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House of Commons Hansard
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General Committees
14 May 2019

Delegated Legislation Committee

Russia (Sanctions) (EU-Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Stewart Hosie

† Brine, Steve (Winchester) (Con)

† Bryant, Chris (Rhondda) (Lab)

† Burghart, Alex (Brentwood and Ongar) (Con)

† Cartlidge, James (South Suffolk) (Con)

† Duncan, Sir Alan (Minister for Europe and the Americas)

† Fabricant, Michael (Lichfield) (Con)

† Goodman, Helen (Bishop Auckland) (Lab)

† Jones, Darren (Bristol North West) (Lab)

† Lopez, Julia (Hornchurch and Upminster) (Con)

McDonald, Stewart Malcolm (Glasgow South) (SNP)

† Pawsey, Mark (Rugby) (Con)

† Rowley, Danielle (Midlothian) (Lab)

† Slaughter, Andy (Hammersmith) (Lab)

† Smith, Nick (Blaenau Gwent) (Lab)

† Stewart, Iain (Milton Keynes South) (Con)

† Thomas, Gareth (Harrow West) (Lab/Co-op)

† Tomlinson, Michael (Mid Dorset and North Poole) (Con)

Yohanna Sallbert, Committee Clerk

† attended the Committee

Tenth Delegated Legislation Committee

Tuesday 14 May 2019

[Stewart Hosie in the Chair]

Russia (Sanctions) (EU Exit) Regulations 2019

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I beg to move,

That the Committee has considered the Russia (Sanctions) (EU Exit) Regulations 2019 (S.I., 2019, No. 855).

Hon. Members will be aware—not least following our recent discussions about other sanctions regulations—of the importance of sanctions to our foreign policy and national security, and of the Government’s commitment to maintaining our sanctions capabilities and leadership role after we leave the EU. I therefore do not intend to rehearse the same arguments today, although I am happy to do so if hon. Members wish.

Colleagues will also be aware that statutory instruments such as the Russia (Sanctions) (EU Exit) Regulations are necessary to set out the detail of each sanctions regime within the framework of the Sanctions and Anti-Money Laundering Act 2018. As required under the Act, a report on the purposes of the regulations and the penalties in them is available in the Vote Office in case hon. Members have an interest.

Under regulation 1(3), the provisions to allow designation decisions to be taken commenced on 11 April, the day after the regulations were made. The regulations were laid before Parliament at midday on 11 April; since the time at which they would come into force was not specified, there was a period on that day when the regulations were in force but had not been laid. Regrettably, owing to an administrative oversight compounded by the Easter break, we did not meet the procedural and legal requirement to notify the Speaker and the Lord Speaker of that pre-laying commencement until eight working days after the regulations were laid.

I have written to Mr Speaker, the Lord Speaker, the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee. A copy of my letter has been placed in the Library. We have reviewed our processes and taken steps to ensure that this will not happen again.

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I recall that barely an hour ago, when the Select Committee on Foreign Affairs asked the Minister why the regulations had been laid before Parliament so late, he chose not to mention any of this. Why not?

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I thought that it would be much more appropriate to mention it to this Committee, out of respect for the House more widely—something that the hon. Gentleman and I always take pains to display. Once again, I thank the JCSI for its close and helpful scrutiny over recent months of so many statutory instruments relating to sanctions.

The regulations provide for the transfer into UK law of the three existing EU sanctions regimes against Russia in respect of Russian actions in Ukraine. They seek to deliver substantially the same policy effect as the measures in the corresponding EU regimes—to deliver a cost to Russia for its actions, to press it to change its Ukraine policy and to end its illegal annexation of Crimea and Sevastopol. The measures include asset freezes and travel bans on individuals and entities; sectoral measures to restrict parts of Russia’s finance, energy and defence industry; and restrictions on trade and investment relating to Crimea.

The continuation of sanctions since 2014 sends a strong, unified international message that Russia’s actions in Ukraine will not be tolerated. Approving the regulations will ensure that we have the necessary powers to impose sanctions in respect of Russia from the date of EU exit. During the period of our membership of the EU, or the implementation period in the event of a deal, EU sanctions would continue to apply and the regulations would not immediately be needed. In those circumstances, we would seek to use powers in the 2018 Act to the fullest possible extent, but there would be some limitations on the measures that we could impose autonomously during that period.

I know that in the light of the Russian Magnitsky case, many hon. Members are keen for the UK to develop our own independent human rights sanctions regime, so they may query why we are simply transferring existing EU sanctions regimes into UK law. That is because this statutory instrument has been laid on a contingent basis to provide for the continuation of sanctions should we leave the EU without a deal. As such, our priority has necessarily been to ensure the transfer of existing EU measures. I assure everyone that the 2018 Act does indeed give the necessary powers in UK law to allow us to develop our own regime. However, it is important to recognise that that cannot be done immediately. It would be the first UK national sanctions regime, so the legal and policy risks must be carefully scrutinised, and the correct processes must be put in place to ensure that it delivers the desired effect, while avoiding any unintended consequences.

This statutory instrument provides for the transfer into UK law of well-established EU sanctions regimes that are in line with the UK’s foreign policy priorities. It encourages respect for the rule of law, for the rules-based international order and for security and stability. Approving this statutory instrument will allow the UK to continue to implement sanctions against Russia from the moment we leave the EU. It will send a strong signal of our intention to continue to play a leading role in the development of sanctions in the future. I welcome the opportunity to discuss it further. I commend the regulations to the Committee.

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It is a pleasure to serve under your chairmanship, Mr Hosie. The Minister and some members of this Committee cantered over the Russian sanctions grounds earlier this afternoon, and I suspect that we will discuss some of the same issues that were discussed in the Foreign Affairs Committee. The Minister’s explanation about pre-laying commencement came as rather a surprise to me because, although he wrote to the Chair of the Joint Committee on Statutory Instruments, Mr Speaker and the Lord Speaker, he did not include in his letter Her Majesty’s loyal Opposition. I am slightly puzzled by what is going on here and what he means by “pre-laying commencement”. Was that just done in the case of the Russian sanctions, and did he do it for all the others? Why was there such an emergency on 11 April? Was it because of the run-up to the Brexit votes that we had on the 12th?

I seek your guidance, Mr Hosie. If we were to oppose this statutory instrument, and if the House were to vote against it, how does that interrelate when there is a pre-laid commencement? I simply do not understand the process, and I would like an explanation, in particular because, rather unusually, we are having consideration upstairs now at 5 o’clock, and there is a vote in the main Chamber at 7 o’clock. This is all being rushed along in rather a strange way. I literally do not understand what is going on.

I understand that the Minister is seeking to translate into our own free-standing legislation the powers that were used by the European Union in response to Russia’s actions in the illegal annexation of Crimea and the destabilisation of Ukraine. The explanatory memorandum, which has also been laid before the Committee, sets out what is being done and why. Basically, the reason for implementing these sanctions was that there were numerous breaches by the Russians of international law, treaties and agreements. We have two reports from the Minister—one on the reasonableness of the offences attached to them, the second on why he believes that sanctions were the right policy in this case.

This obviously raises the fundamental question whether this set of sanctions is effective. Are they in practice influencing the behaviour of the Russians? It is my contention that the answer is “not much”. Since these sanctions were imposed in 2014, we have had the Salisbury Novichok attack on our soil; we have seen no change in Russia’s stance in Ukraine or Crimea; and more recently, the Russians seized three Ukrainian vessels in the Straits of Kerch. It is difficult to argue that the sanctions are effective.

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The hon. Lady makes a fair point about the events since the introduction of sanctions, but will she not accept that it has reduced the gross domestic product of the Russian Federation, which is now almost less than half that of the United Kingdom? If these sanctions had not been put in place, the Russian economy would be far stronger and far more able to produce equipment, weapons and manpower and would maybe involve themselves in even more events overseas in the form of invasion.

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The purpose of the sanctions is not to damage the Russian economy. It is to get the Russians to change their foreign policy and their stance in Ukraine, and they have not done that. The hon. Gentleman’s remarks are hypothetical and cannot be proved either way. At the same time, we also know that at any moment when we have sanctions, there is also a cost to the British economy.

