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House of Commons Hansard
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Written Statements
25 March 2020
Volume 674

Written Statements

Wednesday 25 March 2020

Cabinet Office

Withdrawal Agreement Joint Committee

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The first meeting of the withdrawal agreement joint committee will take place on 30 March 2020 by remote means.

The meeting will be co-chaired by the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office, the right hon. Member for Surrey Heath (Michael Gove) and Vice-President of the European Commission, Maroš Šefčovič .

The agenda will include four items:

Introduction and opening remarks from co-chairs

UK/EU updates on implementation of the withdrawal agreement

Tasks and responsibilities of the specialised committees

AOB

The UK delegation will include:

The Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office, (Michael Gove)

The Paymaster General, the right hon. Member for Portsmouth North (Penny Mordaunt)

[HCWS190]

Treasury

Financial Services Regulation

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In preparation for leaving the European Union, HM Treasury made over 50 EU exit statutory instruments under the European Union (Withdrawal) Act 2018 to ensure the UK’s financial services regulatory regime stood ready for all scenarios at exit day. This included introducing a range of temporary permissions and transitional regimes to minimise any disruption to firms and consumers as we leave the EU.

The UK has now left the EU and entered a transition period, which will last until 31 December 2020. The European Union (Withdrawal Agreement) Act 2020 (“EUWAA 2020”) delayed those parts of the EU exit statutory instruments that would have come into force immediately before, on, or after exit day so they instead come into force at the end of the transition period. As a result of further secondary legislation made under the EUWAA 2020, the temporary permissions and transitional regimes will also now apply at the end of the transition period.

While, in general, the same laws and rules will apply at the end of the transition period, HM Treasury recognises it will be important, irrespective of the agreement that is reached between the EU and UK, for the regulators to have the flexibility to smooth any adjustments to the UK’s regulatory regime for financial services at the end of the transition period.

The Department will therefore retain the regulators’ “temporary transitional power” (TTP), which was introduced via the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019, and shift its application such that it is available for use by the UK regulators for a period of two years from the end of the transition period.

The TTP will allow the Bank of England, the Prudential Regulation Authority and the Financial Conduct Authority to phase-in changes to UK regulatory requirements so that firms can adjust to the UK’s post-transition period regime in an orderly way, in line with the objectives already set by Parliament.

[HCWS188]

Oil and Gas Decommissioning Relief Deeds

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At Budget 2013, the Government announced they would begin signing decommissioning relief deeds. These deeds represented a new contractual approach to provide oil and gas companies with certainty on the level of tax relief they will receive on future decommissioning costs.

Since October 2013, the Government have entered into 96 decommissioning relief deeds.

Oil and Gas UK estimates that these deeds have so far unlocked approximately £8.1 billion of capital, which can now be invested elsewhere.

The Government committed to report to Parliament every year on progress with the decommissioning relief deeds. The report for financial year 2018-19 is provided below.

Number of decommissioning relief agreements entered into: the Government entered into five decommissioning relief agreements in 2018-19.

Total number of decommissioning relief agreements in force at the end of that year: 92 decommissioning relief agreements were in force at the end of the year.

Number of payments made under any decommissioning relief agreements during that year, and the amount of each payment: one payment was made under a decommissioning relief agreement in 2018-19, for £43.2 million[1]. This was made in relation to the provision recognised by HM Treasury in 2015, as a result of a company defaulting on its decommissioning obligations.

Total number of payments that have been made under any decommissioning relief agreements as at the end of that year, and the total amount of those payments: four payments have been made under any decommissioning relief agreement as at the end of the 2018-19 financial year, totalling £94.0 million.

Estimate of the maximum amount liable to be paid under any decommissioning relief agreements: the Government have not made any changes to the tax regime that would generate a liability to be paid under any decommissioning relief agreements. HM Treasury’s 2019-20 accounts will recognise a provision of £285.9 million in respect of decommissioning expenditure incurred as a result of a company defaulting on their decommissioning obligations[2]. The majority of this is expected to be realised over the next four years.

