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General Committees

Debated on Wednesday 16 September 2020

Delegated Legislation Committee

Draft Equivalence Determinations for Financial Services (Amendment etc.) (EU Exit) Regulations 2020

The Committee consisted of the following Members:

Chair: Esther McVey

† Bailey, Shaun (West Bromwich West) (Con)

† Baynes, Simon (Clwyd South) (Con)

Brennan, Kevin (Cardiff West) (Lab)

† Coutinho, Claire (East Surrey) (Con)

† Evans, Dr Luke (Bosworth) (Con)

† Glen, John (Economic Secretary to the Treasury)

† Holden, Mr Richard (North West Durham) (Con)

† McFadden, Mr Pat (Wolverhampton South East) (Lab)

McDonnell, John (Hayes and Harlington) (Lab)

Oppong-Asare, Abena (Erith and Thamesmead) (Lab)

† Rutley, David (Lord Commissioner of Her Majestys Treasury)

† Sambrook, Gary (Birmingham, Northfield) (Con)

Sharma, Mr Virendra (Ealing, Southall) (Lab)

† Smith, Jeff (Manchester, Withington) (Lab)

Thompson, Owen (Midlothian) (SNP)

† Wheeler, Mrs Heather (South Derbyshire) (Con)

† Whittaker, Craig (Calder Valley) (Con)

Nicholas Taylor, Dominic Stockbridge, Committee Clerks

† attended the Committee

Tenth Delegated Legislation Committee

Wednesday 16 September 2020

[Esther McVey in the Chair]

Draft Equivalence Determinations for Financial Services (Amendment Etc.) (EU Exit) Regulations 2020

Before we begin, I remind Members about social distancing. I can see you are adhering to the rules and sitting in the marked seats. If people are going to speak, Hansard colleagues will be grateful if you email your notes to them at I call the Minister to move the motion.

I beg to move,

That the Committee has considered the draft Equivalence Determinations for Financial Services (Amendment etc.) (EU Exit) Regulations 2020.

It is a pleasure to serve under your chairmanship for the first time, Ms McVey.

The Treasury has been undertaking a programme of legislation to ensure that after the end of the transition period, there continues to be a functioning legal and regulatory regime for financial services in the UK. The Treasury lays statutory instruments under the European Union (Withdrawal) Act 2018 to deliver this legislative programme, and the majority of these SIs have already been approved in this place and in the House of Lords. As part of this financial services legislative programme before exit day, the Treasury laid the Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019, commonly known as the equivalence regulations 2019, in January 2019.

The equivalence regulations 2019 were designed to ensure that, if the UK left the EU without a transition period, the UK would have a fully functioning equivalence framework from exit day. The additional time afforded by the transition period has provided us with the opportunity to put in place supplementary measures in the equivalence regulations 2019 to ensure that the UK continues to have a robust and functioning equivalence framework for financial services both during and after the end of the transition period.

The measures in the instrument being debated today complement the equivalence regulations 2019 by creating additional standalone powers for the relevant UK financial services regulators—the Bank of England and the Financial Conduct Authority—which are appropriate for those regulators in the transition period, and also make minor amendments to the earlier 2019 regulations, again as appropriate for the transition period. The SI will make minor amendments to add to the powers available to the regulators after the end of the transition period and to correct errors in earlier financial services EU exit legislation.

I am grateful that this SI was raised as an instrument of interest by the Lords Secondary Legislation Scrutiny Committee in its July report and for the question the Committee raised on co-operation agreements. I intend to address that question during this debate.

The instrument being debated concerns the UK’s future regime for equivalence, which is a process to determine that another country’s regulatory and supervisory regime is equivalent to the UK’s corresponding regulatory framework. Recognising the regulatory equivalence of third countries is a key component of financial services regulation. Equivalence determinations can help to reduce regulatory burdens on firms and facilitate cross-border market access. This may lead to increased competition, which has benefits for UK firms and consumers by engendering healthy market incentives to lower prices and offer innovative products.

At present, equivalence functions are performed by the European Commission and the European supervisory authorities. At the end of the transition period, these functions will be transferred to the Treasury and the UK regulators as provisions in retained EU law. During the transition period, equivalence determinations can be made for European economic area states via powers within the equivalence regulations 2019. This instrument provides a UK equivalence framework that is appropriate for use during the transition period in relation to the EU’s existing framework. This instrument allows the UK financial services regulators to complete the associated actions that mean that Treasury equivalence determinations taken during the transition period can take full effect at the end of that time.

