emphasis on improving our understanding of the uses and exposures of chemicals in the GB context, which will enable better targeting of regulatory actions. Extending the deadlines will provide certainty to industry so that it can avoid making unnecessary investments towards obtaining information for the existing registration model when that information may no longer be necessary under an alternative model.

I now turn to the second change that this SI introduces. It moves the timelines for HSE to complete its compliance checks to ensure that the information submitted by industry is of sufficient quality. These timelines have been moved in order to align them with the extended submission deadlines. We need to move the dates for these regulatory checks because the current deadlines for compliance checking, as set down in Article 41(5) of UK REACH, would otherwise fall before the amended dates for submitting the relevant information. HSE will now have to complete its compliance checks by 27 October 2027, 27 October 2030 and 27 October 2035, corresponding to the three extended submission deadlines.

This is the first time we have prepared an SI using the powers to amend REACH set out in Schedule 21 to the Environment Act 2021. We have followed all the safeguards we attached to those powers: we received consent from the devolved Administrations of Wales and Scotland; we consulted widely with our stakeholders on our plans to extend the submission deadlines; and we published a consistency statement alongside the consultation, as required by the 2021 Act. This provides the Committee with the necessary assurance that extending the submission deadlines is consistent with Article 1 of UK REACH.

Our assessment, as outlined in the consistency statement, demonstrates that the UK REACH regime will still be able to ensure a high level of protection for human health and the environment for three main reasons. The first is the information and knowledge on chemicals registered under EU REACH available to both the Health and Safety Executive and Great Britain registrants. Secondly, importers from the EU will continue to receive EU REACH-compliant safety data sheets from their EU suppliers, which will enable them to identify and apply appropriate risk management measures. Thirdly, the Health and Safety Executive has the ability to seek risk management data from other sources, if necessary, as it did when acting as a competent authority under EU REACH. This could include calls for evidence or using data from EU REACH and other relevant sources that can provide Great Britain-specific hazard and exposure information.

Alongside the public consultation, we also published a full impact assessment on extending the deadlines. The impact assessment was awarded a green “fit for purpose” rating by the Regulatory Policy Committee. The territorial extent of this instrument is the United Kingdom. The devolved Administrations were engaged in the development of this instrument and are content. The Joint Committee on Statutory Instruments did not report any concerns with this statutory instrument.

The Secondary Legislation Scrutiny Committee raised four main concerns in relation to this SI and the ATR more generally, including whether the implementation deadline of 2024 is achievable; concern from stakeholders about weakening protections for human health and the environment; and concerns about the HSE’s regulatory function and the impact of the REUL Bill. As I have already commented, we are confident that UK REACH will still be able to ensure a high level of protection of human health and the environment. I will take the other concerns in turn.

In relation to the timeline for delivery of the ATR, this is a complex project. It is right that we take the appropriate time to develop the policy and test it with stakeholders. We are extending the transitional registration deadlines to ensure that we have a reasonable amount of time to do that. The earliest we can formally consult is the end of 2023, introducing legislation in 2024, and this remains our aim. The timetable is driven by both the technical and the sequential nature of the work. We are just coming to the end of an evidence-gathering project, including detailed interviews with companies including SMEs. Together with the new deadlines, this draft SI will give industry the time it needs to adapt to the new arrangements.

In relation to the HSE’s regulatory capacity, I am pleased to say that it continues to increase its capacity to take on new regulatory obligations. The HSE’s Chemicals Regulation Division increased by 46% between September 2020 and March 2022, and it has continued to build capacity over the last year. By 2025 the number of HSE staff working on UK REACH delivery is expected to grow to at least 50.

Finally, regarding the committee’s concerns about the impact of sunset provisions in the REUL Bill on this SI, I confirm that REACH was not on Defra’s list of retained EU law that it intends to remove from the statute book from 31 December 2023 following the retained EU law Bill becoming law.

I am confident that the provisions in these regulations mean that we will continue to ensure the highest levels of protection for human health and the environment, based on robust evidence and strong scientific analysis. At the same time, we are taking the necessary steps to provide industry with the legal certainty it needs to operate and to preserve the supply chains for the chemicals we depend on. For these reasons, I beg to move.

My Lords, I am extremely grateful to my noble friend for the opportunity to debate the regulations, which I broadly support, and to share with him some concerns that have been raised—in particular, by industry.

I start with the last bit of what my noble friend said about the REUL Bill: that this is not currently on the Defra list of retained EU law that might be changed. Can he give us, and therefore industry, an absolute commitment that in the next two to three years there will be no attempt by Defra to amend or revoke this? When the REUL Bill, which is now in the other place, went through its initial stages, we learned that Defra has absolute power to review, amend and revoke any piece of primary or secondary legislation—I forget all the nomenclatures—on the statute book. We as a Committee, a Parliament and a House do not have the right to review that, so it would be fair to business to know that it is not within the sight, mind or intention of the department to amend or revoke within the next two to three years.

On 24 May my noble friend was kind enough to reply to a Question I tabled on REACH and maintaining compliance with the EU REACH programme. He repeated today that, as we speak, we do not know what the total cost of the statutory instruments and the measures therein will be. In his Answer my noble friend said that it will be £2 billion over six years, but he and the Committee will understand that it is not very helpful to those preparing—the NGOs and particularly the chemical firms involved—that the Government do not have an idea. He concludes by saying:

“Although values of chemical exports are increasing, this is not generally reflected in volume, suggesting that inflationary pressures are contributing to the figures”.

I do not expect my noble friend to be able to reply this afternoon, but I understand that the cost of paint went up hugely after the UK left the European Union and I wonder whether that is partly because of the instrument before us this afternoon and the fact that those who wish to export still comply with EU REACH and are now having to comply with UK REACH, albeit with the slight delay.

The UK chemical sector, represented by the Chemical Industries Association, was kind enough to brief me for this afternoon, and I will share with my noble friend and the Committee its concerns. It

“would like to stress the importance of urgently providing legal certainty to businesses. The current level of uncertainty around future registration requirements, expected timelines and related costs is currently not encouraging new market opportunities. While the proposal to extend the deadlines is much welcomed by industry, clarity on the viability of the future registration model will also be needed very shortly to allow sufficient time for appropriate legislation to be developed and for authorities and industry to implement it”.

When will the future registration model be available?

As regards the concerns raised by the Secondary Legislation Scrutiny Committee, I share its concern that the potential date of late 2024 is not achievable, because my understanding is that the Government are looking at a completely new design for UK REACH, including all the things that businesses are expected to do. Again, I ask my noble friend to put our minds at rest. If it is a whole new design, how, hand on heart, can he explain that the department will be in a position to complete it?

The CIA is also concerned that:

“In considering a different approach to registration, it will be essential to avoid a situation where compliance costs are simply shifted rather than reduced, for example from buying access to data under the current system to new administrative costs due to the work needed to generate a dossier under the new model”.

Therefore, I am sure my noble friend would accept that there is considerable uncertainty as to whether the registration costs can be minimised and that the industry needs to know a workable alternative registration model. The CIA is

“of the view that an effective UK REACH regime could be achieved even without requiring a full resubmission of dossiers for all substances already registered under EU REACH”.

I could go on—my noble friend the Minister is aware that I have tracked this issue for some considerable time—but I share the ongoing concerns raised by the Secondary Legislation Scrutiny Committee. I thank it for providing its report in time for us to consider it this afternoon. My main concerns are that 2024 is not achievable and that the REUL Bill gives my noble friend and his department complete power in this field to revoke or amend this without any consultation of businesses or real scrutiny in this place.

With those few remarks, I look forward to hearing my noble friend the Minister’s response.

My Lords, I rise briefly to make just a couple of points. I remember when the EU REACH legislation was going through the European Parliament. I was involved in a different capacity. It was, as Members will know, the biggest piece of legislation that the European Parliament had ever dealt with. This is a very complex area.

I appreciate the Minister’s exposition of this statutory instrument but, like other noble Lords, I have a couple of questions. As the Minister mentioned, this is not the first extension. I am not surprised by that because this is a complex area. Nevertheless, I want to raise something that I think other Members will also raise; indeed, it has just been raised by the noble Baroness. Is the 2024 deadline realistic, bearing in mind especially that the Secondary Legislation Scrutiny Committee referred to concerns that the ATR might be weaker in its effect? Does the Minister care to elaborate a little more on that?

Another question that arises is whether the HSE has enough staff to cope with the complexity and volume of data and the examination that is necessary in this process. Does the Minister care to comment a little on the industry’s concerns about cost? There are some legitimate concerns about that. Who did the Government consult in the course of preparing this SI? The Minister did not mention anyone specifically, but did the department consult the Chemical Industries Association or the professional body for chemistry, the Royal Society of Chemistry, which has taken a close interest in something of such importance over a period of many years? Does the Minister care to say anything about the capacity for confusion in Northern Ireland between the parallel systems of EU REACH and UK REACH?

Finally, in respect of the retained EU law Bill, I really do think—I hope Members agree—that this is too big an issue for us to allow a future Government to make a major change without consulting Parliament. I would be grateful if the Minister could address those points in his reply.

My Lords, I too have experience of dealing with REACH at the European level. When I was the general secretary of the European Trade Union Confederation, we worked with the British chemical industry, including the Chemical Industries Association—often against opposition from the powerful German chemical industry lobby, which was hostile to the whole concept of REACH. I was very pleased when we got it through; as my noble friend Lord Stansgate just outlined, it was not without considerable difficulty and this is an extremely complex area.

I will make two points today. First, I want to give a little tribute to the Chemical Industries Association, which I have found over the years to be as good a lobby group as any in the business world in terms of taking a broad view of issues, as well as looking after its members’ interests. That is important.

I am particularly concerned to ensure that in the extension that has been given, which I support, we continue to adhere to EU REACH, because we have nothing at the moment and the game plan is there. No doubt we will have some variations on it in due course, and I accept that, but in the meantime, in the absence of a British UK-EU arrangement, I hope that the Minister can ensure that the British industry follows the EU rules until they are replaced.

My Lords, I rise to express significant green concern about this SI and the general direction of travel. We must look at the framework within which we are considering this. We have recently seen published peer-reviewed research showing that the world has exceeded the planetary boundary for novel entities. We have natural systems and, increasingly, human health systems, that cannot cope with the burden of novel entities. I usually talk about those as shorthand for pesticides, plastics and pharmaceuticals, but it is basically what is covered by the REACH directive.

There is now increasing scientific and public concern about the impact of these on environmental health and public health. PFAS forever chemicals are one example of an area that we are coming to understand in our understanding of biology. Most organisms on this planet are structurally holobionts, made up not just of their own entities but of bacteria, fungi and viruses. We are grasping the sheer complexity of life on this planet far more than we did 10 or 15 years ago, and the impact of these chemicals is increasingly understood—for example, the impact of chemical exposure creating antimicrobial resistance, a whole new area of research where there have been considerable advances in the last few years.

In that context, it is interesting to look at some figures. I pay tribute to CHEM Trust, which has provided me with a large amount of information on this issue, with significant expressions of concern. If we take the substances of very high concern, the UK has not added any hazardous chemicals to its list since we left the European Union, while 24 substances have been added to the EU’s list. Defra is considering just four out of 10 substances for the UK list which the EU added in 2021 but is yet to publish assessments on them. In the meantime, another five substances were added to the EU list in 2022 and nine since January this year. This is happening at a very significant pace, and we are falling further and further behind. There seems to be no interest. Can the Minister suggest how we might catch up with the EU in this specific area?

There are obvious public and environmental health issues here, but there are also issues for trade. If our companies are operating on our standards, they will increasingly be excluded from other markets. The Prime Minister has this week been speaking of the desire to be world-leading in innovation. When substances of very high concern are put on that list, there is a push on companies to look for alternatives—to innovate and find new ways of doing things. If we are not creating an environment in which that is likely to happen, then even in the Government’s own terms we are falling behind on the global stage of science and innovation.