I wonder whether the Government might have done better had they implemented the Magnitsky sanctions, which they have failed to do. We agreed on a cross-party basis to put these into law this time last year. We gave the Government the power to introduce sanctions, including travel bans, on individuals who had committed gross and serious human rights abuses. This raises a couple of issues. First, the Government claim that they cannot implement the Magnitsky powers unless and until Brexit happens. However, there is a big question mark over whether this is true. I am sure that the Minister has seen the opinion from two barristers, Tim Otty and Maya Lester, which argues that this is not the case and that section 64 of the Sanctions and Anti-Money Laundering Act makes no reference in the commencement provisions to Brexit day. It appears that the reason Ministers have given in the Chamber for the last several months is simply not accurate.

It is also the case that the use of Magnitsky sanctions would not conflict with European law. We know that because the Baltic states, which are also members of the European Union, have been implementing Magnitsky sanctions. Were the Minister to do this, it might give us a targeted and therefore more effective approach than what is in place at the moment. Despite the fact that we know that there are human rights abuses occurring in Crimea at the moment that would fall under the Magnitsky aegis, the Minister makes no reference to them in his reports to Parliament. Until I hear some more from the Minister, and unless he is able to give some reassurance on this point, I am afraid that we will not be nodding through this statutory instrument this afternoon.

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It is a delight to sit under your chairmanship, Mr Hosie, even though we are in the gloomiest of Committee Rooms in the building. Just a minor point: one of the problems for disabled access in this building is that many people who are partially sighted find it very difficult to read papers in such a room. I hope one day we will be able to sort that out.

I wholly support the sanctions, as the Minister suggested. Indeed, I want to praise the Government of the right hon. Member for Maidenhead (Mrs May) for having been such an ardent advocate of sanctions on Russia. Several people from other countries who have been to Foreign Affairs Councils during her time have told me that had it not been for her strong argument at those meetings in favour of maintaining sanctions, they would have been dropped by now. I am not sure whether it is because of her experience as a former Home Secretary that she is particularly conscious of the pernicious influence that sometimes Russian foreign policy can have elsewhere in the world, and in particular in the UK, or whether it is for some other reason, but I do want to laud the role that the Government have played in that.

I have an anxiety for the future, that if Brexit does ever happen, when we are no longer sitting at the table it will be more difficult for the UK Government to secure the kind of sanctions regime for France, Germany and other members of the European Union that we would want them to advocate, and we may find ourselves standing rather alone. That may well be a worrying situation for us in the future.

It is undoubtedly true that the Russian state’s deliberate annexation of Crimea and Sevastopol from Ukraine—I do not think there is any doubt that that was done deliberately by the Russian state; although they pretended to be independent forces of some kind, they were to all intents and purposes operating under Russian military command—was an illegal annexation and would not have happened had it not been for Ukraine’s surrendering its nuclear weapons as a result of the Budapest accord, of which the UK was a signatory, and of which Putin himself was a signatory, which guaranteed the territorial integrity of Ukraine.

However, I have some anxieties about the way that this statutory instrument has come forward. First, it was laid on 11 April. This SI was meant to meet the problem, had we fallen out of the EU on 29 March without having a new sanctions regime in place because there was no deal. It seems odd that it should not have been laid until 11 April, even though it was meant to meet a need for 29 March. I know there was a second deadline, which was 12 April, and I presume that is what led to the rather strange rush at the final moment. Now we are having another rush, because presumably the Government expect that at any moment something will transpire in the Brexit negotiations that will lead to some change in the situation governing our being kept permanently in aspic or in suspended animation in the House.

It feels as though these mistakes in timing are a result of a lack of capacity in the sanctions section of the Foreign Office. As I understand it, the sanctions team consists of 40 people at the Foreign Office. Reading between the lines from the note that has been sent to the Foreign Affairs Committee, I suspect that that is insufficient to be able to do the job properly. Ministers have said several times—I do not doubt the sincerity of the Minister with us today—that it is a bit difficult to get a new sanctions regime all lined up and put together, because there is so much other business to be got through. I see sanctions policy as an absolutely vital part of our foreign policy. It is one of the key parts of our toolbox—alongside diplomacy, defence and other soft power measures—in trying to secure our foreign policy aims. I hope the Minister can respond on whether there is sufficient capacity and whether that led to the hiccup.

As my hon. Friend the Member for Bishop Auckland said, the key question is whether we can have an independent, autonomous sanctions regime while we are a member of the European Union or during a transition period—if the withdrawal agreement is ever agreed. My hon. Friend referred to the advice by two QCs that makes it very clear that, in their opinion, it is perfectly possible for us to have an independent sanctions regime; if we wanted to, we could draw up anything we wanted while we are still a member, or during a transition period.

As I understand it, the Government’s policy is that that is not the case. The Minister said that an autonomous and independent sanctions regime cannot be introduced immediately and can only happen once we have left the European Union. I presume that is the meaning of paragraph 6.1 of the explanatory memorandum, which says:

“The UK’s implementation of UN and other multilateral sanctions currently relies largely on the European Communities Act 1972.”

The Government’s argument seems to be that we cannot implement any form of sanctions policy.

I believe the Government are wrong, but it seems that they are in doubt as to whether that is the case. If I am right and the Government are wrong, I do not understand why the sanctions measures before us today do not include the Magnitsky measures to enforce sanctions against human rights abusers in other countries in the world.

As my hon. Friend the Member for Bishop Auckland rightly states, the Sanctions and Anti-Money Laundering Act 2018 does not refer to an implementation date of Brexit day, and the Government have to report by the end of this month on the Magnitsky provisions in that Act. Since they have to report to Parliament, that means they have to do so before we rise next Thursday, 23 May. At the moment they have not done anything about those provisions, so I presume that the Government will present a sort of nil return. Will the Minister confirm what he said previously in the Foreign Affairs Committee on that?

I would prefer us to be implementing far more substantial measures. Estonia, Lithuania and Latvia have a list of 49 people who have sanctions against them under the Magnitsky provisions in their nation states. I do not understand why we cannot simply do the same.

Finally, the Government will be reporting annually on each of the sanctions regimes such as this one that they are starting. What form will those reports take? Will there be an opportunity for debate when they are tabled?

I very much hope that the Government will make it as clear as possible that, while they may feel legally constrained, they would none the less like to implement further sanctions regimes as soon as possible.

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Before I call the Minister to sum up, I would tell the Committee, in response to the question from the hon. Member for Bishop Auckland earlier, that should this question be called to a Division, and should the noes have it, that would simply confirm that the Committee has not considered that which we are now considering, but it would not stop the ability of this matter to be put as a question on the Floor of the House later this evening.

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Thank you, Mr Hosie. You have rather stolen my first paragraph. It might not prevent the hon. Member for Bishop Auckland from deciding that she has not considered something that she has just considered, but we shall see whether she chooses to call a slightly fatuous Division. However, I apologise at the outset; she should have been written to and was not. I will investigate why that was not the case and will send her a subsequent letter, fully explaining the procedural hiccup.

If it is indeed her intention to try to vote down this statutory instrument, the consequences could be dire. We could end up with no Russian sanctions, which would be a very grave mistake.

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The right hon. Gentleman knows that that is not the case. He knows perfectly well that, at the moment, the sanctions regime is covered by European law. He is not doing the Magnitsky part that we think he ought to be doing. He is making provision for a legal base for sanctions once the European Communities Act 1972 is no longer in force.

Because we debated it at length in the Bill Committee, he also knows that one of the problems with the Government doing so much through delegated legislation is that Her Majesty’s Opposition have no choice. We cannot amend this. All we can do is vote against it. If we win a vote, the Government can come back with a revised statutory instrument. But it is not in our gift to amend it, which obviously would be our preferred option; that is simply not open to us.

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Procedurally, the hon. Lady is right. If it were to be voted down there would remain a danger that there could be a lacuna or a hiatus in which there were no extant Russian sanctions. She mentioned Magnitsky: Lithuania, Latvia and Estonia have Magnitsky-lite, as it were. Their regimes only include travel bans, whereas the provisions in the primary legislation passed by us—with great cross-party approval—would allow for much more, once the Magnitsky provisions are put in place. We intend to do that. The hon. Member for Rhondda has pointed out—fairly—that our sanctions team are working very hard. Indeed they are. They are an excellent team and I am glad to take this opportunity to say so and put it on the record. But they have a massive rush of SIs. It is not just the number of them going through this House; it is the enormous body of work that goes on beneath the bits of paper we then end up with here. It totally absorbs the 40 people in the team who work so hard. When they do it, we will bring forward a Magnitsky SI.