This is a technical SI that provides for the UK’s transition to its new position outside the EU. I will now explain in more detail the main categories of fixes that the SI introduces. The first three changes provide UK regulators with appropriate powers to complete the associated actions that ensure that the Treasury’s equivalence determinations can take effect fully at the end of the transition period.

Currently, the equivalence regulations 2019 allow the Treasury to make equivalence determinations by direction during the transition period for EEA states, with those directions not entering into force until the end of the transition period. As part of the equivalence process, almost all the equivalence provisions in retained EU law will require UK financial services regulators to conclude co-operation arrangements with the relevant regulatory authority or authorities for that EEA state before the determination can take effect. Currently, there is no mechanism to allow regulators to undertake that during the transition period.

Where the Treasury has made an equivalence determination by direction, the SI will make transitional provision for UK financial services regulators to have the power to enter into relevant co-operation arrangements with the appropriate EEA regulatory authorities before the end of the transition period. Those co-operation arrangements will come into effect at the end of the transition period for the necessary provisions in retained EU law.

Additionally, as part of the direction-making process, almost all equivalence provisions require regulators to issue recognition or registration decisions for non-UK firms. Where the Treasury has made an equivalence determination by direction during the transition period, the instrument puts in place a regime for firms to make an application during the transition period to the appropriate regulator and for that application to be processed.

The instrument will therefore ensure that the regulators have the power to process applications and issue recognition and registration decisions during the transition period, to come into effect at the end of that period for the necessary provisions in retained EU law. It will also give regulators the power to request fees from applicants for regulatory decisions made under it.

I appreciate that the Lords Secondary Legislation Scrutiny Committee questioned whether there is enough time for the UK regulators to establish co-operation agreements with EEA regulators once an equivalence determination is made and then process applications made by EEA firms. I am pleased to say that regulators have a period of one year to process applications from EEA firms once the required co-operation arrangements have been established. Both the Treasury and regulators consider that ample time for the regulators to decide any applications.

Secondly, the SI will amend the Credit Rating Agencies (Amendment, etc.) (EU Exit) Regulations 2019, which in turn make provision for the onshoring of the EU credit rating agencies regulation. The amendments will onshore the powers to enter into co-operation arrangements currently held by the European Securities and Markets Authority to the Financial Conduct Authority.

The amendments also make provision for the existing EU equivalence determinations that will form part of retained EU law by operation of section 3 of the European Union (Withdrawal) Act 2018. Finally, a minor but necessary amendment is also made to the Central Securities Depositories (Amendment) (EU Exit) Regulations 2018 that relates to a provision within the regulations to ensure that they work in a UK-only context.

In summary, the Government believe that the proposed instrument is necessary to ensure that there is an appropriate equivalence framework for financial services during the transition period and to complement that already put in place by the equivalence regulations 2019. I hope that Committee members will join me in supporting the regulations and I commend them to the Committee.

It is a pleasure to serve under your chairmanship, Ms McVey. The regulations are intended to put in place an equivalence regime for financial services during and at the end of the transition period. They mirror the equivalence regulations put in place last year in case we left the EU without a withdrawal agreement. As the old saying goes, it is déjà vu all over again.

The aim is to ensure minimal disruption at the end of the transition period and a suitable UK regime for functions currently carried out by EU bodies such as the Commission or the European Securities and Markets Authority. In most cases, those functions will transfer to the Treasury or regulators such as the Financial Conduct Authority. The Minister might confirm my understanding that the aim of the regulations is not to change policy other than that necessary to recognise the legal fact of the UK’s having left the European Union.

To put the Committee’s mind at rest, I will say that we do not intend to divide the Committee on this matter today. It is clearly in the national interest to have a robust regulatory system in place and to have a mechanism for making equivalence determinations for the financial services industries and the regulatory systems in EEA countries, and that is what the regulations aim to achieve.

However, I do have a couple of questions for the Minister, and I would be grateful if he addressed them in his summing-up speech. Determining equivalence is of course a two-way street. It is of just as much relevance to our financial services industry—and all the jobs, investment and tax revenue associated with it—to know what the situation is with equivalence determinations in EEA countries for our financial services industry as it is to design our own regulatory system for theirs.