Picking up on the points made by the noble Lord, Lord Monks, it is worth noting that the UK was one of the driving forces behind the creation of EU REACH and the restriction of chemicals regulations in 2007. Last night, I was at an Industry and Parliament Trust meeting, talking about trade. I heard there an expert in standards talking about how the UK has in recent decades been a leader in pushing the creation of ISO standards. However, it is our industry, our scientists and our NGOs that led that push towards higher standards. The Government must keep up, and support the drive in our industry, our NGOs and our scientists.

I shall pick up the points made by other noble Lords about the lack of regulatory capacity. The National Audit Office and the Public Accounts Committee have pointed to this lack, which is creating serious problems that are being identified on every side. Others have already spoken about the Secondary Legislation Scrutiny Committee, which also highlights concerns about human health and the environment, and the HSE’s capacity. We are hearing the same messages from all angles.

In particular, the impact assessment says that the absence of data

“could lead to reduced regulatory oversight and regulatory delays”,

but suggests that it would not be significant because other sources of information can be drawn on. However, the publicly available information about registered substances in EU REACH does not include details on safety tests, uses and how the industry reached its conclusion on the hazards and risks of substances.

The time factor needs to be focused on, as does the fact that we know that today, at this moment, we are exposing everyone in Britain and every bit of the UK’s natural systems to harm from chemicals that we continue to release into the environment when we know we should not be doing so. That will keep piling the costs on. The slower we operate, the more costs there will be. Think of the pressure on our NHS and on one of the nature-depleted corners of this battered planet: if we act slowly, the costs will just keep mounting up. For example, I mentioned PFAS forever chemicals: once they are there, we cannot get rid of them. There is no going backwards if we allow their use to continue.

I have some very specific questions. Will the UK look towards mirroring, moving faster than and eventually matching the EU’s pace of action, particularly on the chemicals of most concern? The UK Government talk about whether a control is right for GB. Do the Government see lower standards as being in some way better for us? How can the Minister say that lower standards of chemical regulation and safety are better for us?

An issue on which I have done a great deal of work and have a great deal of concern is microplastics. The Committee will remember microbeads. Indeed, the Government acted a few years ago on microbeads, but many intentionally added microplastics are still not covered by that legislation, which the REACH work programme of 2022-23 indicated as one of its five priorities. However, it has not yet published an evidence review or initiated any restrictions. Can the Minister tell me when we are likely to see that evidence review on intentionally added microplastics? In the light of that question, I note that EU national experts recently voted to adopt restrictions at the REACH Committee. That is now going to the European Parliament and the European Council, so the EU has steps in progress on these microplastics. When will we?

To be really concrete and scientific, and to focus on the importance of this for environmental and, potentially, human health, we—by which I mean scientists collectively: the human race—have identified the new disease of plasticosis. That was identified in one species of seabird, because we have looked for it in only one species of seabird. We are choking this planet with plastics and we have no idea what that is doing to us or to nature.

My Lords, I had the honour to serve on the EU Energy and Environment Sub-Committee when it considered Brexit and the trouble with EU REACH, in that it was not in the least transferable so it is totally dependent on grandfathering, unless there is a stream in which we allow people to apply for new chemicals. We obviously started from zero in our collection and we rely on manufacturers to submit the EU REACH approvals. Do we keep track of how extensive our REACH is, compared with the European one? As the previous speaker said, the EU is expanding its schemes. Do we have tighter regulations than the EU imposes at present?

My Lords, I thank the Minister for his introduction. As with a number of SIs in the past, we have been facing this issue since 2019. At that time, the Government were urged from all sides, especially the chemical industry, to stay within EU REACH. The data analysis and licensing systems that would not be made available to the UK were and are extensive. This would not be the case if the country remained within EU REACH.

The need for registration, evaluation, authorisation and restriction of chemicals is obvious. It protects the public, plants and animals from the harm caused by toxic chemicals, all of which have to be licensed and registered. This is a complex process. Without access to EU REACH data, a completely new set of data had to be compiled and licensed from scratch. This involves animal testing. We cannot get away from this fact. It is necessary, but it could have been avoided. It will also involve huge financial costs to the chemical industry.

On 4 March 2019, my noble friend Lord Fox and I met Defra officials along with the then Minister. We stressed the huge costs involved, which we felt ran into billions, and the long timeframe needed to get the necessary licences in place. I regret to say that we were treated with contempt and told that it would be much cheaper and quicker than our predictions.

The deadline before implementation has already been extended from that set on 26 March 2019. In answer to an Oral Question in September 2020, Defra revealed that EU REACH employed some 600 staff and took 10 years to deal with the difficulties in the system at a cost of £100 million. Defra proposed to achieve the same with 40 staff, at a cost of £13 million. By December 2020, in a debate on a regret Motion, a cost of £1 billion was mentioned.

Here we are today once again extending the already extended timeframe. This is a piece of elastic that has come to the end of its life. Defra’s estimation of the current costs for completing the licensing is now between £1.3 billion and the figure that I think the Minister mentioned of £3.5 billion. I have tremendous respect for the Minister and his predecessor, but on this occasion I have to say to Defra: “We told you so”.

In a debate in 2020, the noble Lord, Lord Cameron of Dillington, began his remarks by saying:

“My Lords, I would like to echo the regret that others have expressed that we have allowed ourselves to walk into this unnecessary nightmare”.—[Official Report, 8/12/20; col. 1162.]

I could not agree more. It is clear than an extension of the timeframe is needed. Is the Minister sure that the timings now being requested will be sufficient? In its report of 11 May, the Secondary Legislation Scrutiny Committee, to which he referred, says that it does not believe that the alternative transitional registration—ATR—model deadline of 2024 is achievable. Can the Minister say whether, during this extended timeframe, animals will continue to be subjected to painful and harmful testing methods? Others have spoken about the effect and the danger of hazardous substances.

Given that the extended timeframe favours large businesses with the greatest tonnage, can the Minister assure the Grand Committee that the smaller but nevertheless vital businesses often providing subcontract work will be able to survive? How many, if any, businesses dealing with and producing chemicals have gone under since the country left EU REACH?

The Minister referred to the Retained EU Law (Revocation and Reform) Bill. How will the three-year extension period proposed today interact with the sunset provisions in the REUL Bill? I believe he said that there would be no impact, but I would be glad for confirmation. The Secondary Legislation Scrutiny Committee raised this issue and the proposed extended deadlines.

In November 2022, Defra extended the submission deadlines for the consultation outcomes. Some 82% of the 289 responses had a strong preference for a three-year extension. However, the NGOs preferred no extension at all. This was due to concerns that the ATR model would be weaker and less protective of human health and the environment than current transitional arrangements, which are also still under development. UK REACH is supposed to be bound by the Environment Act’s precautionary principle. However, there is clear risk involved in the ATR model.

The Chemical Industries Association, the CIA, stresses the importance of urgently providing legal certainty to businesses. The current level of uncertainty around registration requirements, expected timelines and related costs is not encouraging new market opportunities. Extending deadlines is not providing the clarity needed on the viability of the registration model or allowing sufficient time for appropriate legislation to be developed and for authorities and industries to implement it. The noble Baroness, Lady McIntosh of Pickering, referred to this. Will the Minister please comment?

The CIA is of the view that an effective UK REACH could be achieved even without requiring a full resubmission dossier of all substances already registered under EU REACH. Sadly, so prejudiced is Defra to anything that might smack of the EU, it will not adapt EU REACH and insists that UK REACH will be better. If we ever get there, it certainly will not be cheaper.

I will give an example from the CHEM Trust. In its second-year programme, UK REACH deprioritised controls on nine hazardous substances targeted by the EU. These included concentration limits for eight polycyclic aromatic hydrocarbons used as infill and, in loose form, in synthetic football pitches and playgrounds. These are linked to increased cancer risk. A typical sports pitch uses 120 tonnes of these crumbs. According to a 2017 study, six tonnes of potentially carcinogenic material would be non-compliant with the current EU standards. Is Defra’s prioritisation of fewer EU controls on harmful substances a short-term measure until it reaches capacity, or will it introduce other measures to close the protective gap that is opening up before our eyes?

I have serious concerns about the deliverability of the UK REACH regulations. However, I feel I have no choice but to support the extension of the timeframe for delivery. I have a terrible feeling that the ATR will not be achieved and that we will be debating this issue again before too long.

My Lords, I thank the Minister for his overview of the SI before us and for his correspondence in advance of today’s debate. I also thank all noble Lords for their contributions, which highlight the importance of the discussion. Given the discussion in the other place, it will not surprise the Minister that His Majesty’s Opposition will support this SI. However, we have some specific concerns relating to the direction of the post- Brexit REACH regulatory framework and the capacity of the HSE as a statutory body to provide effective enforcement.

As we discussed last week in our debate on the packaging waste statutory instrument—I am becoming a pro—the collation of this data is key to the implementation and enforcement of an effective regulatory regime. But that requires the Government to move at speed to ensure that they have the data available to make informed decisions. Paragraph 7.1 of the Explanatory Memorandum states:

“The changes provide sufficient time for the government to develop and introduce a new registration model that will cater for EU registrations transferred to Great Britain under Title 14A of UK REACH”.

The Government have known about the need to develop and introduce this model for seven years. In fact, the Minister will remember that discussions regarding the future of REACH were a regular feature of the debate around Brexit in the other place before and after the referendum. Given that the industry has been doing everything possible to support the department in reaching a new model, can the Minister inform the Committee why the department is so far behind schedule and why this is being addressed only now?

Paragraph 7.2 of the EM states:

“The statutory timelines for HSE to carry out their compliance checks on the information submitted by industry are also being extended to align with the data submission deadlines”.

I sound like a stuck record, but this is a similar situation to the ones we have seen with imports of food and certain goods from the EU, with launch dates repeatedly postponed due to a lack of preparedness. Can the Minister inform the Committee why we repeatedly need to extend the deadlines?

Later paragraphs of the EM—from paragraph 7.7 onwards—explain why His Majesty’s Government have opted to take a different approach and outline the likely timescales on implementing changes to IT systems. Why were industry concerns about the cost of the original proposal not given more weight at the time? How many civil servants have been used and how much financial resource has been spent on the original option? How much of the work that has already been done can Ministers carry over? While industry supports the changes being made, concerns have already been voiced about the workability of the alternative system and its potential implications for safety, which must remain paramount. We are not against divergence from the EU, but we must not allow gaps to form in our regulation of chemicals. Neither businesses, workers nor citizens will benefit if health and well-being are put at risk unnecessarily.

The Minister in the House of Commons, Rebecca Pow, addressed concerns about the HSE’s capacity by saying:

“Its capacity is increasing all the time … by 2025 the number of HSE staff working on UK REACH delivery is expected to grow to 50, and the number is around 60 or 70 if we consider the wider support functions”.

We welcome that ramping up of capacity, but is the Minister satisfied that this staffing level is sufficient given the areas that we are talking about? In that debate, the Minister also said that the department

“will be developing a chemical strategy”

and that we

“will hear more about that in due course”.—[Official Report, Commons, Fifth Delegated Legislation Committee, 16/5/23; cols. 9-10.]

Can the Minister here, the noble Lord, Lord Benyon, be any more specific? How confident is he that this will not simply be added to the list of items that arrive late?

I sincerely believe that each and every one of us wants nothing more than a regulatory framework that keeps our population safe and secure. Given the nature and importance of the REACH regulations, it is therefore vital that we do not just get this right but get it done quickly.

I am grateful for noble Lords’ interest in this issue, their important contributions to this debate and their support for the REACH (Amendment) Regulations 2023. I will deal with as many of the points as I can.

On my noble friend Lady McIntosh’s point, I can absolutely confirm that there is no intention to amend or revoke any of these measures in the next two years. I will come on to the point about cost.

On the 2024 date, which the Secondary Legislation Scrutiny Committee and a number of noble Lords raised, I repeat the point that I made earlier: the Government are confident that we will be able to meet that date. I am sure that noble Lords will be active in holding the Government to account on that.