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I am glad to hear that. On the travel ban issue, I do not understand why, in the UK, we cannot simply state that anybody involved in the murder of Sergei Magnitsky or the corruption unveiled by him is not welcome in this country and will be banned from entry. That is what the three Baltic countries have done. Why can we not do that?

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It is not for me to speak on behalf of the Home Office. There may well be provisions in law for them to be able to do that, should they so wish. Again, that is a broader Home Office issue rather than a Foreign Office matter for this Committee.

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On the question of the pressures on the 40 civil servants, surely the threat posed by the Russians is a matter of national security. If there are not enough staff in the Department to implement these sanctions, why has the Foreign Secretary not deployed more staff to enable us to crack on with this?

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We are cracking on. We are doing everything on time. We will put in place the provision for a continuation of the 30 EU sanctions regimes, should we leave with no deal. Obviously, there will be an implementation period if we leave with a deal.

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indicated dissent.

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I do not know why the hon. Gentleman shakes his head when this is a straightforward matter of fact. The team have done a good job in making sure that the sanctions regimes will continue in all circumstances. Here we go again.

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The Minister says that the immigration and travel ban situation is not a matter for him. In his own sanctions, it states in section 20 of part 4, “Immigration”, that a person

“who is designated under regulation 5 for the purposes of this regulation is an excluded person for the purposes of section 8B of the Immigration Act 1971”.

His own sanctions regime includes provisions around travel bans, but not in relation to Magnitsky.

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Yes, but the instrument transposes existing EU sanctions regimes; it does not add to or amend them. The process has been to transpose as identically as possible the EU regimes into what will be our law when we leave.

It is clear that the sanctions have been working in broad ways. There are massive economic pressures on Russia, and we should not think that they are not causing concern among those who govern that country. Sanctions are an integral part of our response to some of the most important foreign policy challenges that we face.

We must be ready to deliver sanctions independently as soon as we leave the EU. That is why the SI is so important. Transposing EU sanctions regimes in this way puts the UK on a solid footing to continue to protect our interests, defend our values and maintain the position of leadership that we have built on sanctions since 2014. Once again, I commend the regulations to the Committee.

Question put.

Division 1

14 May 2019

The Committee divided:

Ayes: 9
Noes: 7

Question accordingly agreed to.

View Details

Resolved,

That the Committee has considered the Russia (Sanctions) (EU Exit) Regulations 2019 (S.I., 2019, No. 855).

Committee rose.

Draft International Road Passenger Transport (Amendment) (Northern Ireland) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Mr Adrian Bailey

† Adams, Nigel (Selby and Ainsty) (Con)

Allan, Lucy (Telford) (Con)

Bradshaw, Mr Ben (Exeter) (Lab)

† Burt, Alistair (North East Bedfordshire) (Con)

† Donelan, Michelle (Chippenham) (Con)

† Duguid, David (Banff and Buchan) (Con)

† Foxcroft, Vicky (Lewisham, Deptford) (Lab)

† Ghani, Ms Nusrat (Parliamentary Under-Secretary of State for Transport)

† Heappey, James (Wells) (Con)

† Lamont, John (Berwickshire, Roxburgh and Selkirk) (Con)

† Maskell, Rachael (York Central) (Lab/Co-op)

Morris, Grahame (Easington) (Lab)

Reynolds, Emma (Wolverhampton North East) (Lab)

Smith, Owen (Pontypridd) (Lab)

† Swayne, Sir Desmond (New Forest West) (Con)

Yasin, Mohammad (Bedford) (Lab)

Zeichner, Daniel (Cambridge) (Lab)

Dominic Stockbridge, Committee Clerk

† attended the Committee

Fourth Delegated Legislation Committee

Tuesday 14 May 2019

[Mr Adrian Bailey in the Chair]

Draft International Road Passenger Transport (Amendment) (Northern Ireland) (EU Exit) Regulations 2019

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I beg to move,

That the Committee has considered the draft International Road Passenger Transport (Amendment) (Northern Ireland) (EU Exit) Regulations 2019.

It is an honour to serve under your chairmanship on this glorious morning, Mr Bailey. The draft regulations will amend the necessary domestic implementing legislation in Northern Ireland to deal with deficiencies that would otherwise exist when the UK leaves the EU. In the absence of the Northern Ireland Assembly, the Cabinet has agreed that, in the interest of legal certainty for Northern Ireland post exit, UK Government Ministers will introduce the necessary secondary legislation at Westminster for Northern Ireland.

EU legislation governs access to the international passenger transport market. An EU regulation establishes the conditions for the international carriage of passengers by coach and bus within the EU, and cabotage within member states by non-resident EU operators. It covers regular timetabled services and occasional services such as holidays and tours. It establishes for that purpose a system of Community licences, which act as the international bus and coach licences used within the EU, and provides for those licences to be issued by the competent authorities of member states.

To ensure the continuation of bus and coach services to the UK in the event of no deal, the Government introduced the Common Rules for Access to the International Market for Coach and Bus Services (Amendment etc.) (EU Exit) Regulations 2019, which the House approved on 26 March. Those regulations amended the retained UK version of the EU regulation on a UK-wide basis, allowing EU-based operators to continue to access the UK market through the continued recognition of Community licences and control documents issued by EU member states.

Section 2 of the European Union (Withdrawal) Act 2018 preserves EU-derived domestic legislation, including the Public Service Vehicles (International Passenger Services) Regulations (Northern Ireland) 2019 and the Transport Act (Northern Ireland) 1967, which give effect to the EU regulation in Northern Ireland. The draft regulations, which apply to Northern Ireland only, will adjust the language and references in that retained legislation and in two other pieces of legislation. They will make minor, technical changes to reflect the fact that the UK will cease to be an EU member state, for example by removing references to “Community licence” and “Community rules” from relevant Northern Irish domestic legislation. They will also ensure that domestic enforcement provisions continue to apply to EU operators.

In the event of no deal, UK operators will be able to continue to access the EU market through the Interbus agreement in respect of occasional services, an EU multilateral agreement that allows bus and coach operators to carry out occasional services between participating countries—currently the EU countries and seven other contracting parties in eastern Europe. The UK has completed the accession process and will become a member of the Interbus agreement in its own right in the event of no deal.

The agreement will be extended to regular services in due course, but until the end of 2019, access for existing regular services will be provided through the EU contingency measure on basic road freight and road passenger transport connectivity. The measure, which was adopted on 19 March, enables UK operators to continue to operate existing regular timetabled services to EU member states until 31 December 2019. It would also have enabled cabotage in the border areas of the Republic of Ireland until 30 September. Since it was agreed, an extension to the exit date has been granted to 31 October; we will work with the EU to determine the impact of the extension on the timing of the measure.

The EU contingency measure is dependent on the UK’s reciprocation. UK regulations to provide reciprocity, such as the draft regulations, are a stop-gap measure. In the event of no deal, once the Interbus agreement has been extended to regular services, it is intended that reciprocal access will be provided through that agreement instead. However, we will work with the European Commission and the Republic of Ireland to ensure that any future UK-EU transport arrangements take into account the unique transport demands on the island of Ireland, particularly in respect of the border counties, where cabotage is of particular importance.

The Government have made a commitment to reduce the adverse impact on businesses and citizens of EU exit. That applies to people’s ability to make international journeys by bus or coach. Coach travel is safe and environmentally friendly. Its low cost is particularly valued by individuals on low incomes, such as students and pensioners. In Northern Ireland, travel across the border is a commonplace daily activity, with 900,000 such journeys per annum. Although the Common Rules for Access to the International Market for Coach and Bus Services (Amendment etc.) (EU Exit) Regulations 2019 ensure that EU operators can continue to access the UK market, the draft regulations will ensure that the relevant domestic legislation in Northern Ireland is adjusted to deal with deficiencies that would otherwise exist when the UK leaves the EU. I commend the draft regulations to the Committee.

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It is a pleasure to serve under you in the Chair, Mr Bailey.

As we have heard, the regulations will enable existing bus and coach transport to continue to operate should the UK leave the European Union. It is clear that membership of the Community licensing scheme would alleviate the risks to the industry. Will the Minister tell us what progress has been made on being a member of the Community licensing scheme should the UK leave the European Union with a deal or even without a comprehensive deal? The regulations will remove such barriers and bring clarity, so that buses and coaches can operate across the Irish border and onwards with cabotage arrangements.