The Minister will be aware that paragraph 36 of the political declaration that we signed last year said that the UK and EU should endeavour

“to conclude these assessments before the end of June 2020.”

We are well beyond that now, in mid-September, and perhaps it is a bit much to expect the Government to stick to the non-legally binding political declaration when they do not even intend to stick to the withdrawal agreement, but could the Minister give an update on how the process of determining equivalence with EEA countries is going? That has of course become a more serious and urgent question with the controversy about the United Kingdom Internal Market Bill, currently being debated in the House.

Let us say that no free trade agreement is reached in the coming weeks. What is the Minister’s assessment of the impact of that on our financial services industries? The regulations—they say it throughout—are all about co-operation arrangements, but what if there is not much co-operation in place? What will that mean for this important sector of the UK economy? What will it mean for jobs? And what will it mean for associated industries such as law, consultancy, accountancy, insurance and so on? What does the Minister think are the prospects for equivalence agreements if the good will is being destroyed in the way that we have seen in the last couple of weeks? What representations, if any, has the Minister received from the financial services industry on this question in recent weeks, since the Government’s intentions on the internal market Bill became clear?

We can replicate the regulations currently in place; we can transfer responsibility for these determinations to UK bodies, and that is what the regulations before us today do, but what we cannot do is replicate the market access that we currently have, because the Government have chosen their direction in the negotiations in a way that inevitably lessens market access for these UK-based firms. Of course, quite what the full implications of that are only time will tell, but particularly in the light of the last couple of weeks, I would be interested in the Minister’s assessment of that before we conclude.

I thank the right hon. Gentleman for his points, which I will address in turn. To reiterate, this SI is needed to ensure that we continue in the UK to have a robust and functioning equivalence framework for financial services after exit. As the right hon. Gentleman acknowledged, these regulations make minor amendments to modify errors in onshored legislation.

The right hon. Gentleman asked me to confirm initially whether there was any intention to change policy. There is no intention to change policy. But he then asked a series of questions related to the broader negotiation of equivalence in financial services. I am happy to address that and to acknowledge that we returned all 17 questionnaires received from the EU as part of its assessment process. Our returns totalled more than 2,500 pages. We received the first questionnaire in late March, and the last 250 pages of questions reached us only at the end of May. Our belief, as I have said previously, is that many, if not most, of those questions relate to explaining the detailed rules and regulations in the UK—ones that we share with the EU. I am happy to confirm that, although decisions on equivalence are autonomous and unilateral in many areas of financial services, it is essential that we understand the approach of the other party when deciding how to approach an area of cross-border activity. Although the UK has undertaken its assessment of the EU, we will not be making equivalence decisions at this stage; we will make decisions when and where we determine that it is in the UK’s interests to do so. Our ambition remains to achieve reciprocal equivalence, supported by effective regulatory co-operation and an ambitious free trade agreement. We continue to work towards that goal.

The right hon. Gentleman asks about broader engagement with the industry. Obviously, I have deep and regular contact with representative bodies from the different parts of the financial services industry. Just last week I chaired the tenth meeting of the asset management taskforce, and I obviously hear the concerns about these unresolved matters. With respect to the specific arrangements in this SI, however, I hope the Committee is assured that these modest changes are fully necessary. I welcome the right hon. Gentleman’s agreement on that.

Question put and agreed to.

2.46 pm

Committee rose.

Draft European Structural and Investment Funds Common Provisions and COMMON PROVISION RULES ETC. (AMENDMENT) (EU EXIT) (REVOCATION) REGULATIONS 2020

The Committee consisted of the following Members:

Chair: †Dr Rupa Huq

† Afriyie, Adam (Windsor) (Con)

Cooper, Rosie (West Lancashire) (Lab)

Davison, Dehenna (Bishop Auckland) (Con)

† Furniss, Gill (Sheffield, Brightside and Hillsborough) (Lab)

† Gideon, Jo (Stoke-on-Trent Central) (Con)

Grady, Patrick (Glasgow North) (SNP)

† Jupp, Simon (East Devon) (Con)

Keeley, Barbara (Worsley and Eccles South) (Lab)

† Mangnall, Anthony (Totnes) (Con)

† Moore, Damien (Southport) (Con)

Morden, Jessica (Newport East) (Lab)

† Onwurah, Chi (Newcastle upon Tyne Central) (Lab)