On the point made by the noble Viscount, Lord Stansgate, the Health and Safety Executive continues to increase its capacity. The National Audit Office report from May 2022 details the increased staffing levels at the HSE, including the staffing level in its Chemicals Regulation Division going up by 46% between September 2020 and March 2022. The HSE has continued to build capacity in the last year. In the longer term, by 2025, the number of HSE staff working on UK REACH delivery is expected to grow to 50, or around 60 to 70 when considering wider support functions.

The noble Baroness, Lady Bakewell, mentioned that the staff in the EU directorate numbered 600. Of course, that covers the whole of the EU, which is a considerably larger area, but nevertheless we seek to align any regulatory changes we can with them, working with the EU, and I will give more assurances on that.

We do not yet know what the costs of ATR for business would be. As the work is still ongoing, it is not possible to comment on any cost savings. We should have a better idea when we have completed gathering evidence against the developed model. Our estimate is that the existing model could cost industry about £2 billion by 2027. This figure is highly uncertain; it is expected to fall within the range of £1.3 billion to £3.5 billion, although the final cost will depend heavily on industry behaviour. For example, trade bodies in the UK and the EU have recommended that GB companies should not be charged a second time for data they have already used for the purposes of EU REACH.

The costs are composed mainly of business-to-business payments for data, with administrative costs and registration fees also contributing. The central estimate implies an average cost per substance of £91,000 for 22,400 substances. Substance costs are derived from a published evaluation of registration costs under EU REACH but discounted to take account of Great Britain- specific factors.

The noble Lord, Lord Monks, made a very important point about how aligned we are with EU decisions during this extension period. We do not believe it would be appropriate to adopt all future EU decisions under UK REACH. This is because the EU no longer considers the impact of its decisions on GB, including the use of exposure patterns in Great Britain. Nevertheless, the UK will continue to monitor EU decisions and consider whether they are right for GB. On his point about parliamentary scrutiny, ATR will be subject to public consultation, will require the devolved Administrations’ consent and will be brought back to Parliament for affirmative resolution.

The noble Baroness, Lady Bennett, made a number of important points. I entirely agree with her and share her concerns about AMR. Although it is a slightly separate subject, it is top of our priorities to address. All 209 substances on the EU list were transferred to the UK list of SVHC on EU exit. While further substances have been added to the EU list under UK REACH, a substance will not be proposed for inclusion on the candidate list unless it is a good candidate for the authorisation list. Our approach to prioritising substances of very high concern was published on 9 December, 18 months ago. We believe that focusing the candidate list on identifying substances that are genuine candidates for authorisation—the statutory purpose of the list—will more effectively enable substitution away from the most hazardous substances.

On the noble Baroness’s allegation that the UK is not keeping pace with the EU, since leaving the EU we have initiated regulatory risk management options analyses on four substances to assess whether they should be added to the candidate list. These will conclude shortly. Defra, together with the technical specialists at the Health and Safety Executive and the Environment Agency, monitors the European Chemicals Agency’s work to introduce new substances of very high concern to the EU REACH candidates list. Since UK REACH came into force, our work programme has prioritised the issues that are most effectively addressed through UK REACH and where action would have the greatest impact for human health and the environment. Where this work is relevant for Great Britain, we will assess the scientific evidence and ECHA’s rationale for taking this regulatory step. If inclusion on the UK REACH authorisation list would be an effective risk management measure for that substance, we will take action to recommend it for inclusion on the UK candidate list of substances of very high concern. That reflects the concerns of a number of noble Lords.

Now that we have left the EU, we have the freedom to make our own regulatory decisions where we believe that there is a strong case that there is a risk to human health or the environment in Great Britain that needs to be addressed. Defra, the Scottish and Welsh Governments, the Health and Safety Executive and the Environment Agency have sought to focus our work programme activities on those issues that are most effectively addressed through UK REACH and where actions should have the greatest impact for human health and the environment. We have conducted stakeholder engagement workshops with representatives from NGOs, industry, trade associations and academia to inform our priorities and articulate our prioritisation principles. The Government are certainly not interested in lower standards. The requirement in the Environment Act that any changes to REACH must be consistent with Article 1 of REACH demonstrates that.

The noble Baroness also raised important points about microplastics. We are commissioning a research project on microplastics to better understand the risks and consider the best policy options domestically. We will continue to play an active and ambitious role in the UN’s landmark plastics treaty, which it will be critical to progress globally. One of my first jobs as a Minister over a decade ago was to attend the OSPAR talks in Bergen in Norway, where we were shown the revolting sight of the intestines of a fulmar that had ingested plastic. That has affected my view and my determination that cross-party—I know that we all agree on this—we should make this an absolute priority. We have created a nightmare, which this Government have done enormous amounts to try to turn around, but there is still massive work to do, both domestically and internationally.

On the key point raised by the noble Baroness, Lady Bakewell, the UK has long been at the forefront of opposing animal tests where alternative approaches could be used. The last resort principle remains a core part of our approach to UK REACH and has been retained and enshrined in legislation through our landmark Environment Act. The UK supports work internationally to determine which new approach methodologies can provide information on chemical hazards and risk assessment. She asked what impact extending the deadlines will have on animal testing. The alternative model that we are developing should remove any remaining risk by reducing the need to submit detailed information on chemical hazard. As I said, the UK has long been at the forefront of opposing tests where alternative approaches can apply.

Let me give the rationale behind extending the deadline for three years. We consulted on extending the registration deadlines last year. I am satisfied that, based on responses to the consultation, the three-year extensions are the best balance between timely access to registration data that the HSE will need to help it in its regulatory work under UK REACH and the impacts that the changes could have on businesses, especially the potential cost burdens on downstream users and SMEs. The timeframe should allow industry to submit better-quality registration and maximise its chances of compliance. The noble Baroness, Lady Anderson, is, as always, forthright in her determination that we all stick to deadlines and that there is no slacking off in standards. It is vital that we keep our engagement with the European Union and that we work off the data to make sure that we are up to date with all the information that it is receiving and vice versa.

The noble Viscount, Lord Stansgate, asked about consultation. I cannot give here the list of the many organisations, but I am happy to provide it—I am sure that it is available. It was and is an extensive list of continuing consultation and will remain so, because these things are not done in isolation and it is important that we work with all organisations to achieve this. We want to extend the deadlines for the reasons that I have set out. The European Union (Withdrawal) Act 2021 allowed us to start these changes, so we are moving at the greatest pace possible to achieve the necessary regulatory framework.

REACH never fails to generate high levels of interest, as has been said. Today is no exception. We have had a wide range of contributions and a number of questions have been asked. I endeavoured to answer as many as I could in the time available to me.

Putting aside wider issues, I must return to the SI in front of the Grand Committee. As I said at the start of the debate, this instrument is necessary to allow us to extend the existing UK REACH submission deadlines while we make the much-needed changes to the existing transitional requirements for submitting information to the Health and Safety Executive.

Without these changes, businesses would be forced to expend resources obtaining and then compiling dossiers as they would be statutorily compelled to submit information under a model that is likely to change and potentially require different information. This means that the existing deadlines need to be amended before October 2023, when the first deadline falls.

We have made these changes to UK REACH without any impact on the high levels of human health and environmental protections, as demonstrated by the consistency statement and the impact assessments that accompanied the public consultation in summer 2022. Our chemicals sector is world leading and one of the UK’s largest manufacturing exporters by value. We fully recognise this sector’s economic importance and its importance to the way we all live our lives. At the same time, we also recognise the risks to human health and the environment if chemicals are not used properly. We must continue to strike an important balance between these two factors. I commend the draft regulations to the Grand Committee.

Before the Minister sits down, may I briefly raise two points? He said that a difference in exposure patterns would help to explain the differences in regulation between the EU and the UK. I tried to imagine what those differences might be. Some parts of the EU have considerably more heavy industry. We were at a joint event this morning where we were told that both have large areas of factory farming. Thinking about what people actually consume in the EU and the UK, I cannot think of any significant differences between the two that there would be in the pattern of life in terms of consumption. Either now or perhaps in writing, would he consider explaining what those different exposures are?

Finally, I acknowledge that the Minister very much welcomed and is enthusiastic about the microplastics review. What timeframe are we looking at there? I realise that he might not be able to be precise, but will it be this year or next year?

The noble Baroness half answered her first question. An example is that river flow is often lower in England than in the EU. That is a factor, but I will certainly go back to the department and seek further answers on that and on her subsequent question on plastics. I will certainly write to her.

Motion agreed.

Animal Welfare (Electronic Collars) (England) Regulations 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Animal Welfare (Electronic Collars) (England) Regulations 2023.

Relevant document: 38th Report from the Secondary Legislation Scrutiny Committee

My Lords, these draft regulations were laid before the House on 27 April. The purpose of the instrument is to promote the welfare of cats and dogs by prohibiting the use of electronic collars capable of emitting an electric current when activated by a handheld device. As noble Lords will be aware, animal welfare is a devolved issue. Therefore, these regulations apply to England only.

These collars are sometimes described as electric shock collars or e-collars. The instrument will make it an offence for a person to attach, or cause the attachment of, an e-collar to a cat or a dog. It will also make it an offence for a person responsible for a cat or dog that is wearing an e-collar to be in possession of a remote control device designed or adapted for activating the collar. This proportionate and targeted ban will not prevent the continued use of other electronic collars which are not associated with such harm and abuse. These include those that emit a vibration or a spray, as well as invisible fencing or containment systems.

This instrument fulfils a commitment given by the Government in response to their 2018 consultation on electronic training collars for cats and dogs in England. This commitment was reiterated in Defra’s 2021 action plan for animal welfare. Concerns about the capacity for e-collars to cause harm to cats and dogs have consistently been raised with the Government. In response, Defra commissioned research to understand the effect of these devices on the welfare of domestic dogs. The research showed that many owners do not read the manufacturer’s instructions prior to use. It also showed that e-collars have a negative impact on the welfare of some dogs, even when used in compliance with the manufacturer’s instructions. E-collars may also redirect aggression or generate anxiety-based behaviour, worsening underlying problems.

In developing these regulations, we have listened carefully to a range of views from pet owners and respondents and have consulted key organisations, including animal welfare and dog owning organisations, veterinary organisations, e-collar manufacturers, dog trainers and behaviourists. We engaged with both those who support the use of e-collars and those who do not.

I am aware of concerns raised by some colleagues regarding the implications of these regulations on livestock worrying. I assure noble Lords that very careful consideration was given to this matter. My officials liaised closely with the National Police Chiefs’ Council lead on livestock worrying, and with several English police forces, as well as police from Wales. They noted that the vast majority of livestock worrying cases involve dogs that have escaped from the premises on which they are kept without their owners knowing. These are cases that hand-controlled e-collars could not have prevented. We therefore maintain that owners keeping dogs in secure premises and ensuring that they are kept on leads when walked in close proximity to livestock is the most effective line of defence against dog attacks of this nature.

We have also considered the impacts of the ban under the Equality Act 2010. Most people who reported having a protected characteristic, when responding to the 2018 consultation or writing to the department since, noted that they relied on the vibration function of e-collars, so the impact of the ban on people with a protected characteristic will be minimal.

We consider that this instrument is an appropriate and measured response to the welfare concerns raised and to the outcomes of the Defra-commissioned research and public consultation. The Scottish Animal Welfare Commission has also recently conducted its own review. It concluded that e-collars should be banned for any training purpose. The same conclusion was reached by other nations that have already banned the use of these devices, including Wales, Austria and Germany. However, the instrument will allow His Majesty’s Armed Forces to continue to use e-collars controlled by handheld devices where this is needed for national security reasons. The Government recognise that some pet owners and trainers have been using e-collars for some time. This means that they will need time to retrain their pets to respond to alternative training methods and devices. For this reason, we have built in a transition period until 1 February next year, when the ban will come into force. I beg to move.

My Lords, I thank the Minister for his introduction. I acknowledge his confident sign- posting of where the regulation takes us. It is clearly a very welcome regulation; there are millions of cat and dog owners who are hugely fond of their pets and will, no doubt, greet the mention of electronic collars with quite some repugnance. The Minister can be congratulated on his regulation, which will surely be wholeheartedly greeted with no little relief by many pet owners.