I stress that bringing the regulations to the Committee six weeks after the UK was due to leave the European Union, possibly with no deal in place, is incredibly negligent. Are we to expect that other regulations in the transport brief will be brought forward? What risk assessment has the Department for Transport made of the impact of being unprepared for Brexit? The Secretary of State seems to have mismanaged the progress of legislation that will protect the continuity of public transport. I must remind the Minister that this is an area of major concern to the people of Northern Ireland—not least her Government’s confidence and supply partners. The regulations are designed to maintain the status quo on the access rights of bus and coach operators in their international travel operations across the border, and they have come to this Parliament in the absence of a functioning Northern Ireland Assembly.

I note the progress that has been made on the Interbus agreement. Will the Minister update the Committee on what stage we are at in the further talks on regular and special services? When are they expected to conclude, and what changes are needed to maintain those services? Such an agreement is due to cease at the end of this year. Labour is therefore disappointed that at this late stage we are discussing such vital legislation, should the UK leave the European Union. However, we recognise the importance of ensuring that there is a smooth transition and access to cross-border operations for coach and bus passenger services.

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I thank the hon. Lady for her consideration of the regulations. I will turn to some of the points raised in the debate. If I fail to address all of them, I hope she will allow me to respond in writing.

I must put on the record that the Department for Transport’s preparation for Brexit has been second to none. I believe that we laid the greatest number of statutory instruments of any Department other than the Department for Environment, Food and Rural Affairs. The SIs were on schedule, but with the extension from the March date there was a reprioritisation, which is why we are dealing with this instrument today. The programme was on schedule and there is no risk to any part of our sector.

The hon. Lady talked about consulting the industry. The aim of this legislation is, quite frankly, to maintain the status quo as far as possible. These are just technical amendments, and consultation took place with the Federation of Passenger Transport Northern Ireland and other agencies. She talked about the Interbus agreement and raised a very important point. The contracting parties to the Interbus agreement are the EU, Albania, Bosnia, Croatia, the former Yugoslav Republic of Macedonia, Moldova, Montenegro and Turkey.

A signatory process for a protocol that will extend the Interbus agreement to regular services opened on 16 July 2018 and ran until 16 April 2019, although officials have been informed that this date will be extended. Four of the seven contracting parties need to sign the protocol, including the EU. The protocol will then come into force in the third month after the fourth signature is made. As of 16 April, no contracting party had signed the protocol. Once the UK becomes a contracting party to the agreement, we will be able to sign the protocol in a no-deal scenario.

Again, the statutory instrument just makes minor amendments to reflect the fact that the UK will no longer be part of the EU. I hope that I have managed to address the points raised in the debate and that hon. Members agree that the instrument is needed to remove any ambiguity in Northern Ireland legislation that deals with the operation of international bus and coach services in the event of no deal.

Question put and agreed to.

Committee rose.

VAT (Place of Supply of Services) (Supplies of Electronic, Telecommunications and Broadcasting Services) (Amendment and Revocation) (EU Exit) Order 2019 Finance Act 2011, Schedule 23 (Data-Gathering Powers) (Amendment) (EU Exit) Regulations 2019 Customs (Records) (EU Exit) Regulations 2019

The Committee consisted of the following Members:

Chair: Mr Virendra Sharma

† Clarke, Mr Simon (Middlesbrough South and East Cleveland) (Con)

Daby, Janet (Lewisham East) (Lab)

† Dakin, Nic (Scunthorpe) (Lab)

† Flint, Caroline (Don Valley) (Lab)

† Fysh, Mr Marcus (Yeovil) (Con)

† Hart, Simon (Carmarthen West and South Pembrokeshire) (Con)

Hill, Mike (Hartlepool) (Lab)

† Jack, Mr Alister (Dumfries and Galloway) (Con)

† Knight, Sir Greg (East Yorkshire) (Con)

† Lammy, Mr David (Tottenham) (Lab)

† McGinn, Conor (St Helens North) (Lab)

† Merriman, Huw (Bexhill and Battle) (Con)

† Morris, James (Halesowen and Rowley Regis) (Con)

† Reynolds, Jonathan (Stalybridge and Hyde) (Lab/Co-op)

† Robinson, Mary (Cheadle) (Con)

† Stride, Mel (Financial Secretary to the Treasury)

† Thewliss, Alison (Glasgow Central) (SNP)

Sarah Rees, Committee Clerk

† attended the Committee

Eighth Delegated Legislation Committee

Tuesday 14 May 2019

[Mr Virendra Sharma in the Chair]

Value Added Tax (Place of Supply of Services) (Supplies of Electronic, Telecommunication and Broadcasting Services) (Amendment and Revocation) (EU Exit) Order 2019

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I beg to move,

That the Committee has considered the Value Added Tax (Place of Supply of Services) (Supplies of Electronic, Telecommunication and Broadcasting Services) (Amendment and Revocation) (EU Exit) Order 2019 (S.I. 2019, No. 404).

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With this it will be convenient to consider the Finance Act 2011, Schedule 23 (Data-gathering Powers) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019, No. 397) and the Customs (Records) (EU Exit) Regulations 2019 (S.I. 2019, No. 113).

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It is a pleasure to serve under your chairmanship, Mr Sharma. The Value Added Tax (Place of Supply of Services) (Supplies of Electronic, Telecommunication and Broadcasting Services) (Amendment and Revocation) (EU Exit) Order 2019 amends the Value Added Tax Act 1994 to reverse changes made on 1 January in consequence of an EU-wide change to the place of supply of electronic, telecommunication and broadcasting services, or “digital services”. The place of supply rules govern where VAT has to be paid.

Since 1 January 2015, the place of supply of digital services made to a private consumer in the EU has been the consumer’s member state. Businesses that make supplies of digital services are therefore required to account for VAT in each member state where their consumers are located. To facilitate payment of VAT, the mini one-stop shop, or MOSS, was established. MOSS is an EU-wide simplified registration and accounting scheme, which allows businesses that supply digital services to consumers to register for VAT in one member state, rather than in each member state where they make supplies. Since VAT MOSS is an EU scheme, on exit from the EU, the UK will no longer be eligible to take part in it.

On 1 January 2019, the EU made further changes to the place of supply rules for digital services, which were implemented by amendments to the VAT Act. Those changes removed the requirement for EU businesses with very low cross-border trade to register in respect of supplies to consumers in other member states. If an EU business’s total cross-border supplies are valued at less than €10,000, or £8,818, the place of supply is now the supplier’s member state and not the consumer’s. In those circumstances, VAT is due in the supplier’s member state, subject to any domestic registration threshold. That treatment could no longer apply to UK businesses in the event that the UK left without a deal, because the UK would no longer be a member state. The changes to the VAT Act would therefore become redundant.

The changes made by the order are consistent with the changes to the VAT Act made by the Taxation (Cross-border Trade) Act 2018, which included removal of the VAT MOSS. However, the 2018 Act predated the changes to the place of supply rules, which is why a separate instrument is required. If we did not proceed with this instrument there would be no immediate impact, since the legislation is otiose and should no longer have practical effect. However, manipulation of the place of supply rules has been used in the past for tax avoidance, so, although no risk has been identified, it makes sense to remove the superfluous legislation now. That approach will also provide certainty and consistency with other amendments made to VAT primary legislation. I commend the order to the Committee.

The Finance Act 2011, Schedule 23 (Data-gathering Powers) (Amendment) (EU Exit) Regulations 2019 enable Her Majesty’s Revenue and Customs to request data from postal operators in support of the compliance strategy for parcels. In the unlikely event of the UK leaving the EU without a deal, the Value Added Tax (Postal Packets and Amendment) (EU Exit) Regulations 2018 would introduce a new policy in respect of imports of parcels, transferring the liability for payment of import VAT on consignments of goods with a value of £135 or less from the UK consumer to the overseas supplier. To enable HMRC to ensure compliance with the new regime, it will be necessary for it to obtain information on those imports from businesses involved in the transaction chain.

Clearly, postal operators are well placed to provide useful information on the parcels they deliver in order to allow HMRC to ensure that overseas suppliers pay the import VAT due. The regulations are the first step in ensuring that HMRC can obtain that information. Schedule 23 to the Finance Act 2011 enables HMRC to collect relevant data from certain third parties. The regulations simply extend those powers to include postal operators in the unlikely event of the UK leaving the EU without a deal.

The next step will be to set out in detail the type of information that HMRC can require postal operators to provide. That will be done by way of a separate statutory instrument. However, HMRC can require data holders only to provide information that they acquire as part of their normal business activities. It cannot require them to collect additional information and provide it to HMRC. The rules as a whole will therefore balance the need to ensure that tax is collected, where due, with the need to prevent additional costs or administrative burdens from falling on business.