† Simmonds, David (Ruislip, Northwood and Pinner) (Con)

† Tarry, Sam (Ilford South) (Lab)

† Tomlinson, Michael (Lord Commissioner of Her Majesty's Treasury)

† Watling, Giles (Clacton) (Con)

† Zahawi, Nadhim (Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy)

Bradley Albrow, Committee Clerk

† attended the Committee

Thirteenth Delegated Legislation Committee

Wednesday 16 September 2020

[Dr Rupa Huq in the Chair]

Draft European Structural and Investment Funds Common Provisions and Common Provision Rules etc. (Amendment) (EU Exit) (Revocation) Regulations 2020

I beg to move,

That the Committee has considered the draft European Structural and Investment Funds Common Provisions and Common Provision Rules etc. (Amendment) (EU Exit) (Revocation) Regulations 2020.

It is a pleasure to serve under your chairwomanship, Dr Huq. The draft regulations were laid before the House on 13 July 2020. The European Union regulations for structural funds and the cohesion fund are designed to reduce social and economic disparities in the EU. The funds are the main funding tools designed to deliver the EU cohesion policy and come under the wider family of European structural and investment funds, or ESIF. The EU regulations set out the rules governing those funds and give powers to the member states to ensure the operability of eligibility projects. More than half of EU funding is channelled through the European structural and investment funds, which are jointly managed by the European Commission and EU member states.

The Department for Business, Energy and Industrial Strategy sets the policy for and co-ordinates the management of four of the funds across the United Kingdom: the European regional development fund, or ERDF, which includes the European territorial co-operation fund, or ETC; the European social fund, or ESF; the European agricultural fund for rural development; and the European maritime and fisheries fund. Under the structural funds, the UK was allocated about £9.5 billion of funding for the 2014 to 2020 period. The funds support growth, low carbon, transport, research innovation, small business, employment opportunities and social inclusion.

Structural fund programmes are managed and delivered by Government organisations designated as “managing authorities”. In essence, they are the delivery bodies for the funds in England and in the devolved Administrations and are responsible for drawing up operational programmes. The programmes set out the levels of funding for certain activities, and how the programmes will be run within the parameters set by the EU regulations.

BEIS is the co-ordinating body for the ESIF in the United Kingdom. In England, the managing authorities for the European regional development fund and the European social fund are, respectively, the Ministry of Housing, Communities and Local Government, and the Department for Work and Pensions. The devolved Administrations and Her Majesty’s Government of Gibraltar administer ERDF and ESF in their respective areas. The Department for Environment, Food and Rural Affairs manages the agricultural funds in England, and the devolved Administrations in their areas, apart from the EMFF, which is run across the UK by the Marine Management Organisation, a non-departmental Government body sponsored by DEFRA.

Gibraltar receives a small allocation of about €10 million, or £8.8 million, from the ERDF and ESF for 2014 to 2020. It has agreed operational programmes with the European Commission to implement those. It also takes part in two transnational programmes.

The need for continued regional investment in the event of a no-deal exit, and the nature of the projects supported by those funds, led to the introduction of legislation so that the funds could operate domestically under no deal until their planned closure, even though they would cease to be funded by the EU. Since the UK signed the withdrawal agreement document, which maintains the EU regulations for European structural and investment funds until programme closure—which might not be until 2026, given that programmes run until 2023 and generally take two to three years to wind up—that statutory instrument, the European Structural and Investment Funds Common Provisions and Common Provision Rules etc. (Amendment) (EU Exit) Regulations 2019, or SI 2019/625, contradicts the intent and purpose of the withdrawal agreement.

The draft regulations are therefore being made to revoke SI 2109/625, which was made on 18 March 2019. That SI disapplied retained EU law in relation to the European regional development fund, European social fund and European territorial cooperation fund, in order to ensure that the programmes could continue in a no-deal exit scenario. Under the withdrawal agreement, the regulations can still apply to the UK, despite the UK not being a member state.

Now that the withdrawal agreement has been signed by the UK and made into law through the European Union (Withdrawal Agreement) Act 2020, SI 2019/625 is no longer required and should be repealed in order not to confuse the statute book. The Act allows the UK to continue to apply EU regulation 1303/2013, the supplementary fund-specific regulations and associated delegated, and implementing legislation for European structural and investment funds, until the end of the current programmes. It is proposed that the UK shared prosperity fund will be set up as the domestic successor to European structural investment funds for new programmes.