The regulations are securely rooted in the Animal Welfare Act 2006—perhaps a landmark Act of its kind. We should thank the department for them. As a dog lover, and a dog owner at one time, I recollect our late dog: a black lab, named Sweep. He was a failed gun- dog and, for sure, he had neither courage nor aggression. When we were burgled, I rather think he was the welcoming group for that misdemeanour.

I have only a few brief questions. Mainly as a point of principle and for the record, will the Minister expand a little on paragraphs 4.1 and 4.2 of the Explanatory Memorandum? How did he or his department consult the Senedd? It is a trifle delphic. It is not sophistry, of course, but perhaps he might expand on those paragraphs a little.

Further, paragraph 7.13 refers to His Majesty’s Armed Forces. How will this operate? In what circumstances does the Minister envisage paragraph 7.13 operating? One might presume that an MoD dog with an electronic collar would be very obedient and might even, if it is doing its work, in some circumstances cease to worry a trespasser. One does not know, so perhaps the Minister could indicate how that might work.

Paragraph 10.4 of the Explanatory Memorandum is about consultation. Can the Minister give a brief summary—a précis—of those involved? Maybe they are well-known national organisations, and it may come easily to his memory whom he or his department consulted. Again, I congratulate him on the regulations and a helpful Explanatory Memorandum.

I thank my noble friend the Minister for laying out these regulations and the work that has gone into drawing them up. I declare my interest as a vice-president of the National Sheep Association. Of course, worrying by dogs is a major concern for the industry. I have had sheep worried by family pets, and it is very sad for all concerned because, at the moment, the only cure for a dog that is worrying sheep is to have it put down. If a dear family pet fails in this way, often people send it away somewhere else, which does not really solve the situation.

Recently, the secretary of the NSA issued a statement that some farmers in Wales are finding that they can train a dog not to worry sheep by using electronic collars. It is not a question of monitoring the collar but of training the dog. This could prevent the putting down of healthy dogs. Has this been considered? The collars are limited to shocks of about 5,000 volts, whereas electric fences and so on can be about 35,000 volts, which animals quickly come to recognise. This is an area where the limits covered by this measure might have to be reconsidered.

My Lords, I declare my interest as a landowner and farmer. We have a flock of sheep and, of course, I keep dogs. These days, it seems that every public document states that it is evidence-based, but too often the scientific research and the evidence involved are pre-organised to produce a political result—and so it is with this legislation, prepared by Defra.

Wales, a country with a great deal of sheep farming, banned electronic dog collars a few years ago. A year after the ban, Welsh farmers reported four times more dog attacks on sheep and that they had needed to shoot three times as many dogs. At home, in 2020, our flock lost five sheep to dog attacks and two in 2021. One was saved but was never the same again, and perhaps we should have euthanised the poor thing when we found it. Last year, we lost 23 sheep. I am not saying that this legislation would have saved all those dogs, because clearly there is an issue with responsible dog ownership. Most responsible dog owners keep their dogs on leads. However, we are about to pass this legislation. Defra understood that 500,000 electronic dog collars were in operation in this country. The RSPCA’s 2021 figures for cruelty to animals reported 1,094 killings of animals and 38,087 abandonments. How many e-collar incidents of cruelty were reported? Zero.

I have had 15 dogs. I have had five generations of working spaniels. In answer to the emotive speech by the noble Lord, Lord Jones, about dog owners loving their dogs, of course I love my dogs. The fifth generation of my working spaniels is a batshit crazy spaniel. I am sure that noble Lords with spaniels will agree with this. I try to love him. Well, I do love him. For Christmas, he got an e-collar. The first thing that I did was use the “vibrate” button on him, but in worst-case scenarios I use the “shock” button. I am lucky that the Government are allowing me a transition period to February 2024; I am certain he will be a brilliant dog by then. He wants to do a good job but he is a lively animal.

What will happen after February 2024 to the 500,000 people in this country who own an electronic dog collar? This legislation says that they will be subject to unlimited fines. I know about this, so I will have to destroy my electronic dog collar and put it in the bin, but what will happen to someone found with one who is unaware of this legislation? What sort of fine will they get?

I turn to the policy background on this. The Explanatory Memorandum says at paragraph 7.2:

“The Government’s decision was based on the concern”—

I suggest that concern is supposition—

“that electric shock collars can be all too easily”—

“can” is again supposition; it is not evidence based—

“be open to abuse and can be harmful for animal welfare, and as there was a lack of evidence of the capacity for electronic shock collars to correct unwanted behaviour without also impacting the animal’s welfare”.

I suggest that there is no scientific evidence because research has not been carried out. This is well-meaning legislation but it is ill thought through and will lead to more animals, specifically sheep, being killed and more dogs being put down prematurely.

I support the remarks of my noble friends who spoke about the use of collars in livestock, but I will ask my noble friend the Minister a brief question. Why has the department provided an exemption for the use of e-collars by the Armed Forces? What was the basis for that? It would be helpful and interesting to have sight of the internal animal welfare standards and permissions of the Armed Forces if they are available.

My Lords, I thank the Minister for his introduction to the SI. He will be pleased to know that I am happy with it and have only a couple of points to make.

In contrast to the previous SI, this one seeks to protect animals from harm and amends the Animal Welfare Act 2006. Once implemented, it will ban the use of handheld devices and prohibit the use of electric shock collars. Anyone found guilty of using a handheld device will be subject to unlimited fines. This is quite clearly a good thing.

Defra conducted a public consultation in 2018. Most respondents supported a ban on all types of electronic training collar but some were in favour of retaining the ability to use them provided they did not deliver an electric shock. Animals quickly learn from these devices and they are useful in keeping animals safe near busy roads by keeping them contained in a restricted area. There is also an opportunity for their use in preventing dogs escaping and chasing livestock, as we have heard. Sheep worrying is a very serious matter—

Might I suggest that the seven-week public consultation in 2018 received 6,700 responses, of which 64% opposed making it an offence to attach an e-collar to a cat or a dog and 63% opposed making it an offence to be responsible for a cat or a dog who had an e-collar?

I thank the noble Earl for his correction. However, I was going on the information that I had received in the SI.

As I was saying, sheep worrying is a very serious matter and one where every effort should be made to prevent it happening.

I welcome the consultation but wonder why it has taken so long since its completion in 2018—five years ago—to bring forward the SI. In the intervening period, many dogs will have suffered electric shock treatment, which could have been prevented.

It is useful to make a distinction between domestic dogs and working dogs. I would support that.

There is a great difference in the way the two systems work. Collars that make a sound or vibrate are not prohibited under this SI. Paragraph 7.12 of the Explanatory Memorandum is very clear on that. It says:

“As electronic training collars that emit sound, vibration or some other non-shock signals are not prohibited under this instrument, they will remain available for situations where voice, sound or other recall methods cannot be used”.

An electric shock is a form of punishment for a dog or a cat, whereas the other system is a more humane way of encouraging domestic animals to adopt a different behaviour. I have seen some of the comments made in response to the consultation, including from those who believe that dogs will go on killing if electric shock collars are banned—the noble Earl, Lord Leicester, seems to indicate that this will be the case. This is the response, I believe, of the farmer and the shepherd, and some weight should be attached to that response. A collar that provides an electric shock is the tool—certainly in a domestic situation—of the uncaring. A better option is for a collar that emits a sound or a vibration.

The noble Lord, Lord Jones, raised an important point about the Armed Forces, and I am very interested in the Minister’s response.

From my point of view, this SI is long overdue in preventing unnecessary suffering endured by dogs and cats. I fully support the ban and the measures contained in the SI; there are exclusions, but I am happy with them.

My Lords, I was not intending to intervene in this short debate but, through sitting here, I think I have something to contribute as a sitting magistrate. I deal with dogs and dog owners in magistrates’ courts in London, and a number of times I have put in place what are effectively dog death sentences for those that have misbehaved. Before one gets to that stage, of course, one would have mandatory chipping and neutering of animals, but sometimes they continue to attack people or other dogs.

It is a very interesting debate, but I have just one specific question for the Minister. We have heard about the unlimited fines on the owner if there is no compliance with these regulations, but can I check that there is no change in the powers of the courts when they are dealing with the dogs themselves as a result of this statutory instrument?

My Lords, it is a pleasure to follow my noble friend Lord Ponsonby. This SI is a necessary piece of legislation and His Majesty’s Opposition will support it. Many of us have and have had wonderful family pets who are and were central to our family life. I come from a family of dog owners, having had an Alsatian and a crazy—maybe not batshit—springer spaniel as cherished childhood pets. I cannot imagine why anyone would wish to use an electronic shock collar for training, rather than treats.

A 2019 study carried out by the University of Lincoln found that electric shock collars compromised a dog’s well-being, even when used by professional e-collar trainers. They were also found to be no more effective than training using positive reinforcement methods. This is far from the only evidence that collars cause harm to animals. We therefore strongly welcome the introduction of this SI.

Given that the consultation took place in 2018 and featured in the 2021 action plan for animal welfare, why has it taken the extra time to bring the measure forward? As acknowledged in the Explanatory Memorandum and by the Minister, the Welsh Government acted on this back in 2010. Can the Minister inform the Committee why we are legislating 13 years later? Do our colleagues in Wales care more about corgis than this Government care about bulldogs?

We welcome the decision to include an exemption—outlined in paragraph 7.12 of the EM—for those with protected characteristics. This will help those who have a legitimate need for collars that emit sound, vibration or other non-shock signals, whether for the owner’s benefit or the animal’s. After all, Labradors, golden retrievers and German shepherd dogs are so valuable for those of our citizens who are dependent on service dogs. It would be an anathema to them that anyone would seek to train their support dogs via shock treatment.

We also note the exemption on the use of electronic collars for the Armed Forces, where this is required for defence purposes. The Minister knows that we share a keen interest on issues pertaining to our Armed Forces. Does he have any estimate of how many dogs this is likely to affect and which breeds, and is he personally satisfied that the Armed Forces’ animal welfare standards are robust in this area?

The Kennel Club is campaigning for the same measures to be introduced in Scotland. Its chief executive, Mark Beazley, was quoted in the Independent as saying:

“More action is urgently needed in Scotland, where regulations are needed to replace the ineffective guidance currently in place, and we will not rest until we see the complete ban on these devices that cause suffering and harm”.

What discussions, if any, has Defra had with Scottish counterparts?

We all have a favourite breed of dog, whether that is a Labrador retriever, a Border collie or a cockapoo. There are more than 13 million pet dogs in the UK. Their owners will expect us to do everything we can to protect their pets from harm, which is why we are supporting this SI. After all, who could countenance the image of a cocker spaniel, a Jack Russell or a labradoodle being subject to electric shock treatment?

I am grateful to noble Lords for their important contributions to the debate. This instrument will deliver on another commitment made in the Government’s action plan for animal welfare. As a nation of animal lovers, we are united in our commitment to do what is best for the welfare of our pets. Protecting them from unnecessary suffering is an important step towards that goal.

Almost unique in any animal welfare debate, I think, has been the absence of a response I get to almost any measure we bring in, which is, “That is all very well, but—”. Usually, people want you to go further. I have been to enough animal welfare events and debates in this and the other place where people always want more. But we hope that we have introduced something that is proportionate, addresses the concerns of animal welfare organisations—I will come on to talk about who we consulted—and reflects the need for this.

Several noble Lords asked about our exemption for the Armed Forces. They are right: this instrument includes an exemption for His Majesty’s Armed Forces where required for defence purposes. This is a specific and limited exemption to ensure that important national security and public safety capabilities are retained. The use of an e-collar in such circumstances would be subject to the internal Ministry of Defence animal welfare standards and permissions. I say to my noble friend Lady McIntosh that it is entirely legitimate that she puts that question to Ministry of Defence Ministers. They have very high standards for animal welfare right across the Armed Forces. There is an exemption here, for reasons of a specialist nature, for certain uses of dogs. I will not go into any more detail, but I assure the Committee that I have been convinced by the evidence I have heard on that matter.