Failing to agree to proceed with this instrument will not in itself change the introduction of the new parcels policy in the unlikely event of the UK leaving the EU without a deal, but it will mean that HMRC may not be able to collect the necessary data to ensure compliance with that policy. HMRC may be unable to satisfactorily assure itself that the new policy is working correctly and therefore spot and deal with any difficulties. That in turn could lead to losses in VAT revenue.

The third instrument is the Customs (Records) (EU Exit) Regulations 2019, which are needed to incorporate existing record-keeping requirements relating to customs obligations, currently contained in EU law, in UK law after the UK’s departure from the EU. They cover all types of customs transaction and are designed to provide customs officials with an effective audit trail for the movement of goods, including the intended use of the goods, the point at which they became liable for import duty, the level of that duty, and details of the payment. The regulations require HMRC to publish a notice containing the requirements for the types of record that importers and exporters and those connected to imports and exports will be expected to keep, the format of those records and the length of time for which they will need to be retained.

The requirements contained in the notice, in conjunction with provisions in the Customs Traders (Accounts and Records) Regulations 1995, will maintain existing record-keeping requirements, which means that those involved will be required to continue to retain relevant documentation for a customs transaction, on both imports and exports, for a suitable period, usually not less than three years. That is in line with the Government commitment to provide maximum certainty for businesses after EU exit. The record-keeping requirement is of course essential to enable a customs authority to assure customs processes by checking and confirming transactions and declarations, particularly where potential discrepancies are identified after the relevant transactions have taken place.

I commend the instruments to the Committee.

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It is indeed a great pleasure to serve under you in the Chair, Mr Sharma. It has been a while since the Minister and I addressed a no-deal statutory instrument together, but unfortunately we remain n a process beset by uncertainty and have little insight into whether we will actually need this regime. The Opposition’s view has not changed and we continue to have profound concerns about conducting such significant decision making through the secondary legislative process.

Today, we are here to discuss matters relating to VAT. Existing VAT exemptions for cross-border trade among member states are critical, and any changes need to be carefully considered. I would like to raise two broad questions before getting into the detail of the instruments. In the run-up to 29 March, Opposition Members spent many happy hours in Committee Rooms debating dozens of no-deal statutory instruments that the Government had laid before the House. However, with the extension until 31 October, that preparation essentially ceased. Indeed, some legislation, such as the Financial Services (Implementation of Legislation) Bill, has not returned to Parliament at all, and we still have no date for that. First, therefore, I ask the Minister why selective no-deal preparation has resumed today, with instruments such as these. Will he offer some clarity as to the strategy now being pursued?

Secondly, a large number of the instruments that we dealt with in that period related to establishing a temporary permissions regime and to onshoring EU rules on financial services, so that firms operating in the sector would have a minimum period to cope with transition and to mitigate any consumer detriment in a no-deal scenario. Given that the proposed non-EU scheme will allow British companies to operate within the EU in the same way as they do now, why are the Government not seeking regulatory alignment on some of the VAT issues raised today, even on a temporary basis?

We are talking about the impact on small businesses, which have fewer resources and less time to deal with disruption, so what efforts are being made to minimise disruption for them? The approach seems inconsistent, as in some elements there has been a divergence from the status quo and in others we have had measures intended to duplicate the existing framework. It does not seem right that such policy decisions are being taken in an opaque manner without any real explanation being provided to Parliament.

The first instrument before us will repeal the most recent changes to the VAT MOSS provisions, as the Minister described. Those provisions made life easy for businesses by preventing them from having to register for VAT in every member state in which they supplied digital services. It is worrying, therefore, in relation to smaller businesses that may not be in a position to quickly adapt to the changes, that those provisions may be withdrawn if we crash out without a deal. Has action been taken to raise awareness of the potential change among small businesses? With the addition of the difficulties raised by the Making Tax Digital programme, is there not a risk that small businesses will be heavily disrupted by wide-ranging and rapid change in VAT, for which there is insufficient resource at HMRC to offer appropriate support? I note that no impact assessment has been carried out, which seems ill advised given the potential consequences for small businesses. How can HMRC offer adequate support if we do not know how many businesses will be affected, and to what extent?

The second instrument relates to the data-gathering powers in schedule 23 of the Finance Act 2011. The Minister has elaborated on the explanatory memorandum’s stating that the instrument enables:

“HMRC to ensure that overseas businesses sending goods to the UK in postal packets comply with those regulations... HMRC will require information on such imports and therefore will need to obtain data from various parties involved in these transactions. The instrument amends current data gathering legislation to add “postal operators” as a category’.”

Once again, the Opposition are concerned that legislation has been designed to enable a new customs regime without proper parliamentary consultation. The instrument stipulates that data can be provided only if it is relevant to VAT; however, the rationale for that limitation has not been made clear and I ask the Minister to clarify it just a bit further.

The final instrument, the Customs (Records) (EU Exit) Regulations 2019, require that

“a person who is subject to a Customs obligation…keep and preserve records, in such form, and for such period, as specified in a notice published by HMRC.”

Although the explanatory note indicates that the intention is to replicate the current EU requirements, there is insufficient clarity about what is required and what the potential penalties might be for non-compliance. Will the Minister confirm whether there will be any change from the current system? How will any penalties be decided? What communication has taken place with the businesses that may be affected? I shall be grateful if the Minister provides some clarity on those points before we decide our course of action today.

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It is a pleasure to see you in the Chair, Mr Sharma.

It seems that we are back in the land that time forgot—the land of Brexit statutory instruments, which is in a different time zone altogether if the Committee Room clock is to be believed. It feels as though the SIs we are looking at today were the Brexit SIs that the Government forgot. If they were so vital why are we dealing with them now rather than before the Government cancelled their original date for Brexit back at the end of the March? These SIs are important. They deal with the functioning of many processes that businesses find incredibly important, and overshadowing all that is what exactly the future regime envisaged by the Government looks like, and how businesses can prepare themselves and adapt for it.

As hon. Members have laid out, the first SI, on VAT and the supply of services, changes the circumstances with the mini one-stop shops—the MOSS regime. As this was introduced in January 2019 and we are now getting rid of it, we seem to be in a veritable customs VAT hokey-cokey. Electronic, telecommunication and digital services are important to the economy. I was at the ScotlandIS awards on Friday night; there are many companies working in the digital sphere doing incredibly innovative and exciting things. They need to have some degree of certainty that they will be able to do their business from Scotland—from Glasgow—and the rest of the UK in a couple of months’ time. This really gives us very little clarity.

The mini one-stop shops have gone about the business of simplifying the rules for businesses, but businesses want to continue to supply digital services. They will perhaps need to re-register in the different member states of the EU and comply with those regimes, in circumstances where, as the hon. Member for Stalybridge and Hyde said, there has been no consultation and no impact assessment.

We do not have any real idea, as Members of Parliament, how this will affect businesses and what it will cost. We do know that there is a risk of losing 47,000 jobs in Scotland with the loss of the single market. That is a huge number of jobs, and they will probably be in this type of high-skills sector. Many of the people involved in these sectors are bright young things who can travel and are very flexible. If they find that their business will be located on the other side of the English channel and carry on as now, they will most likely consider that rather than staying, which will be to the detriment of us all. I want to hear from the Minister what the impact will look like and who the Government have consulted.

I will now turn to the Finance Act 2011, Schedule 23 (Data-gathering Powers) (Amendment) (EU Exit) Regulations 2019. A no-deal Brexit—Brexit in general—was supposed to be about ripping up red tape and removing paperwork to make things simple, but this appears to be another example of how, if we end up with a no-deal Brexit, we will have more paperwork and things being far more complicated. I note that it says that overseas suppliers are liable for the import VAT on

“any consignment of goods sent into the UK in a ‘postal packet’ if the value of goods it contains is £135 or less. Overseas suppliers may discharge the liability by…registering with HMRC and accounting for import VAT…or…paying the import VAT due to the postal operator”.

All those things require additional procedures and processes. They require the people transacting to know that they have to do this and that this is an obligation on them. I would be interested to see what the regime looks like if they do not comply with what is being asked here. Will there be fines or some manner of sanction imposed on people who overlook this new process? People are being asked to do something different in the circumstances of no deal.

As the explanatory note points out,

“The definition of a ‘postal operator’ is wide—it covers any person who carries parcels from one place to another or who receives, collects, sorts or delivers parcels.”