It is necessary to revoke the original no-deal statutory instrument 2019/625 to remove conflict with the provisions of the European Union (Withdrawal Agreement) Act 2020. The United Kingdom will continue to participate in European structural investment fund programmes until their closure, and delivery continues through the management authorities and devolved Administrations. In order to remove any confusion from the statute book, as the no-deal guarantee for funding is not required, I commend the draft regulations to the Committee.

It is a real pleasure to serve under your chairship, Dr Huq, especially on this very important subject, which I know is close to your heart and that of all of us here. I thank the Minister for his opening remarks, which were enlightening in some respects, though not in all, as I will come on to.

Between 2014 and 2030, the UK benefited from £17.2 billion of European structural and investment funds, as well as the additional national and private co-financing that that funding leveraged. That investment continues to strengthen projects led by not-for-profit organisations, local authorities, registered charities, higher and further education institutions, voluntary and community organisations, and statutory and non-statutory public-funded bodies, but it also—the Minister briefly made reference to this point—makes its way to businesses across the regions and nations of the United Kingdom that support these sectors in making the best of the investment.

Over time, the funding streams have become an integral part of the US business landscape. Whether through research and innovation, supporting our shift towards a low-carbon economy or promoting social inclusion to combat poverty and create jobs, the European Union structural and investment funds have mitigated some of the chronic regional, socio-economic and business investment disparities we see in the UK. As an MP from the north-east of England, I know very well how vital the funds have been in plugging the gaps left in my region after a decade of austerity.

The funds are underpinned by fair and progressive distribution formulas that ensure investment gets to where it is needed most and where it will have the most impact. I am sure that the Minister will agree that is the very definition of levelling up. Indeed, the Institute for Public Policy Research’s report on the proposed shared prosperity fund, published in February 2019, states:

“After Brexit, the UK will need to continue to give targeted support and investment into regions with lower levels of growth and higher levels of poverty, or it risks worsening the geographical divide.”

Labour supports the SI, in so far as it ensures that UK-funded programmes and activities entered into as part of the MFF 2014-2020 can continue to operate smoothly through to completion beyond the end of the transition period. We recognise that the SI is largely technical in nature and that it revokes a previous SI that, as the Minister has said, is no longer relevant and must be removed from the statute book. However, I want to raise a number of concerns that I hope the Minister will be able to speak to in his response.

We have just months left until the end of the transition period, but the Government are seemingly—obviously, I would say—struggling to negotiate effectively with the European Union, and they continue to undermine their own political declaration and withdrawal agreement at every turn. It was interesting to hear the Minister say that the SI was no longer needed because the withdrawal agreement had been signed and agreed, yet we debate in this House whether the withdrawal agreement will continue to apply in certain important aspects.

As things stand, the UK will have no access to structural investment funds once the 2014-2020 funding cycle comes to an end. The Minister said that “it is proposed” that the replacement be the strategic prosperity fund, using the passive voice as if it were not part of his Department’s obligations—or promises rather than obligations. The Minister will also know that Labour has been concerned for some time that the UK shared prosperity fund has no details on how the Government will distribute and match the success of EU programmes. No details have been forthcoming whatsoever.

Labour has been pushing the Government for any kind of plan since the new fund was first suggested in the Conservative party’s 2017 manifesto—more than three years ago. We were told that we would be seeing a full consultation document and final decisions on the fund’s design as part of the 2019 spending review, so businesses and key stakeholders across the country duly geared up to work with the Government on the replacement fund. Instead, the Government cancelled the spending review and have since rowed back on their commitment to a full and transparent consultation process. The Minister made no mention of that.

A rescheduled spending review to conclude in July 2020 has been further delayed due to covid-19. We understand that, and the Government can be forgiven for having to adapt their legislative programme at short notice. However, the plans for the fund were already off schedule well before the pandemic hit. Without figures or even a simple timetable, businesses operating in all sectors across the UK are left in the dark, unable to plan for key funding applications beyond 2020, and all that just months before the transition period comes to an abrupt end. That adds even more layers of uncertainty on top of those already being felt by businesses small and large across our country as a result of the Government’s mismanagement of the coronavirus pandemic and European Union negotiations.