The noble Lord, Lord Jones, asked who Defra engaged with in drawing up the ban. We ran a public consultation on proposals for a ban in 2018. A total of 7,334 responses was received, including approximately 6,000 from members of the public. The remaining responses were from organisations or individuals involved in fields relevant to electronic training collars, dog trainers or vets. Animal welfare groups support the ban, as do veterinary surgeons, the training sector and assistance dog charities. In the way that the data was compiled, an individual’s responded was counted as one and an organisation’s was also counted as one, but those organisations may have reflected the views of many hundreds, possibly even thousands, of members. It may be not quite right to talk about it in terms of percentages. Of course, animal welfare is a devolved matter and we engage closely with the devolved Administrations on a range of issues, including this policy.

A number of people have raised the issue of the increase in sheep worrying in Wales subsequent to the ban. I investigated this closely in the lead-up to our debate on this statutory instrument. It is clear that, across police forces, there has been increased activity and an increased determination to work with both the public and farmers to report sheep worrying events; that may be the reason why we have heard of more cases. Sheep worrying is a disgusting thing to witness. I have had livestock killed and injured by dog worrying. This Government have taken immense pains to try to limit these sorts of activities. We will continue to work with others to make sure that we limit the number of livestock worrying incidents and dog attacks.

Very careful consideration was given to the potential unintended consequences of these regulations. We liaised with the National Police Chiefs’ Council lead on livestock worrying and several English police forces. They report that the vast majority of livestock worrying cases involve dogs that have escaped from the premises in which they are kept without their owners knowing. One police force reported that in 70% of such cases, no one in control of the dog was close by.

The police were also clear that they would not recommend the use of e-collars to prevent instances of livestock worrying. As I said earlier, we therefore consider that keeping dogs on leads around livestock and securing dog enclosures are the best measures. This aligns with the advice provided in the Countryside Code, which has just been updated and is supported by landowners, and the views of the Scottish Animal Welfare Commission, which recently reported on this issue.

The noble Duke, the Duke of Montrose, mentioned electric fences being used to deter livestock from crossing a boundary. They deliver a shock directly to the body and are of course different to e-collars. The use of electric fences in agricultural settings is subject to statutory guidance, which requires anyone installing an electric fence to ensure that it is designed, constructed, used and maintained properly so that, when animals touch it, they feel only slight discomfort. I can assure noble Lords that I have touched enough electric fences in my lifetime to know that they give quite a belt, but they are within regulatory parameters.

Last year, the Animal Welfare Committee prepared an opinion on the welfare implications of virtual fencing systems for livestock—something that could transform our nature conservation and agriculture use, particularly in the uplands. It found that the use of these systems could offer several potential welfare advantages over conventional electric fencing, such as improvements to livestock nutrition, health and welfare, as well as benefits for the land being grazed.

A question was asked about the evidence on which we based our decision. Concerns that e-collars can cause long-term harm have been raised by a number of trainers, behaviourists and dog-keeping organisations, as well as the animal welfare sector. Defra-commissioned research revealed that many shock collar users were not using them properly and in compliance with the manufacturer’s instructions. The research was commissioned in line with the standard processes for the tendering and consideration of bids and in accordance with the rules on government procurement exercises. Data from the research was published separately in two different reputable scientific journals, which required additional independent peer-review exercises involving scrutiny from experts in the same field prior to publication.

As well as being misused to inflict unnecessary harm, there is also concern that, even when used in compliance with the manufacturer’s instructions, shock collars can redirect aggression or generate anxiety-based behaviour in pets, making underlying behavioural and health problems worse. Further to that point, the Government are satisfied that the processes for the tendering and consideration of bids were carried out according to the guidelines, and data from the research was published in two separate reputable journals.

My noble friend Lord Leicester raised some really important points. We will proactively raise awareness of the prohibition and its scope in advance of 1 February 2024, when the regulations come into effect. We intend to work closely with welfare charities, the training sector and the veterinary profession to reach as many owners as possible. We also intend to update the Code of Practice for the Welfare of Dogs, which includes guidance and reminders for owners about their responsibilities to provide for the welfare needs of their animals; guidance on how to minimise the adverse effects of containment systems by having them installed by a professional and set up properly; and guidance on ensuring that the owner is provided with training in their use.

My noble friend will not have to throw away his electric collar: he can put it in a glass case, which he can smash to retrieve the collar if some future Government change the law. He will not be a criminal for possessing it; he will be breaking the law if he uses it. I want to be absolutely clear about that.

Organisational responses to the consultation counted as a single response, as I said earlier. The offence applies mainly when a collar is being used—a point I just made —or if a dog or cat is wearing an electric collar and the owner or keeper is in possession of a remote collar- control device which is connected to the collar, so they look as if they are about to use it.

The noble Baroness made a good point about the time it has taken; it has taken a long time. I think I first attended an event in this building shortly after I was elected to the other place in 2005, and I remember a friend of mine in the House of Commons, Roger Gale, putting an electric collar on his neck to feel the impact. He invited me to do it and I declined. I have four dogs: two whippets and two spaniels, one of which entirely fits the description that my noble friend Lord Leicester applied to his dog, but I am doing my best to change its behaviour through other means than the one we are outlawing today.

I conclude by thanking noble Lords for their contributions, and I commend the regulations.

Motion agreed.

Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment) (England and Wales) Order 2023.

Relevant document: 38th Report from the Secondary Legislation Scrutiny Committee

My Lords, I beg to move that the Committee has considered the statutory instrument to amend the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 to add four occupations: chartered management accountants, fire and rescue authority employees, justice system intermediaries, as defined, and notaries public of England and Wales.

As your Lordships know, the Rehabilitation of Offenders Act 1974 governs the disclosure of cautions and convictions for most employment purposes. Under the Act, most convictions become spent following a specified period, which supports the rehabilitation of offenders, helping them to put their past behind them.

The exceptions order lists the categories of jobs where those protections are lifted so that individuals, if asked, are required to disclose spent convictions. There are certain jobs where more complete or relevant disclosure of an individual’s criminal record may be appropriate, particularly when we are dealing with financial matters, professional persons, vulnerable persons or young persons, among others. There is clearly a balance to be struck here between the rehabilitation of the offender and the protection of the public.

The order proposes to add four occupations to the exceptions order. First, it adds members of the Chartered Institute of Management Accountants—CIMA. This is related to the functions that they carry out, which are fundamentally based on trust and present a particular opportunity to cause harm to the public through abusing that trust. The order already includes most accountants but, for historical reasons, it does not yet include CIMA, whose members carry out very similar functions to those already carried out by chartered accountants. The addition has been requested by the institute itself and it already exists in Scotland, so in the Government’s view, it is entirely in line with the policy and intent behind the order in question.

The second category being added is employees of the fire and rescue service, where, in the Government’s view, there exists a clear case for change. The Independent Culture Review of London Fire Brigade contains some troubling findings, and recent reviews into fire and police culture have also revealed certain failings. That has been confirmed by a report by His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services. It is important that we vet people we employ in our public services. Firefighters in particular come into contact with the public in certain circumstances, so it is right that they should be included.

The addition is particularly sought by the National Fire Chiefs Council, representatives of which, I gather, are present today. It asked that this change be made. In the Government’s view, this supports the ongoing reform of the fire and rescue service from a cultural and safety point of view, bearing in mind that firefighters in particular often attend schools or vulnerable persons’ homes and incidents or accidents as first responders, exercising statutory powers and helping to safeguard others. Therefore, it is only right that the fire and rescue service should be included. We hope that this will protect and enhance the reputation of our fire and rescue service employees, who are deeply trusted: we admire their courage and dedication to duty. In the Government’s view, this will enhance the trust that they must enjoy to carry out their roles effectively.

The third category being added is justice system intermediaries, whose role is essentially to enable communications with vulnerable witnesses and parties in police inquiries and court and tribunal proceedings, particularly those who assist the Ministry of Justice in the witness intermediary scheme or are appointed as intermediary advisers. Their participation is generally to help witnesses who are, for example, under 18 or suffering from some mental or physical disorder or impairment. These intermediaries are clearly in a position to have unsupervised access to vulnerable adults. In the context of their duties, they may have unsupervised access to children under the age of 18, and the role can involve discussions with vulnerable people concerning highly personal or sensitive matters, such as domestic or sexual abuse. The inclusion of such persons in this list will add to the safeguarding of the vulnerable people concerned and place the intermediary in a position of increased responsibility for the welfare of the vulnerable people. Again, that will increase trust in the system.

The fourth category being added is notaries. This is a quite different category. A notary—or notary public, to give the technical term—is a specialised lawyer who has undertaken further legal education and examination, and is typically responsible for certifying and authorising certain documents, particularly those relating to property deeds and other financial transactions, and to foreign court proceedings, foreign qualifications and the like. For those who enjoy the byways of history, notaries are still regulated by the Faculty Office of the Archbishop of Canterbury. Although most notaries are solicitors, they do not have to be. They attest the authenticity of documents, certify documents, take affidavits and swear oaths.

The background to this, particularly in the light of the Ukraine crisis, is that the then Deputy Prime Minister, the right honourable Dominic Raab, asked the legal services regulators how the Government could support the upholding and enhancing of the economic crime regime. In response, the Faculty Office recommended adding notaries to the exempted professions under the exceptions order, so notaries are now added to barristers, solicitors and other similar professions that are already subject to these enhanced checks.

The effect of this order is that while there is a basic DBS check for many employees in the existing exceptions and those in the categories I outlined, the order now moves them up to a standard DBS check, where relevant convictions which would otherwise be spent are disclosable. That is to protect the public. However, it is important that this change is implemented proportionately, because the Government are still very much concerned with the rehabilitation of prisoners. Without taking up the Committee’s time this afternoon, I draw attention to the proportion of prison leavers who are in employment six months after release having doubled in the last two years to March 2023. The Government have taken many active steps to help released prisoners to gain employment.

All the professions that I mentioned have agreed to produce updated guidance, developed with the support of MoJ officials, to ensure that employers are fair in their recruitment decisions. Just because a firefighter in his early 30s got into bad company 10 years before does not mean that he is not a trustworthy firefighter today. It must be borne in mind when we implement this that having to disclose a conviction does not mean that you will not get the job. This must be done in a fair and balanced way. The Government are very conscious of that.

Those are the main points that I would draw to the attention of the Committee.

My Lords, the Opposition support this draft order. Supporting ex-offenders into employment is something that we must all endeavour to be better at, especially given the central role employment can play in preventing future offending. It is vital that our criminal records system does not unnecessarily trap people in the past when they are committed to reform and have stayed out of the offending cycle and rebuilt their career. However, the overriding concern when legislating in this area must always be the protection of the public.

The exemptions included in the 1975 order strike that proportionate balance because those areas of work, such as working with vulnerable individuals or potentially sensitive information, require a high degree of trust. We are satisfied that the proposed extensions to the 1975 order can be introduced while maintaining that vital proportionate balance. Given the culture that we have seen across some of our fire and rescue authorities, and the police, we must ensure that people are properly safeguarded. I am glad that representatives of the fire authorities are here today.

Justice system intermediaries have very high levels of responsibility for the vulnerable individuals they assist, including children, and they sometimes have unsupervised access to them. Notaries also frequently deal with vulnerable people and highly sensitive information, and it is right that individuals who undertake such work are subject to additional DBS scrutiny.

The relevant organisations are producing guidance to ensure that a proportionate approach is taken with regard to the disclosure of criminal records in these additional areas, to ensure that equality and individual privacy are upheld alongside public protection. What plans, if any, do the Government have to review this guidance to ensure that it is indeed proportionate, as the Minister emphasised, and drafted in line with the anticipated need of those professions, as recommended by the Secondary Legislation Scrutiny Committee?

Can the Minister share whether the draft order represents the extent of his department’s current intentions to change the criminal records system? Will he also inform us whether he has had any recent meetings with the organisation #FairChecks, or whether the Government have any plans further to reform in relation to its campaign about offences committed in childhood?