That could be quite wide and quite significant. Some people feel that they have not been captured within this definition and therefore that they do not have to register. It would be good to get a lot more detail on when the Minister intends to bring these subsequent regulations to the House, how they will be scrutinised when they come to the House, and what consultation he intends to do to ensure that people who are affected by these regulations actually have some say on what they contain.

Yet again, there has been no formal consultation regarding this SI and it is not clear from what is set out here exactly which stakeholders the Government have engaged with. Although it says that stakeholders have been engaged with, there is no further detail on that. It is difficult for us to see the extent to which that has already been done.

The third instrument—the Customs (Records) (EU Exit) Regulations 2019—is again a replication of current EU law, but, as it is regarding many of these SIs, it is unclear what the future will look like. It is unclear whether anything will change, when further notice will come back to the House for us to decide and whether it will come back to a Committee like this. Given the uncertainty around deal or no deal, we do not know exactly when that might come either.

The Government are saying today that they want to get their withdrawal agreement done and dusted by the summer recess. Well, good for them if they can. Who knows if they will? We need to know when the Government will introduce these measures and that it will be done in a reasonable timescale, so that full consultation can be conducted and that those who need to know these things can do so.

Does the Minister have any figures on familiarisation costs, which were very much part of the financial services SIs and impact assessments, but do not seem to be, as far as I have seen, part of these Sis? Will new processes be put in place? How long will firms have to become familiar with those processes and understand them? How far ahead will the Government notify them of any new processes that they may have to follow?

The Minister said that data will have to be retained for a suitable period—perhaps three years—but again, people need to plan for and understand that process. They need more certainty. Just saying in this Committee, “A suitable period of about three years is what we intend,” is different from saying when the regulations will be introduced.

Finally, how will the Government notify all the organisations, companies and individuals who will be affected by the proposed processes? We have heard a bit about the issue of people having to register for settled status and there has been advertising about that, but if this is going to be a serious issue for businesses in the event of no deal, what will the Government’s process be for getting in touch with them? Is there a communications plan, should it be needed, if we end up without a deal? Hopefully the Minister will be able to answer some of those concerns.

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I thank the hon. Members for Stalybridge and Hyde and for Glasgow Central for their contributions. I will endeavour to go through their points.

The hon. Member for Stalybridge and Hyde made a general overarching point about the uncertainty of Brexit. I agree with him about that, which is why the Government are working so hard, including through conversations with his Front Bench, to secure a negotiated arrangement with the European Union whereby we have an orderly exit. The measures are being brought in only on the basis that, in the unlikely event of day one no deal, we will be able to switch them on by way of an appointed day order.

An important point for the Committee is that we are not rushing these measures in immediately; we have time to see how the negotiations conclude and to bring the measures into effect at the appropriate moment. That also gives us some time to address the specific point about how we propose to make sure that those affected by the measures are aware of them. Of course, we have consulted extensively on these matters with businesses across the country that are involved in imports and exports, and there is an extensive amount of information on that area on gov.uk. There was also an impact assessment that covered, among others, the two instruments that relate specifically to VAT measures, which concluded that the impact would be relatively modest.

The hon. Gentleman is also concerned about the fact that we are using secondary legislation for the measures, but we published the statutory instruments some time ago. I think I am right in saying that the instrument relating to VAT MOSS was published in January, and the other two have also been available for hon. Members to consider for a reasonable amount of time. Of course, they are also affirmative instruments, rather than negative instruments, given that they make amendments to primary legislation.

I was asked specifically why the instruments were being moved today, rather than at any other point. It is a case of making sure that we put them in place so we can switch them on through an appointed day order in the event that we come out without a deal. Of course, in theory at least, we have until the end of October to conclude our arrangements with the European Union.

The hon. Gentleman spoke about the importance, as he saw it, of regulatory alignment with the EU in the context of VAT, on which I agree with him. We have always made it clear that it is our intention and desire for VAT and other tax issues, and indeed customs measures more generally, between us and the European Union to be as closely aligned as possible, so we have a period of stability as we go forward in whatever new arrangement we end up in.

The hon. Gentleman also asked about what would happen to the UK businesses that have benefited from what I accept are considerable easements and simplifications related to the operation of VAT MOSS if we leave without a deal. We have always been clear that either they would have to register with the individual member states with whom they were transacting VAT-applicable business and digital services, or they could afford themselves of the benefits of the non-Union VAT MOSS arrangements available to those outside the European Union.

The hon. Members for Stalybridge and Hyde and for Glasgow Central both made points about the data that will need to be collected under the parcels regulations. I assure the Committee that, as I set out in my opening remarks, there will be no additional burden on business. The focus is strictly on obtaining data that is relevant to parcel collections.

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The Minister says that there is no additional burden to business, but is he not asking businesses to do something that they were not doing before?

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The additional burden, such as it might be, would be registering and being prepared to provide information that is already being collected. In their day-to-day transactions, those businesses already collect a large amount of information, for example on the flow of parcels, where they come from and their value. As the hon. Lady will know, for parcels with a value below £135 the responsibility for accounting for the VAT will transfer from the UK to the sender in one of the EU27 states. To rephrase my point, the additional administrative burden will be proportionate and relatively slight—that is probably a better way to describe it.

The hon. Lady asked about the penalty regime with respect to the responsibilities and obligations that will materialise under the regulations on customs transactions. The answer is that there will be no change to the regime for the businesses concerned. She spoke about consultation, which I think I have dealt with. She also observed that the changes under the VAT MOSS order relate to changes that happened as recently as January 2019. We could not have foreseen those changes, and there are no changes to primary UK legislation. As I set out in my opening speech, it makes sense to rid ourselves of that superfluous legislation, for the reasons that I gave about the potential risk that it could be used for tax avoidance purposes.

The hon. Lady mentioned the three-year period for which customs data will have to be held. Under the current European Union arrangements, however, the data is retained for four years, so the new system will be no more onerous.

Question put and agreed to.

Resolved,

That the Committee has considered the Value Added Tax (Place of Supply of Services) (Supplies of Electronic, Telecommunication a Broadcasting Services) (Amendment and Revocation) (EU Exit) Order 2019 (S.I. 2019, No. 404).

Finance Act 2011, Schedule 23 (Data-gathering Powers) (Amendment) (EU Exit) Regulations 2019

Resolved,

That the Committee has considered the Finance Act 2011, Schedule 23 (Data-gathering Powers) (Amendment) (EU Exit) Regulations 2019 (S.I. 2019, No. 397).—(Mel Stride.)

Customs (Records) (EU Exit) Regulations 2019

Resolved,

That the Committee has considered the Customs (Records) (EU Exit) Regulations 2019 (S.I. 2019, No. 113).—(Mel Stride.)

Committee rose.

Draft Criminal Injuries Compensation Scheme 2012 (Amendment) Instrument 2019

The Committee consisted of the following Members:

Chair: Mr Nigel Evans

† Argar, Edward (Parliamentary Under-Secretary of State for Justice)

† Brereton, Jack (Stoke-on-Trent South) (Con)

† Caulfield, Maria (Lewes) (Con)

† Cruddas, Jon (Dagenham and Rainham) (Lab)

† De Piero, Gloria (Ashfield) (Lab)

† Eustice, George (Camborne and Redruth) (Con)

† Foxcroft, Vicky (Lewisham, Deptford) (Lab)

† Johnson, Gareth (Dartford) (Con)

† Jones, Mr Marcus (Nuneaton) (Con)

Kinnock, Stephen (Aberavon) (Lab)

† McDonald, Stuart C. (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)

† McMorrin, Anna (Cardiff North) (Lab)

† Phillipson, Bridget (Houghton and Sunderland South) (Lab)

† Quin, Jeremy (Lord Commissioner of Her Majesty's Treasury)

† Shelbrooke, Alec (Elmet and Rothwell) (Con)

† Thomas, Derek (St Ives) (Con)

† West, Catherine (Hornsey and Wood Green) (Lab)

Mike Winter, Committee Clerk

† attended the Committee

Ninth Delegated Legislation Committee

Tuesday 14 May 2019

[Mr Nigel Evans in the Chair]

Draft Criminal Injuries Compensation Scheme 2012 (Amendment) Instrument 2019

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I beg to move,

That the Committee has considered the draft Criminal Injuries Compensation Scheme 2012 (Amendment) Instrument 2019.