The British Chambers of Commerce wrote to the Government in July 2019, more than a year ago, stating:

“From city regeneration schemes to business support, investment finance to research collaboration, businesses do not want to see ‘cliff edges’ in funding, but nor do they want a copy-and-paste approach to replacing the current system of EU development finance. Government must publish long-overdue proposals for a UK Shared Prosperity Fund for consultation—with a commitment to maximum local autonomy, a strong voice for business and a focus on economic growth.”

That was requested more than a year ago.

First, can the Minister clarify today when we can expect to see a credible plan for the UK’s shared prosperity fund? Secondly, can he confirm whether a full public consultation will take place to ensure all views and stakeholders get an equal opportunity to feed into this important and nation-shaping fund? Can he also clarify what work his Department has done to audit the impact of the European Union structural investment fund on businesses across the regions of the UK? Labour believes it is important for the Department and Ministers to have a clear picture of the impact before plans for a replacement fund can be decided upon. Can he agree that that vital work will be placed in the public domain before any consultation takes place?

The all-party parliamentary group for post-Brexit funding for nations, regions and local areas believes that the European regional development fund, the European social fund and the local growth fund, a non-EU fund, may be considered for amalgamation. The Minister mentioned a series of smaller funds including the European maritime and fisheries fund, and there is also the LEADER programme for rural development and the youth employment initiative. They could be considered for folding into the UK shared prosperity fund too. Taking into account the inflation uprating of those funding pots, as well as the additional designated “less developed regions” and “transition regions” the UK would have been allocated in the next MFF, the APPG suggests that any new shared prosperity fund should total just over £4 billion. Taking that figure as a starting point, will the Minister say whether the Government’s fund will be higher or lower than that figure?

On devolution, the Welsh Government have legitimate concerns about the shared prosperity fund being directed centrally from Whitehall, which they would see as an attack on devolution. Welsh businesses need the Government here in Westminster to ensure that the extraordinary benefits experienced by Welsh businesses under the European structural and investment funds are not lost in the transition to a new fund. Many local authorities across England, Scotland and Northern Ireland share that concern. I want to see the replacement fund enabling local leaders, businesses and people to have more say on how money is spent in communities. Indeed, in March this year the Institute for Government said

“Although the UK government has committed that the UK Shared Prosperity Fund will operate in a way that respects the devolution settlements, the devolved administrations are also suspicious that it might be used to allow the UK government to spend money directly in devolved areas, bypassing the devolved governments. This could signal a centralisation of regional development policy which would, according to Welsh First Minister Mark Drakeford, represent “a direct attack on devolution”.”

Can the Minister reassure us that that is not his intention?

In a letter to the Chancellor in February, the chair of the North East England Chamber of Commerce, James Ramsbotham, called out the Government’s “extremely poor” approach to engagement and consultation on the UK shared prosperity fund, which must recognise the north-east’s specific challenges regarding deprivation and lower economic performance. You will understand, Dr Huq, that as a north-east MP I cite a north-east example, but I know that other regions have concerns about the lack of consultation. Many businesses I speak to are also concerned that the Government may move to a shorter funding cycle. A seven-year funding cycle is embedded in European Union structural and investment funds, which enables businesses to plan strategically to make smarter investments in their workforce and operations over a longer period of time. I ask the Minister to acknowledge the value of longer-term cycles. Will the Minister be advocating for that approach on behalf of UK businesses in any new fund?

I have concerns that the Government will propagate politically motivated funding strategies via the shared prosperity fund that could negatively impact areas that most need investment. We have seen cynical funding formulas deployed in the future high street fund and in the town of culture funds, targeting Conservative party seats that have received disproportionate levels of funding. Will the Minister allay the concerns of businesses and non-Conservative target seats by declaring today that the Government have no intention of leaving out areas that are in urgent need of investment?

Does any other Member wish to catch my eye, any Back Bencher? SNP not here? That’s them for you, isn’t it.

I thank the Shadow Minister for her remarks, and I will attempt to address those in my closing comments. I thank my colleagues for listening so intently to such an enthralling statutory instrument.

Now that, obviously, the UK has left the European Union we are able to design and implement our own regional funding programmes that I mentioned. Just a couple of small typos to mention, I do not want Hansard to get it wrong: I think the hon. Lady meant that businesses benefitted from the funds from 2014 to 2020, I think maybe she mistakenly said 2030 in her opening remarks, and she talked about US businesses, and I think she meant UK businesses.