When preparing for this short debate, I reflected on my experience with the DBS system. As somebody who has worked all their life in private industry, I have never been checked in the DBS system. I have recruited many people and been recruited, I have been a company director and various other things, and I have never been checked. However, I have been checked by the DBS system as a magistrate and as a coach for my son’s sports clubs to make sure that I am a fit and proper person to carry out that coaching role. However, I have never had to jump that particular hurdle in my working life.

As the Minister said, this is a very live issue when one deals with youths, as I do as a magistrate. It is not unusual for me to have a youth in front of me who says that he aspires to being a football coach. Of course, if you are a football coach you will be coaching youths, which requires the highest level of DBS check. It is not necessarily a bar, but it is the highest level. When I sentence youths, I want to encourage them to go on to fulfil their ambition, if it is to be a football coach. While on the one hand we support these enhanced safeguards, I hope they will not be a bar on people fulfilling their ambitions. The fear is that these enhanced checks will act as a disincentive for people to go ahead and apply for certain types of roles, such as the example I gave.

I hope the Minister can expand a little further on what the Ministry of Justice is seeking to do with a wider review of the whole DBS system, and how it could be thorough on the one hand but on the other proportionate to the aspirations of people who seek to get a job as a firefighter, as in his example, or, as in my example, a youth who wants to be a football coach. The system is very cumbersome. The effect of that is that it discourages people checking and putting their names forward. I hope the Minister can expand a little further on the work the Ministry of Justice is doing to look at the whole criminal records review process.

My Lords, I thank the noble Lord for his contribution and for the support he offers to this statutory instrument. I will respond to his two main questions. First, on the guidance, officials from the Ministry of Justice, with the help of officials from the Disclosure and Barring Service, are working closely with representatives from these professions to develop and update their guidance to ensure that it is proportionate and fair. As far as I know, that is an ongoing process and a matter for ongoing review to make sure this scheme works proportionately.

As far as other plans are concerned, as I understand it—having regard to the Police, Crime, Sentencing and Courts Act 2022 and a recent judgment of the Supreme Court—the intention is to remove the disclosure of certain youth cautions, warnings and reprimands from the system altogether so that there is less clutter, if I can use that shorthand, in the system. There is also something called the multiple conviction rule, which I think necessitated disclosure when there was more than a single conviction. This will, I hope, reduce the likelihood of protection of the public unduly interfering with the important objective of rehabilitation; that is the intention, at least.

We have to find a balance. We are doing our best, particularly in the youth area. I am conscious of the point made by the noble Lord, Lord Ponsonby, about those who aspire to be a football manager and so forth. We really do not want, if we can possibly avoid it, to put obstacles in their way from when they got into trouble at 15, 16 or 17 when they are now 27 and settled down. We do not want the earlier criminal record to be a blight on their lives. We have to strike the right balance.

Work on this is ongoing. My good friend in the other place, the right honourable Edward Argar, is meeting criminal justice charities on 13 June—tomorrow, I think. It may even be today; I have slightly lost track of what day it is at the moment. They will discuss further reform of the criminal records system to see whether we can simplify it and tip it a little more in favour of youth, in particular, to ensure that the rehabilitation objective is properly followed.

That is the most I am able to say this afternoon. I am sure that there are further instalments to come in this important story. Unless noble Lords have any other questions, I commend this instrument to the Committee.

Motion agreed.

Register of Overseas Entities (Penalties and Northern Ireland Dispositions) Regulations 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Register of Overseas Entities (Penalties and Northern Ireland Dispositions) Regulations 2023.

My Lords, I beg to move that these regulations, which were laid before the House on 26 April 2023, be considered. They form part of a series of secondary legislation needed to effectively implement the register of overseas entities. The register of overseas entities, which I will refer to as the register, was created under Part 1 of the Economic Crime (Transparency and Enforcement) Act 2022, which I will refer to as the Act.

The register will help crack down on dirty Russian money in the UK and corrupt foreign elites abusing the openness of our economy. Overseas entities owning or buying property or land in the UK must give information about their beneficial owners or managing officers to Companies House. Law enforcement agencies now have a wealth of new information to help them track down criminals using UK property or land as a vehicle for money laundering.

On 1 August 2022, the register went live, with the deadline for registering set at 31 January this year. There has been a high level of compliance, with more than 28,100 overseas entities already registered to date. Entities that disposed of land before the end of the transitional period were required to provide statements with information about their beneficial owners and details of the land disposals, such as the title numbers. More than 750 have provided details to Companies House, having disposed of all their interests before the end of the transition period. This means that just under 29,000 entities have complied with the requirements. While that leaves up to a few thousand entities still to register, some of these are believed to have been dissolved or struck off and others have not kept their addresses up to date with the land registries. This means that they may not have received letters from Companies House.

I know noble Lords will want reassurance that compliance and enforcement action is being taken. This takes time but is well under way. Companies House continues to work to increase compliance even further and is preparing cases for enforcement action. Any overseas entity that has failed to register is already restricted from selling, leasing or raising charges over land that they own. Overseas entities are also unable to register any new purchase of UK land without first registering. These are novel and severe sanctions.

It is worth reminding noble Lords that, when the draft Registration of Overseas Entities Bill was scrutinised by Parliament in 2019, the Joint Committee on Human Rights warned of the severity of these restrictions, in particular the “chilling effect” that this would have. The Government took these concerns seriously but felt that the sanction was proportionate given the register’s policy objectives. This shows the seriousness of the sanction and the need for the Government to balance our approach to enforcement so as not to deter legitimate investment into the UK.

Once the Economic Crime and Corporate Transparency Bill receives Royal Assent, a further enforcement tool will be added to our arsenal. A person who receives a financial penalty from the registrar or is convicted of an offence may be disqualified from acting as a UK director. Once that Bill receives Royal Assent, I will also bring forward further regulations under new and amended powers to further strengthen the register’s requirements.

I now turn to the details of this instrument. These regulations deal with two main areas: financial penalties arising from offences in relation to the register; and the treatment of land disposed of in Northern Ireland by overseas entities and the rights of those acting in good faith. The Bill sets out that the registrar may impose a financial penalty as an alternative to criminal prosecution. This instrument sets out the procedure for imposing and enforcing these financial penalties. A financial penalty could be imposed on a variety of persons depending on the offence in question. For example, it could be imposed on the entity and its officers where an overseas entity has failed to register, a verifier who has knowingly submitted a false filing or a person who has failed to respond to an information notice sent by an overseas entity.

If the registrar suspects that a person has committed an offence, she may issue them with a written warning, giving them 28 days to make representations about their conduct. If the registrar is satisfied beyond reasonable doubt that the person has committed an offence, she may issue a penalty notice in writing to that person, giving them 28 days to pay the penalty. If a person fails to pay, interest will accrue at the statutory interest rate of 8% per annum.

The instrument sets out that financial penalties imposed by the registrar may be fixed, set at a daily rate or a combination of both. Where the criminal fine set out in the Act is a fixed penalty, the registrar may impose multiple penalties in relation to the same conduct if the contravention continues. Subsequent penalties could be of increasingly higher amounts to encourage compliance. The instrument does not prescribe the specific financial penalties that may be imposed on each offence. Instead, it states that a financial penalty must not exceed the maximum fine that a court in the jurisdiction in which the offence was committed could impose under criminal proceedings. This flexibility allows non-compliant persons to be targeted proportionately and effectively and allows for penalties to be adjusted according to the seriousness and specifics of the case.

I will now briefly set out the approach that the registrar will take. Given that financial penalties are an alternative to criminal prosecution, the registrar will bear in mind the process that a court would follow. They will be proportionate, as the goal of the financial penalty regime is to encourage ongoing compliance with the requirements of the register. When deciding whether to prosecute and what sentence to give, courts follow sentencing guidelines to ensure that it is in the public interest to prosecute and that the sentence is proportionate to the seriousness of the offence. The registrar will also consider the public interest and be proportionate when imposing financial penalties.

The Act provides different maximum fine amounts and prison sentences commensurate with the nature of the offence. Contrary to recent reports, the Act does not set out that courts may impose daily fines for the failure to register offence. This means that the registrar cannot impose daily penalties either. Instead, the instrument allows the registrar to impose more than one penalty if non-compliance is ongoing.

For the failure to register offence, the Act sets out that, in England, Wales and Scotland, courts can impose an unlimited fine. In theory, this means that the registrar may impose an unlimited financial penalty if an overseas entity fails to register. As an indication of the seriousness of this offence, the registrar will review portfolios owned by overseas entities that fail to register.

The registrar will use a range of sources to estimate the value of the portfolio in question, including the UK house price index and data on business rates bands. The registrar will then apply different starting points for the financial penalties, depending on whether the estimated value of each property or piece of land falls into one of three bands. If its value is estimated to be in the lower band, the starting point for the penalty will be £10,000. If it is estimated to be in the middle band, that rises to £20,000. If it is estimated to be in the higher band, it rises again to £50,000.

If an overseas entity owns more than one property or piece of land, the penalty values will be added up to calculate its starting point. Given that interest will accrue at the statutory interest rate of 8% per annum, if an overseas entity fails to pay, the penalty will rise quickly. The registrar may also consider other aggravating factors, such as whether the person has committed the offence previously.

Where any financial penalty remains unpaid, it can be enforced as if it were a judgment debt, including by registering a charge against the property or land owned by an overseas entity. The registrar will keep the model under review before imposing financial penalties for failure to file the annual update on time. If the registrar finds that the level of penalties needs to be reviewed because they are not providing a sufficient deterrent, this instrument gives her the flexibility to do so.

The instrument gives the registrar the power to vary or revoke financial penalties on a case-by-case basis, for example if new information comes to light that aggravates or mitigates any offence. The instrument also sets out the grounds for appeal and the court’s powers in relation to that appeal.

This measure adds to the tools at the registrar’s disposal to promote compliance and maintain the register’s credibility as a vehicle for improving transparency and reducing the misuse of UK property by overseas entities. Companies House has been preparing to operationalise these regulations and will be ready to issue notices as soon as they come into force.

The second part of this instrument sets out the grounds for registering dispositions in Northern Ireland that would otherwise be prohibited. It amends Schedule 8A to the Land Registration Act (Northern Ireland) 1970 to provide a mechanism to allow the Secretary of State to consent to the registration of a land transaction that would otherwise be prohibited.

If a third party transacts with an overseas entity at a time when that entity is non-compliant with the register’s requirements, the third party will be prohibited from registering the transaction. For example, if they have purchased land from a non-compliant overseas entity, they will be unable to register themselves as the new proprietor. The intention of this sanction is to disincentivise anyone from transacting with non-compliant overseas entities. However, in certain circumstances, it is possible that a third party may transact in good faith without knowing that the overseas entity was non-compliant, resulting in their acquisition of a land title that cannot be registered with the Land Registry. The Act is not intended to penalise innocent third parties, so this mechanism is necessary for the effective functioning of land transactions. A similar mechanism is already available in England and Wales, and in Scotland.

The Bill’s expedited passage through Parliament last year left no time to include this mechanism in the draft Bill for Northern Ireland. Instead, a power was taken to make regulations, ensuring that consistency in the application of the requirements could be maintained across the UK. The instrument also inserts a regulation-making power into Schedule 8A to enable regulations to be made to specify how applications should be made, and makes other consequential amendments to Schedule 8A.

I close by emphasising once again that the measures in these regulations are crucial for the effective operation of a register that will crack down on dirty Russian money in the UK and corrupt foreign elites abusing the openness of our economy. I hope noble Lords will support these measures and their objectives. I commend these draft regulations to the Committee.

My Lords, I thank the Minister for that extremely clear and helpful explanation of the statutory instrument. As he will be well aware, we are now in the middle of considering the second economic crime Bill in two years. This deals with a number of issues that overlap with those two pieces of legislation, in particular the position of Companies House and how far it will have the additional staff needed to handle its new responsibilities and ensure that this SI and the other elements of those two pieces of legislation will be effectively enforced. I would welcome any reassurance he might give on that.