The purpose of the amended scheme is to remove what we consider to be a discriminatory eligibility rule, and to provide a potential remedy to some victims of violent crime who have been affected by its application. It is right that we are seeking to make these changes expeditiously. I am grateful for the strong support on both sides of the House for what we seek to do, in particular from the shadow Minister. I am sure she will wish to shade into broader issues in her remarks.

Our knowledge and understanding of domestic violence and sexual abuse of children is far greater today than it was when the rule was introduced. It is not acceptable that a rule originally intended to stop perpetrators from benefiting financially from causing harm to people they lived with has unfairly denied victims acknowledgment of that harm and access to compensation for their injuries. All cases of sexual and physical abuse by a family member in the family home involve a grave abuse of trust, but the rule has operated in a way that has denied eligibility for compensation on the basis of victims being in a situation over which they had no or limited control and could not necessarily change.

The circumstances that have given rise to the need for this instrument are exceptional. It is fitting that Parliament is breaking new ground in meeting that need. For the first time, Parliament is invited to approve an amendment to part of the existing statutory scheme. Hon. Members will be aware that we have committed to bring forward a consultation later this year on the overall scheme, offering them and others the opportunity to comment more widely.

A commitment to abolish the pre-1979 “same roof” rule was announced in the “Victims Strategy” published on 10 September 2018. Today, with cross-party support I hope, we deliver on that commitment. Under the rule, applicants were not entitled to compensation if they lived with their assailant as members of the same family at the time of the incident. The rule applied to cases between 1964 and 1979, and affected victims who were adults or children at the time of the incident and claims for injuries from physical or sexual assault.

The amended scheme strikes out paragraph 19 of the 2012 scheme. That will enable victims of violent crimes who may not have applied due to the rule, or those who may not have been aware of the scheme, to consider applying. However, we have gone further in recognition of the unfairness attached to the application of the rule for more than 50 years. We have made provision in new paragraph 18A for past claimants who were refused on the grounds covered by the rule to make new applications.

We have also taken steps to avoid creating a new potentially discriminatory position whereby claimants who were adults at the time of one incident are treated more favourably if the incident happened before 1 October 1979. We have extended the post-1979 “same roof” rule of paragraph 20 of the 2012 scheme to a start date of 1964, to provide consistency in how the rule applies to all applicants who were adults at the time of an incident. The rule will be considered in the comprehensive review of the scheme that we announced in the “Victims Strategy” and to which I just referred. A public consultation on potential reforms to that overall scheme will take place later this year.

Requirements, eligibility rules, criteria and values of awards have changed over time. Members will recognise the importance of a fair and proportionate approach for all applicants, whether they are making a new first application or are reapplying following a past refusal on the grounds of the pre-1979 “same roof” rule. We have sought to enable as many of those victims affected by the rule as possible to consider and take up the opportunity to apply.

As I mentioned, this is the first time we are making changes to parts of an existing scheme and, uniquely, we are applying changes to past applicants. The complexity, therefore, of assessing applications made so long ago will be significant. Administratively, it will be challenging for the Criminal Injuries Compensation Authority to assess and determine claims to the non-statutory or statutory scheme that was applied to previously, or to which a victim could have applied at the time had the rule not existed. We have addressed that by providing that new first applications or reapplications following a past refusal under the pre-1979 “same roof” rule should be made to the 2012 scheme—the existing scheme—and amending the scheme to that effect. We believe that that ensures equality of opportunity.

We have set a time limit for new applicants and past applicants who are reapplying that we believe is fair and consistent. They must submit their claim within two years, as applies to current claims under the scheme, beginning from the date on which the amended scheme comes into effect. We have retained the discretion in the 2012 scheme to extend the time limit where, owing to exceptional circumstances, an application could not be made within that timescale, thereby again ensuring consistency.

Placing a time limit on applications will help us to manage the significant financial liability potentially attached to the changes and to forecast the financial repercussions more effectively. However, where a victim meets all the relevant eligibility criteria under the amended scheme, an award will be made. I recognise that there may be challenges in meeting the evidential threshold required for a compensation award, and it is right to state that a successful outcome to a claim cannot be guaranteed, as they will all be considered appropriately in line with the scheme’s rules.

The changes to the scheme are designed to level the playing field for applicants to the amended scheme. All eligibility criteria in the 2012 scheme must be met. Cases will be assessed on their merits, and the authority will make appropriate inquiries with the applicant and relevant authorities as sensitively and as quickly as possible. All the circumstances of the claim must be considered as a whole to determine whether there is sufficient evidence on the balance of probabilities to support it.

The safeguards in the 2012 scheme will apply to decisions of the authority on an application. They include review by another officer in the authority and, if the applicant remains dissatisfied, the right of appeal to the first-tier tribunal. We intend to monitor carefully the operation of the amendments once they are implemented. It is important that we assess the impact of the changes in meeting our intention to offer an opportunity for redress for the unfairness under the existing 1979 “same roof” rule. We recognise that there is a challenge in raising awareness of the scheme—a point that appertains to the two-year time limit, which is the same limit as applies for other applications under the scheme—and we are looking at that more generally in our review of the scheme.

Given that her term comes to an end imminently, I wish to put on record my gratitude to Baroness Newlove, the Victims’ Commissioner, not only for her work in that role but specifically for her review into criminal injuries compensation. She has been a tireless advocate for the rights of victims of crime and for their voice to be heard. It has been a great pleasure and privilege to work with her in the role for the past 11 months. I am sure that all Members wish to put that on the record. I look forward to working with her successor, Dame Vera Baird, who will be known to many in this House. She will be an equally passionate advocate for the rights of victims.

In relation to the changes that we are introducing, work has begun to engage with external stakeholders on how to ensure that potential applicants are signposted to guidance and support in making a claim. We recognise that making claims to the amended scheme may prove difficult for some applicants, and the authority has made specific preparations to implement it. A small dedicated team has been set up, ready to support people making applications by phone or online.

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I simply wish to commend the choice of Vera Baird as the champion. She has done excellent work over many years, particularly on violence against women, both in a legal capacity and in the community.

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I am grateful to the hon. Lady for her words. We were clear that we wanted the best person for the job. This is not about party politics or anything else. We wanted someone who would do an excellent job and, crucially, carry with them the trust of stakeholders, be they victims or organisations. It is fair to say that Dame Vera has that in spades.

Applicants will be given a named contact to assist them through the application process. The amended scheme and the Government’s intent are clear. The changes we are making are necessary, fair, reasonable and, I would argue, urgent. I commend the amended scheme to the Committee.

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It is a pleasure to serve under your chairmanship, Mr Evans. I echo the comments about Baroness Newlove and her work. I extend my congratulations and the congratulations of hon. Members on both sides of the Committee to Dame Vera Baird, who I am sure will do a fantastic job.

The instrument addresses an antiquated and outdated law, which has received widespread condemnation throughout our justice system. We welcome the move to finally consign it to history. As we have heard, the “same roof” rule denies compensation to victims of violent crime who lived with the perpetrator at the time of the offence, if it took place before 1 October 1979. Victims have had claims for compensation rejected not because they have not suffered enough or are not deserving, but because of an arbitrary cut-off date that prohibits any payment. That not only denies the victims proper financial redress for their traumatic experiences, but denies them justice.

According to the charity Victim Support, 1,484 compensation claims have been rejected in the last decade due to the “same roof” rule. Those claims involve some of the most horrific crimes imaginable, with devastating effects on the victims. People subjected to child abuse or domestic abuse over several years, for instance, have endured appalling episodes of violence, but the nature of those crimes means that the perpetrators are likely to be known to and close to the victim—a parent, partner, family member or carer. That means that the victim is likely to be living under the same roof as the perpetrator, often with no other option. Instead of receiving financial reparation for those horrific experiences, however, they are flatly rejected because of an illogical cut-off date for eligibility.

Victim Support describes the case of two sisters who were sexually abused by their father. One was awarded compensation and the other was not. The only difference was that one had been subjected to that grotesque abuse before 1979 and the other after. It is a cruel and arbitrary rule that excludes some of the most vulnerable, traumatised and in need.

The law has not only presented a barrier to justice for too many, but established a rank double standard in our justice system. In a ruling that was eventually overturned on appeal last year, a woman was denied compensation after surviving sexual abuse at the hands of her father between the ages of four and 17, yet another of his victims was granted compensation. The difference was that the abuser’s daughter, naturally, lived under the same roof as him when he committed the offence, but the other victim did not. That is plain evidence of the horrendous double standard for which the out-of-date law is directly to blame.