Absolutely. I will touch on the hon. Lady’s remarks about what the UK shared prosperity fund will look like. The 2019 Conservative manifesto commits to creating the UK shared prosperity fund, a programme of investment to bind together the whole of the United Kingdom. I take slight issue with her final remark about our in some way discriminating; the Prime Minister is absolutely committed to levelling up all over the United Kingdom and, of course, binding the four nations together, tackling inequality and deprivation in each of our four nations. Through the UK shared prosperity fund the Government can cut out bureaucracy and create a fund that invests in UK priorities, at least as much as the current European fund has done, and is easier for local areas to access.

The hon. Lady asked about clarity. The Government recognise the importance of providing clarity on the UK shared prosperity fund. Decisions on the design of the fund will need to be taken after the cross-Government spending review. In the meantime, we will continue to work closely with interested parties. On the hon. Lady’s question about consultation on the fund, the Government recognise the importance of reassuring local communities, including her own constituency, on the future of local growth funding and providing clarity on the UK shared prosperity fund. I can confirm that Government officials have held 26 engagement events in total, including 25 across the United Kingdom and one in Gibraltar. They were attended by more than 500 representatives from a breadth of sectors and designed to aid the development of the fund.

The hon. Lady asked about how the Government would set up the fund. Obviously, leaving the European Union provides us with fresh opportunities to create a fund that invests in UK priorities and targets funding where it is most needed, which was her point, while maintaining support for our businesses and communities.

The findings from the Scottish and Welsh Governments’ consultations are certainly welcome. We want to ensure that the UK Government and their institutions are working effectively to realise the benefits of four nations working together as one United Kingdom. UK Government officials have held 16 engagement events across Scotland, Wales and Northern Ireland designed to aid policy development.

On devolution and the future of funding, clearly the House will recognise that international arrangements are a reserved matter and that it is for the United Kingdom Government to negotiate a future relationship with the EU for the whole of the United Kingdom. The programmes in which the UK is considering participation are those that represent benefits to the UK, provided the terms reached in negotiations are fair and appropriate. Those programmes were selected based on business cases that the devolved Administrations had the opportunity to feed into, as far as possible. BEIS has ensured that the views of the devolved Administrations were reflected.

The UK Government remain committed to engaging with the devolved Administrations on the negotiations, including on the discussions about participation in those EU programmes that were considered as listed in the UK’s approach.

I thank the Minister for his responses to my questions. I agree with him about much of what he says that the shared prosperity fund should do, but does he recognise that we have left the European Union and yet we still have no detail on that fund? There is nothing stopping the Government designing that fund now, now that we have left the European Union, so why do we still not have any detail on that fund? Can he please let us know when we will have some information on that fund, which, as a sovereign nation, we have the power to design?

I am grateful to the shadow Minister for her question, and maybe I should have repeated what I said in my opening remarks; I thought she had actually got it the first time. Although we have left the European Union, the funding for business will carry on through 2021 all the way to 2023, so this idea that somehow we are being negligent is incorrect. The right thing to do is to go through the spending review and to design the UK shared prosperity fund correctly, so that it benefits the whole of the United Kingdom.

There have been some queries about future participation in EU programmes, and if that is the hon. Lady’s point, I am happy to address it, because we will continue to take part in the PEACE PLUS Programme, which is so important to the people of Northern Ireland.

I did listen to the Minister’s opening remarks with rapt attention, and I acknowledge that he said that the funding and subsequent winding-up of funding could go on until 2025-26. However, we now have the power to design the shared prosperity fund and as I made numerous references to, businesses, business organisations and local authorities have been crying out for two or three years now for some indication of what will happen to that fund. The barrier is not the European Union; the barrier is the Government getting on with it and designing the fund.

I am grateful to the hon. Lady for her intervention. I do not think there is a lack of focus or seriousness in wanting to design the fund and get it right. However, I hope that she will agree that it is important that we deliver that once we have the spending review delivered. I will not dwell any further on this matter, but clearly, decisions on the design of the fund will need to be taken after the cross-Government spending review. In the meantime, we will continue to work closely with interested parties, while developing the fund.

Dr Huq, I do not want to take up any more of your time, so I will finally conclude my remarks. In the context of the current pandemic, I will just add that managing authorities and devolved Administrations have made use of the flexibilities provided by the European Commission’s coronavirus response investment initiative, as well as working with partners to provide assurance on business survival and job protection in the most exposed sectors of the economy.