It is encouraging how much compliance there has been so far. It will be interesting and useful to know how stubborn the remaining non-compliant areas are. What is the scale of the unregistered land and properties that we still face in England, Scotland and Northern Ireland? We are all aware of stories of large houses in Hampstead that have been unoccupied for many years and whose ownership is unclear. Is this SI likely to end that situation so that business rates can be properly levied, and so that ownership will be clear and, if necessary, come under scrutiny and be changed?

I am interested in the remark about an alleged chilling effect from forcing everyone to comply. I have a certain interest in this, since my wife and I are thinking about downsizing and are looking at aspects of the London property market. On looking at a major new development on the South Bank some months ago, we were told that just over 40% of the apartments had already been sold to foreign buyers. I wonder whether the Government have looked at the impact of full compliance with the new overseas ownership regulations and whether they think that will have a marked effect on the London housing market—and possibly on London house prices, which the Wallace family would welcome.

The extent to which over the last 20 years a number of new housing developments in London have been built specifically to be sold to foreign owners rather than to serve the needs of people who need housing here has been one of the scandals of our housing market, and we very much welcome this position now changing.

I want to ask a little about how we can be assured that financial penalties themselves can be enforced, given that these overseas beneficial owners will be in a range of different jurisdictions, many of them not particularly friendly to the United Kingdom and not particularly open to the United Kingdom, whether it be Panama, Bahrain, Malaysia or Hong Kong, all of which have difficult arrangements.

The Minister mentioned charges on the property. Does that imply, as I hope it does, that, when a financial penalty is imposed, it is held against the property and that, if necessary, if it is not paid, the property will in effect be confiscated?

Are there any other specific issues that relate to Northern Ireland about which we should be aware, or is this simply a matter of slightly different legislation? Is a substantial amount of land in Northern Ireland owned by anonymous overseas owners? Are there particular security dimensions there which might require more people to want to maintain the anonymity of ownership than on the mainland? We are well aware of some of the complexities of the situation there.

In general, however, having asked those questions, naturally we welcome this SI as we welcomed both last year’s Act and this year’s Bill. We look forward to a stronger Companies House enforcing this regime and we hope that it will have a highly beneficial effect on the British housing market, on reducing the amount of illicit finance coming into the United Kingdom, and on what the Treasury receives from business rates and what local authorities receive from property rates in future.

I add my thanks to the Minister for his opening remarks and the detail that he went into in explaining the nature of the SI before us. I preface my comments by picking up on one remark that he made, that the whole purpose of this is not to deter investment. We are always looking at finding the bad actors in this situation, rather than bringing in penalties that will have a detrimental effect on businesses’ ability to attract investment.

We regard this as an important statutory instrument, and I am sure the Minister will agree with me that it is very overdue. We know that there were conversations around this and action was taken by David Cameron back in 2016. We have to acknowledge that it is a tragedy that it took the war in Ukraine to precipitate the action that we have seen thus far. I hope we do not get into a Groundhog Day situation, as I know that we will probably engage in further conversations around this when we head into Report on the Bill next week. However, that is the nature of the fast-moving situation that we are in. Many of the issues that have been touched on today have been discussed at length in Committee on the Economic Crime and Corporate Transparency Bill, so I do not want to repeat too much of that, knowing that we will come back to it.

As I say, we support provisions within this SI and believe that they are common sense, but we have to acknowledge that the delays have been at a cost.

I believe the fine is currently set at £2,500 per day. Is it the case that no one has yet been issued with a penalty? It would be good to clarify where we are in the process. We certainly want to see action stepped up against those failing to comply with the new legislation, and we know that there are those who are yet to face financial penalties. The spirit running through all the debates about the next stages of this is of wanting the system to be as robust as possible. In particular, as the Minister mentioned, this presents us with an opportunity to bring in further measures and strengthening, but the question that will run throughout this, which he probably cannot answer at the moment, is whether it will be fit for purpose and will cover all the issues that come up.

How soon after the passing of the SI will the registrar be able to issue financial penalties? I presume there will be a process of issuing warning notices. Has there been any provision for warning notices to be sent out in advance of the SI being passed? It would be helpful to know whether that is the case and therefore whether it will be possible for the registrar to move to those financial penalties as soon as the SI has been passed.

More generally, on timings, the dates of appeal on the warning notices suggest that a period of 28 days needs to be passed. Can we have some clarification? The draft regulations state that the period contained in any warning notices

“must be at least 28 days beginning on the day after the date of the warning notice”

being issued. If a company or entity disagreed with what was in the warning notice, would it have to make representation to the registrar within 28 days or after a minimum of 28 days? There is a need for some clarification. Also, if warning notices have been issued, have any written representations been received?

I also emphasise the issue that we have raised significantly. I am grateful to the noble Lord, Lord Johnson, for arranging for us to meet the registrar and some of her officers; it was a very instructive meeting. But, as has been outlined, I want to put on record our continuing concern about whether the level of resources will be fit for purpose, given the scale of change being brought in, the number of companies that we have heard about and the fact that there will be stubborn cases that are difficult to bring to a conclusion. We have had some reassurance that this will not be fixed in stone and that if the registrar feels that more resources are required, they will be able to come back to that. The issue is the sheer capacity and the fact that the status of those working in Companies House is being changed from recording information to taking action when there is suspicion of wrongdoing.

The other area that has generated a great deal of concern is the 25% threshold for beneficial ownership and the possibility of anonymity that it gives, enabling overseas entities access to UK properties and markets. I know there will be more discussion around this, but it is important to flag these matters whenever we have the opportunity. I hope the Minister will acknowledge that this area still presents a problem in getting underneath all the issues that need to be addressed. I thank him for his very clear explanation of the powers in the SI to consent to Northern Ireland dispositions.

I conclude by saying that, yes, we support the changes being introduced, but it is an area of huge concern. Economic crime is still increasing, as we know, and coming back to deal with unforeseen loopholes that might ensue will be an important part of the legislation before us. I very much look forward to the Minister’s response and to continuing the work on this important area.

I thank both noble Lords for their valuable contributions to this debate—not just now but in the past.

The Government are absolutely committed to ensuring that the register is robust and effective at tackling the use of UK property to launder money. These regulations provide mechanisms that ensure the register operates effectively. A clear and effective procedure for the imposition and enforcement of penalties will serve as a deterrent against non-compliance and bad actors, as well as punishing guilty parties, including by potentially imposing charges over their land.

The provisions relating to the dispositions in Northern Ireland extend the same treatment to the entirety of the UK. They allow the registration of land, where it would otherwise be prohibited, for the benefit of those who act in good faith, and ensures that their interests are not affected by the actions of non-compliant overseas entities.

The points that noble Lords have discussed today highlight the necessity of the measures contained in these regulations. I will try to address some of these now. The noble Lord, Lord Wallace, raised a number of extremely important issues, and I will take them in the order I wrote them down.

On the question of proper funding for Companies House, there are two elements of funding, which total a maximum of about £83 million in any one period; that should certainly be enough. I think one can see from the work it has already achieved that it has made great strides. I am not saying the work is finished, but it has made great strides towards achieving the whole purpose of the register and, through that, giving the registrar the leeway to concentrate on the people who have not yet fully complied.

On the continuous rate of compliance, I think we last met here on about 2 May. Since then, Companies House has had 600 more applications for compliance. That rate of about 100 a week is continuing, so the process is working.

My Lords, I apologise for interrupting the noble Earl, but there is a Division in the Chamber. The Committee will adjourn for 10 minutes.

Sitting suspended for a Division in the House.

If I am right, I completed talking about the compliance rate, which I hope answers the noble Lord’s query.

On the question of the marked effect on the market, I suppose one will have to wait and see what the market response is. As the noble Baroness said, we must not affect the investment market because inward investment into this country is extremely important. We are trying to catch the people who are trying to launder dirty money but there are many more people who are trying to invest legitimately. Whether the market is actually affected by this instrument, I am not so sure. It is an enormous market and we are not talking about a vast number of properties. It is a very difficult question to answer. It is a balance between having severe penalties for those who are flouting the law and allowing proper, genuine inward investment.

On the question about how enforcement action will take place, the answer is that the fine can be enforced as any judgment debt. This would include a charge on the property, which could indeed lead to repossession and, ultimately, the sale of the property.

I think I have answered the question on Northern Ireland. It is not a significant number of properties in Northern Ireland, as I understand it. The purpose of the SI is just to ensure that there is commonality—it is a levelling-up issue—throughout the whole of the United Kingdom.

Some of the issues that the noble Baroness, Lady Blake, raised have been covered by some of those answers. Her initial point about deterring investment was very well made: that is certainly something we do not want to do. We have already discussed the detail of this, but she mentioned the fine being set at £2,500 a day. The actual amount can be limitless. The courts can issue and aggregate that fine, depending on the scale of the penalty. The instrument is as robust as possible, and I believe it is fit for purpose.

The statutory instrument sets out that the register must allow a minimum of 28 days for the person to make representation following receipt of the warning notice. That period of notice will be issued at the same time as the warning notice.

On the question of how much action has already been taken, the answer is that no one has had a penalty yet. This SI allows Companies House to impose financial penalties. It has written to property and service addresses, but warning notices cannot be issued until the SI is in force. However, Companies House stands ready to issue warning notices as soon as the SI is actionable.

The Government fully understand the 25% beneficial ownership point. It is one that really needs careful watching; the Government and Companies House are fully aware of the potential ongoing issue that is likely to provide. I hope that answers some of the specific questions raised by noble Lords.

The register sets a new global standard for transparency and levels the playing field with property owned by UK companies, which must already disclose their beneficial owners to Companies House. This register is a crucial part of the Government’s fight against illicit finance. The Economic Crime and Corporate Transparency Bill, which is currently before Parliament, will feature substantial changes to UK company and partnership law and will complement the Act. The Bill will introduce amendments to the Act which will further strengthen the requirements for overseas entities wishing to own land in the UK. For example, new measures in the Bill will require more information about overseas entities, including the title numbers of the properties held. It also introduces minimum age limits for managing officers to ensure that the details of a person aged over 16 are always provided—a point the noble Lord made when we last discussed this.

The Bill will also make further provisions for registrable beneficial owners in cases involving trusts. It includes an anti-avoidance mechanism to ensure that those in scope of the register when the Act was first published as a Bill in Parliament cannot circumvent its requirements. The laying of these regulations will complement the measures in the Act to ensure the register is as effective as possible. I commend these draft regulations to the Committee.

Motion agreed.

Road Vehicles (Authorised Weight) (Amendment) Regulations 2023

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Road Vehicles (Authorised Weight) (Amendment) Regulations 2023.

My Lords, these draft regulations were published on 23 January and laid before Parliament on 26 April. They will be made under powers conferred by Sections 41(1), (2)(d), (3) and (5) of the Road Traffic Act 1988.

The highest greenhouse gas-emitting sector of the economy is transport, with road freight making a significant contribution to those emissions. In 2021, heavy goods vehicles produced 20% of greenhouse gas emissions from domestic transport. Shifting towards cleaner types of vehicles and fuels is therefore vital if emissions from this sector are to be brought down in line with the 2050 net-zero goal.

These regulations implement increases in weight limits for certain alternatively fuelled or zero-emission vehicles. The weight limit increase is up to a maximum of one tonne for an alternatively fuelled vehicle and a flat two tonnes for a zero-emission vehicle. In all cases, the maximum weights for individual axles will remain unchanged.

The vehicle types that are having their weights changed by this regulation include articulated lorries and road train combinations with five or six axles, normally limited to 40 tonnes, and four-axle combinations, normally limited to 36 or 38 tonnes. No additional weight allowance will apply to the heaviest articulated lorry and road train combinations of 44 tonnes or four-axle motor vehicles of 32 tonnes. As the noble Baronesses know, those are the standard limits and types of vehicle.

These regulations will also apply to certain smaller zero-emission lorries with two or three axles and zero-emission three-axle articulated buses. Alternatively fuelled versions of these types can already operate at up to one tonne above the normal limits.

A vehicle’s power train consists of the components which generate power and then transmit it to the road to move the vehicle. Alternatively fuelled or zero-emission heavy goods vehicles may have a heavier power train compared to traditionally fuelled, heavy goods vehicles with internal combustion engines. For example, they may be fuelled by a gas stored in a pressurised fuel tank or they might use batteries. These components can be significantly heavier than a conventional petrol or diesel fuel tank and combustion engine used in an equivalent vehicle.