[1] This figure takes into account a revision made to a claim in 2017-18 that was reported in a previous written ministerial statement [HCWS1435].

[2] This figure takes into account payments made subsequent to the financial year covered by this written ministerial statement.

[HCWS189]

Pension Reforms

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The Government are developing proposals to address the unlawful age discrimination identified by the Court of Appeal in the 2015 reforms to the judicial and firefighters’ pension schemes.

On 15 July 2019, the Government announced they would take steps to remove this discrimination retrospectively [HCWS1725]. It confirmed that this would apply to pension scheme members with relevant service across all those public service pension schemes that were introduced in 2014 and 2015, regardless of whether individuals had made a claim. This is a complex undertaking, and it is important to get it right.

Since February 2020 relevant pension schemes have been conducting technical discussions with member and employer representatives to seek initial views on the Government’s high-level proposals for removing the discrimination.

I am grateful for the constructive engagement of trade unions, staff associations, public service employers and other stakeholders in these discussions. The Government are considering the initial views of stakeholders and continuing to work through the details of the technical design elements of the proposals. Detailed proposals will be published later in the year and will be subject to public consultation. The Government will welcome views on these proposals.

For the avoidance of doubt, members of public service pension schemes with relevant service will not need to make a claim in order for the eventual changes to apply to them.

I would like to reassure members that their pension entitlements are safe. The proposals the Government are considering would allow relevant members to make a choice as to whether they accrued service in the legacy or reformed schemes for periods of relevant service, depending on what is better for them. The Government will provide more detail later in the year, but if an individual’s pension circumstances change as a result, the Government may also need to consider whether previous tax years back to 2015-16 should be reopened in relation to their pension.

The Government will also set out their proposal to remove the discrimination for future service in the forthcoming consultation.

In January 2019, the Government announced a pause to the cost control mechanism in public service pension schemes, due to uncertainty about benefit entitlements arising from the McCloud judgment. Alongside their proposals for addressing discrimination, the Government will also provide an update on the cost control mechanism.

[HCWS187]

Home Department

Immigration Rules: Simplification

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This Government are committed to creating a firm and fair immigration system that prioritises the skills people have to offer, not where their passport comes from, and restores public trust by ensuring the immigration system truly works for this country.

The immigration rules form one of the foundations of our immigration system. So I am pleased today to publish our response to the Law Commission’s report and recommendations on simplifying the immigration rules. I am extremely grateful to the Law Commission for their detailed and constructive work.

The first recommendation from the Law Commission is we should overhaul the immigration rules, consolidating and streamlining, based on the principles it has identified. I am pleased to announce we accept this recommendation. Our aim is to complete this overhaul by January 2021.

Simplified rules will be at the heart of Britain’s new, global points-based immigration system.

For far too long, users have struggled to understand the confusing and complex immigration rules. They create barriers for employers who want to bring skilled workers to the UK; to colleges who want to encourage international students to come to the UK, and to the brightest and best migrants from around the world who want to make a contribution to the UK.

We will cut through the complexity and make the rules clear, consistent and accessible, to encourage those who have the skills or talent to benefit the UK, and to crack down on illegal migration and remove those who abuse our hospitality by committing criminal offences.

In line with the Law Commission’s recommendations, I have already established a Simplification of the rules review committee to look at the drafting and structure of the rules. The committee will ensure the simplification principles put in place now continue to apply in future, while providing ongoing support to continuously improve and adapt the rules in our changing world.

The Law Commission made 41 recommendations for change. We accept 24 of the recommendations, and partially accept the other 17 recommendations. Where we have not fully accepted a recommendation that does not mean we disagree with the ambition behind the recommendations; it generally means we want to explore how it can be delivered in practice.

Simplification of the immigration rules, the global points-based immigration system, and the Immigration and Social Security Co-ordination (EU Withdrawal) Bill which will end free movement, will deliver the biggest shake-up of the immigration system in a generation.

The Government’s response has been published on gov.uk and can be found at: https://www.gov.uk/government/publications/simplifying-the-immigration-rules-a-response.

A copy of the response will also be placed in the Libraries of both Houses.

[HCWS186]