Because of such cases, and the hard work of victims’ organisations and charities across the country, action has finally been taken to abolish the “same roof” rule and its distressing impact on victims in our justice system. Can the Minister confirm that those rejected for compensation because the offences took place before 1979 will face no barrier to reapplying for financial compensation from the criminal injuries compensation scheme?

Although the change in legislation is a welcome step, for justice to be fully delivered, the Government must match it with further efforts to make amends to victims. What steps are the Government taking to make the many victims whose claims for compensation were previously rejected aware that they have the opportunity to reapply? Many will have lost trust and interest in the system that was established to support them, so will the Government make an active effort to reach out and contact those whose claims were rejected in the past? With crimes dating back decades—the Minister touched on this—will victims of historical offences be subject to time restrictions in making the new claims?

Recent figures provided by the Government show that the amount of compensation paid by the criminal injuries compensation scheme since 2010 has fallen by almost a half. Will the Minister provide details of what new funding has been earmarked to address the increase in applications, or will an already depleted pot of resources be spread even more thinly? On that note, while welcome, this change fails to address many of the other shortcomings of the criminal injuries compensation scheme that regularly fails victims. The charity Barnardo’s has labelled it “unfair and illogical” and in need of overhaul.

The Government’s changes to the eligibility criteria of the scheme in 2012, for instance, drastically reduced the number of people receiving payments. The most recent figures show that 60% fewer victims have been given compensation. Overall payments made by the scheme have been slashed year on year, while victims suffering horrific injuries now receive significantly less for their troubles. Where once an eye injury that required an operation entitled the victim to £4,400, now they will receive just £2,400. A fractured skull resulting from a violent crime would have brought up to £6,000 in compensation for the victim; now, it is no more than £4,600.

Once again, we see the real impact of the Government’s obsession with austerity and callous slashing of budgets. It is the victims of violent crime, some of the most vulnerable people in our society, who are forced to shoulder the burden of these cuts. Will the Government now commit to providing new funding for victims, so that those who are most in need can be properly compensated for their trauma and injuries?

Charities such as Victim Support have also voiced concerns over the so-called consent rule, which sees the scheme classify sexual assault as a violent crime only in circumstances where a person did not consent. As the scheme provides no minimum age for the point below which all sexual activity automatically becomes criminal, there are fears that this rule is being used to deny compensation to child victims of sexual abuse and grooming if there is any sign that the victim may have complied with the abuse.

Charities have noted cases where victims of child sexual exploitation, subjected over years to horrendous acts of abuse including rape, have been denied compensation because the scheme determined that they had consented to the act. That is an egregious miscarriage of justice; no child victim of grooming should be denied compensation on the grounds that they consented to their abuse. Can the Minister commit to immediately reviewing the consent rule?

Concerns have also been raised about withholding or reducing compensation awards due to previous criminal convictions. Preventing the awarding of compensation or severely reducing the amount paid due to the victim’s holding an unspent conviction can disproportionately affect the most vulnerable victims. Victims of child abuse, for example, are often targeted specifically because of their background and upbringing, so they are more likely to have already committed a crime, while victims are also likely to do so in the process of their abuse.

Victim Support has found that over the past five years, 159 victims aged 16 or under have had an award for a sexual offence refused due to an unspent criminal conviction, while 105 child victims of sexual offences had their payments reduced for the same reason, some by up to 80%. Again, we see evidence of the scheme failing in practice and inappropriately targeting those it was established to support. Does the Minister acknowledge the evidence of a link between victimisation and offending?

We further recognise that the scheme’s failure to do that is a significant flaw that discriminates against victims of abuse. Will the Minister also commit to a review of the unspent conviction rules, so that any reductions are proportionate and no victim is denied financial redress due to convictions for unrelated and minor offences?

Ultimately, the legislation before us is an attempt to address a specific element of the criminal injuries compensation scheme, which has prevented victims from acquiring justice for too long. We welcome the abolition of the outdated “same roof” rule but, while it is an important step in the right direction, that long overdue change should not be used to mask the failings of the scheme at large, which sees victims of the most horrendous abuse and violent crimes re-traumatised, discriminated against and absent of the vital support the scheme was established to provide.

I therefore look forward to the guarantees from the Minister, not just on the implications of this legislation, but on what further efforts the Government are making to support, and properly provide access to justice for, victims through the criminal injuries compensation scheme.

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It is a pleasure to serve under your chairmanship, Mr Evans. I thank the Minister for his explanation of the background to the proposed changes to the compensation scheme; I welcome pretty much all that he had to say, although I share some of the wider concerns set out by the shadow Minister and think they are worthy of consideration. I certainly agree with what both of them said about the work of Baroness Newlove.

For my part, all I need to say is that the Scottish National party welcomes an end to the old “same roof” rule, which is necessary in light of earlier court judgments, but also simply in the interests of justice. The Minister was right to say that this will be challenging both for people who might want to apply for very old cases and for the authority in respect of how it looks at and investigates these cases. It will be important that it is given the resources and manpower to do the job properly.

The Minister rightly flagged the importance of raising awareness of the changes, so that people who are eligible to apply are encouraged to do so. To understand whether we are making sufficient progress on that, it would help to know whether the Minister has an estimate of how many people may be eligible to apply thanks to the changes. That would help us to understand whether there has been sufficient awareness raising to reach the people who need to know about them.

I welcome the broader public consultation that will happen in due course. As ever, I encourage the Minister to pay particular attention to the feedback that comes from stakeholders in Scotland. Although the compensation scheme operates UK-wide, it does so in the context of a different set of criminal laws in Scotland. In short, I very much welcome the proposed changes.

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We have had an interesting and important debate. This debate and what we are seeking to do provide an example of something not always seen beyond these walls: Parliament doing what it does, and doing it well. I reiterate my gratitude for the cross-party support for the measures, and in particular to the shadow Minister, the hon. Member for Ashfield, for her engagement on this issue.

The hon. Lady raised a number of points, which I will endeavour to address. As I mentioned in my opening remarks, we have been clear that, although this is not routine, the changes are in essence retrospective and people will have the right to reapply if their claims were previously rejected on the grounds of the “same roof” rule. Other criteria still apply to the scheme that will obviously have to be met, but that rule will no longer be a ground for rejection, as it has been in the past.

On building trust and communicating the changes to those who need to reapply, the hon. Lady is right that the success of the changes will be measured in people coming forward, and knowing that they can do so. We have imposed the two-year time limit because we believe that it is important that that is consistent with the rest of the scheme’s operation. However, I highlight two things. First, there is an element of discretion in particular circumstances that mean that someone is unable to come forward within the time period. We also have a clear emphasis on communication and stakeholder engagement, because it is right that people know, and know early, about the changes that we have made here, and that hopefully will be approved in due course by the House and the other place.

We have that stakeholder engagement and we have a dedicated team to support those who apply though the process; those applicants will get a named contact. I also encourage hon. Members to highlight the changes by whatever means they have within their power when the legislation has passed all its stages, as I hope it will.

The hon. Lady asked about payments for those who are deemed eligible and are successful. I assure her that victims applying to the amended scheme who meet the criteria will receive the award that they are offered, and funding will be available to ensure that they get the money that they are awarded.

The hon. Lady moved on to other aspects that fall more properly into the review that we have announced of the overall 2012 scheme, which we will introduce later this year. The scheme was last reviewed in 2012, when reforms were made to make the scheme more financially sustainable. As she said, that has affected the total awards made, although the volume of applications has also reduced since 2012. It is important to remember that our scheme remains the most generous in Europe; CICA paid out £154 million in compensation to victims in the last financial year.

The broad terms of reference for the current review of the scheme were announced on 18 December 2018. In that context, the hon. Lady made a number of points about the tariff for awards, the eligibility criteria more broadly, the consent rule in the context of the scheme and the previous convictions rule. The overall review of the scheme will be an opportunity for people, stakeholders and members of the public to comment on those and other factors; I am sure the official Opposition will wish to do so too. I am conscious that she and I are due to meet in the near future to discuss the review.

I will briefly mention the comments of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, who, as ever, was measured, pragmatic and sensible in his response. I am grateful for his support, and that of his party, in this endeavour. I am conscious of the points that he made about Scotland. I am sure that he and his party will also wish to participate in the broader review of the overall scheme.

I hope that the Committee agrees that the proposed changes are small but an important step as part of a bigger whole. They are welcome and necessary to remedy an unfairness that has taken place for far too long.

Question put and agreed to.

Committee rose.