The typically heavier power trains of these vehicles means that, under the current vehicle weight limit rules, they may have to carry a reduced amount of cargo compared to an equivalent fossil-fuelled vehicle in order not to breach the weight limit. The higher weight of the empty vehicle essentially acts as a payload penalty. This decreases the commercial viability of these new types of cleaner vehicles, as more vehicles may be required to move the same amounts of cargo or they may just be restricted to moving lighter loads.

These regulations increase the maximum permitted weight for the relevant zero-emission vehicles by a flat two tonnes. That is most appropriate for a zero-emission vehicle, because the weight of the power train is usually significantly more than two tonnes. The weight limit increase for alternatively fuelled vehicles is up to one tonne, because it depends on the actual extra weight of the power train. That will be assessed and put into what I think is called the ministry certificate—the little chitty that goes inside the lorry and basically tells enforcers how much weight that lorry can take. It is key that these two things are different and are considered differently, because they take into account the variations and different features of the power trains of these cleaner vehicles.

However, the weight limit does not apply beyond the existing maximum for a six-axle vehicle of 44 tonnes. These vehicles are therefore within the current normal limits for infrastructure, such as roads and bridges. We see no reason why they cannot freely circulate on the road network. Furthermore, the per-axle weight is also not being changed because, if it is, one would see increased road wear and deterioration. It is also worth pointing out that operators in the European Union also have that flexibility and are using their vehicles when it comes to cabotage movements in the UK already, and there have been no significant issues.

There was a public consultation on this draft instrument, which ran from July to September 2021. There were 92 responses, with 59% in favour and 6% opposed, the remainder being “don’t know”. We obviously looked at the rationale and concluded that we were content to go ahead with that.

The only other thing to point out about the statutory instrument is that the regulations will include a requirement for the Secretary of State for Transport to conduct a review of them on a five-yearly basis, because there will be a rapid development in technology and they may not be appropriate in five years, for whatever reason. It is important to include that—but, otherwise, I see this as fairly straightforward, and I beg to move.

My Lords, I thank the Minister for her explanation. I understand the need for these changes for practical reasons, to develop and enable the rollout of the new generation of HGVs. I also realise that, as the Minister referred to just now, this measure is part of our international obligation derived from the TCA, if we want our goods vehicles to be able to operate abroad. But the Minister would be very surprised if I did not have some questions and comments.

She mentioned articulated buses, but what about non-articulated buses? I remember, about seven or eight years ago, having a ride on a prototype electric bus in the Westminster area, where it was made clear to us that there was a special dispensation for this bus. It was a two-level bus, not a single-storey bus. They made it clear that, because the battery was so heavy, there was a special dispensation to allow this bus to operate in the London area because of weight limits. Technology moves on and batteries may not be as heavy now, but it would be interesting to know where we are, because an awful lot of electric buses are being ordered at this moment.

That leads me on to an obvious question—to ask the Minister what we are talking about in terms of the number of goods vehicles, at which this is largely aimed, on our roads at the moment. Several paragraphs in the Explanatory Memorandum talk about this being the early stages of development, but we hope that this development is going to roll out very quickly, and it would be a good thing to have some kind of measure of what is happening at the moment. There will be—and this is severely underplayed in the Explanatory Memorandum —a cumulative impact on road structures, which are bad enough already in Britain. People are always complaining about the potholes and road surfaces, and there will be an impact on them.

Were the views of National Highways sought? Obviously, this will have an impact on its finances. Despite its name, National Highways is not in charge of motorways in Scotland and Wales, so were the views of the devolved Administrations sought? Looking at paragraph 10.4 of the Explanatory Memorandum, I think they probably were not asked. Of course, local authorities are in charge of local roads, and I am also interested in their responses about the impact of vehicles such as this on their road surfaces. The roads in the local area around a heavy goods vehicle depot are going to get quite a pasting over time.

I note that the consultation was two years ago. Why has there been a delay this long? Bits of the Explanatory Memorandum sound a bit out of date. It talks about the technology being in an “early stage”, but things have moved on a lot since then. However, in paragraph 12.3, the EM mentions

“potential changes in accident severity”.

This is a very serious issue, because heavier vehicles are more likely to kill when involved in an accident. The EM suggests, obliquely, the potential need for additional training and familiarisation, which could have a financial impact for businesses. Has any thought been given to formalising the need for additional training for the drivers of these bigger vehicles?

Before I move to my final point, I will mention the issue of road surfaces. I am stretching this a little, but I am sure the Minister saw coverage of the collapse of a multi-storey car park in America. That story led to a debate in the press about the impact of heavier vehicles—in that case, it was obviously cars and small vans. There will be a case for looking at and reinforcing our infrastructure. The Minister is clearly aware of it because she referred to the impact on bridges. Has the department looked at the impact on multi-storey car parks? Is there a programme to ensure that, before this technology is rolled out to a large percentage of people, the safety of car parks is reassessed?

My final point is that the impact on road surfaces and the possible training implications of this measure mean that there should have been an impact assessment and consultation with the devolved Administrations.

I, too, thank the Minister for setting out the basis of these important regulations, which are fairly straightforward on the face of it. As she said, transport is our economy’s biggest greenhouse gas-emitting sector and a huge amount of those emissions come from HGVs. The issues around commercial viability and making sure that there is no commercial disadvantage to those vehicles because they have an inherent weight disadvantage built in are also really important.

We have no objection to these regulations in principle. We also understand that the extensive consultation with the industry took place in 2021, with 59% of respondents in favour. However, to add to the comments of the noble Baroness, Lady Randerson, this consultation was carried out over two years ago. In view of the urgency of tackling the climate emergency, can the Minister shed any light on why the regulations are only now being introduced? Was National Highways consulted on the regulations and on the long-term impact on the national roads infrastructure, which may be considerable?

Other questions need to be answered, some of which the noble Baroness, Lady Randerson, has already referred to. There are concerns for all vehicle types about the impact of the additional weight of alternative and low-carbon fuel technology. Just last week, the AA was flagging-up the issue of weight for car parks. It is not just from America that the concerns are coming. Some of the car parks built in the 1960s and 1970s were not built to take the heavier vehicles that result from new technologies. I appreciate that, for the most part, HGVs will not be using multi-storey car parks, but this applies to all vehicles with alternative technologies.

The main issue arising from these weight amendments to HGVs is the potential impact on our crumbling road infrastructure, which is already bad enough. We have a backlog of 1.5 million potholes in the UK, and there is an estimated cost of £10 billion. While some very welcome funding has been provided to local authorities to tackle this, it is nowhere near enough to fill the gaps in funding—or the gaps in our roads—from successive rounds of cuts to local government funding. Our road infrastructure should reflect the needs of an economy that is aspiring to be the strongest in the G7—that is really important.

There are warnings from the industry about the impact on our roads, bridges and car parks of heavier vehicles. What assessment have the Government carried out to determine where there are vulnerabilities in the highways network which may be exacerbated by the introduction of these heavier vehicles? What steps are the Government taking to ensure that our roads, bridges and car parks remain safe, as well as around the potentially more serious issues such as accidental damage that may occur from heavier vehicles? Has any assessment been carried out where these new weight limits have been introduced, in other countries, in terms of their impact on the highways infrastructure? The Minister referred to this operating in Europe. Has there been an impact on roads, where it is already operating?

Local authorities are coming under increasing pressure regarding the provision of more charging points. Presently, there is insufficient funding available to provide these. For domestic and commercial vehicles, the successful transformation to more sustainable transport is dependent on the distribution of alternative fuel sources that they depend on, whether that be charging points or other alternative fuel sources. It seems that far too little attention is being given to this. Can the Minister comment on whether her colleagues in the DfT are consulting with the Department for Levelling Up, Housing and Communities about how this deficit in charging facilities and alternative fuel sources can be met?

Lastly, when these regulations were discussed in the other place, the Parliamentary Under-Secretary of State for Transport referred to the development of lighter technology which would not impose the additional weight burdens on our roads. He did not give any timescales for these improvements. I appreciate that with any technology, it is difficult to estimate how quickly it will develop significantly, but can the Minister give us any further information about discussions between the DfT and the industry in relation to developments in this respect?

I am grateful to both noble Baronesses for their contributions to the debate this evening. I will answer as many of their questions as I possibly can although I am already aware that there is one or two I cannot. Therefore, as ever, a letter will be forthcoming.

I do not have any information on the first issue that the noble Baroness, Lady Randerson, raised about the double decker bus that she went on. They are not covered by these regulations. It is quite interesting that, in my many years as buses Minister, it was not something that came up in my discussions. I am assuming that the issue has been fixed and that the batteries are sufficiently light such that they fall under the standard regulations. If that is not the case, I will write to the noble Baroness.

One of the other things worth mentioning—this is where the noble Baroness, Lady Taylor, finished—is the question of where we are and where we are going to be. It is still very early doors on this. There are not significant numbers of these vehicles circulating. We are trying to make a small change to encourage more people to take them up. I am sure that the noble Baroness has seen things such as the zero-emission road freight demonstrators, into which we are investing £200 million. Those sorts of things are the trials to encourage these sorts of vehicles to take to the road. It is very early in their development but we think that we are getting slightly ahead of the game by ensuring that this is in place. There are some logistics companies operating their own trials with these kinds of vehicles because they can charge them within their depots. I suspect that, in five years’ time, when we do the post-implementation review, we will be able to establish with greater certainty what the demand and pick-up rate look like.

It is also the case that this does not apply to vehicles that normally operate at 44 tonnes because, as the noble Baroness will know, that is the standard in the industry. It does have slight limitations but that limitation is not really fundamental in that we are not going to go over 44 tonnes. This means that the issues raised about increased road wear, the impact on bridges and training generally fall away, to my mind: the roads and bridges that we have already deal with 44 tonnes and these are all going to be less than 44 tonnes. The increase in road wear correlates to a one-fourth power of the weight on the axles: whatever the weight of the axle, you get a times four increase, or a power of four increase, in terms of the road wear. Again, though, we are not changing the weight there.

The point is that we are not going over the current limitations and, as I said at the outset, the numbers of these are still very small in the context of the tens of thousands of trucks that are out there. I do not see that there is a significant case for the wear and tear of roads; nor do I see that there would be significant issues for bridges at all because there will be plenty of other trucks going over that are heavier.

In terms of training, any trucker who is driving one of these new trucks will have been trained up to 44 tonnes anyway. They will probably need new training to operate the vehicle but we do not anticipate that there will be a significant change for driving. They will be used to driving heavier trucks and will probably have been doing it for a long time.

In terms of the infrastructure rollout, it is the case that goods vehicles are slightly behind the private car sector. As one can imagine, they are much more difficult to decarbonise. However, we are pushing forward and working with the industry in various forums that we have set up, such as the Freight Energy Forum, to think about what sort of infrastructure the industry needs and where it is going to need it. We will publish a zero-emission HGV infrastructure strategy in due course; that is being worked on at this moment in time. That will set out how we will charge the vehicles when we get them on the road.

I do not agree that there was a delay in bringing forward this SI. While the consultation was at the end of summer in 2021, there would have been analysis of the consultation and ministerial decision-making, then you get into the world of pain that is getting lawyers drafting and figuring out which law they will be drafting against. Statutory instruments take a surprisingly long time from the moment of intention—saying, “Yes, let’s do this—to actually bringing it before the House. We have to make sure that they are right. I am always slightly surprised but, actually, this is a “business as usual” instrument. I do not think that there is a pressing need for it because it is not as if we have thousands of these vehicles desperate to go on the road. However, doing this is worth while. I am grateful for the support of both noble Baronesses for this instrument.

Motion agreed.

My Lords, that concludes the business of the Grand Committee this afternoon. The Committee stands adjourned. If I may say so, it is immaculate timing because I think that we will be needed in the Chamber very shortly.

Committee adjourned at 6.55 pm.