I commend this draft regulation to the House.

Question put and agreed to.

Committee rose.

Draft Air Quality (Domestic Solid Fuels Standards) (England) Regulations 2020

The Committee consisted of the following Members:

Chair: Philip Davies

Bradshaw, Mr Ben (Exeter) (Lab)

† Griffith, Andrew (Arundel and South Downs) (Con)

Johnson, Dame Diana (Kingston upon Hull North) (Lab)

† Jones, Fay (Brecon and Radnorshire) (Con)

† Jones, Ruth (Newport West) (Lab)

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

† Longhi, Marco (Dudley North) (Con)

McCabe, Steve (Birmingham, Selly Oak) (Lab)

† Millar, Robin (Aberconwy) (Con)

† Morden, Jessica (Newport East) (Lab)

† Morris, James (Lord Commissioner of Her Majesty's Treasury)

† Morrissey, Joy (Beaconsfield) (Con)

† Pow, Rebecca (Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs)

Ribeiro-Addy, Bell (Streatham) (Lab)

† Richards, Nicola (West Bromwich East) (Con)

Slaughter, Andy (Hammersmith) (Lab)

† Stevenson, Jane (Wolverhampton North East) (Con)

Ian Bradshaw, Committee Clerk

† attended the Committee

Eighth Delegated Legislation Committee

Wednesday 16 September 2020

[Philip Davies in the Chair]

Draft Air Quality (Domestic Solid Fuels Standards) (England) Regulations 2020

I beg to move,

That the Committee has considered the draft Air Quality (Domestic Solid Fuels Standards) (England) Regulations 2020.

As ever, it is a pleasure to serve under your chairmanship, Mr Davies. The draft statutory instrument fulfils an important commitment made in the clean air strategy to tackle harmful emissions from domestic burning and to improve air quality. The national statistics on emissions of air pollutants in the UK, published in February, indicated that the domestic burning of wood and coal was a major source of primary emissions of fine particulate matter in 2018.

Fine particulate matter—so that we all know what we are talking about—was identified by the World Health Organisation as the most damaging pollutant to human health. The tiny particles in smoke can enter the bloodstream and internal organs, causing long-term illness and reduced life expectancy, mainly due to cardiovascular and respiratory diseases, and lung cancer. Given the impact of the pollutant on human health, and taking account of the advice of the World Health Organisation, it is vital that we take action to protect householders and their neighbours.

There are many sources of fine particulate matter in industry, including the transport industry. While we have secured a significant reduction in pollution from those sources, the emissions from domestic burning are increasing. As we said in the clean air strategy, we need to look beyond transport and industry to tackle other sources, including pollution caused by heating our homes. The regulations will make a significant contribution towards reducing emissions of that harmful pollutant.

I will now outline a little of what the SI will do. Before I go further, I will make it clear what will change and what will not change under the legislation because, as you might imagine, Mr Davies, I have had a lot of correspondence from colleagues on this issue. The legislation will apply to domestic burning only; it will not apply to businesses or to the heritage sector. The key change will be to phase out the supply of traditional house coal and wet wood—wood with a moisture content of more than 20% when sold in units up to 2 cubic metres—and to introduce sulphur and smoke emissions limits for manufactured solid fuels. The measures will come into force in a staged process between 1 May 2021 and 2023.

We recognise that many people enjoy using open fires and wood-burning stoves—including me—and we are not looking to stop them. Instead, we want to ensure that people are able to make informed choices and source cleaner fuels to protect the health of their families, neighbours and, indeed, themselves.

The quantity of fine particulate matter released from coal might be lower than that from wood, but we have taken into account the evidence about the level of harm that the particles can cause. The World Health Organisation’s International Agency for Research on Cancer has advised that the smoke from burning coal is a known carcinogen. It has also reported that burning coal can release elements and compounds that are particularly harmful to human health, such as fluorine, arsenic, selenium, mercury and lead—a toxic cocktail that one might breathe in from that smoke.

In the clean air strategy, we committed to take action to reduce people’s exposure to those more harmful pollutants. That is why action on coal is required, in addition to wet wood. The SI will encourage a switch from traditional house coal to smokeless coal and low-sulphur manufactured solid fuels, which will reduce the amount of harmful emissions.

We estimate that wood burned domestically is at least partly wet. Burning wet wood releases significantly more fine particulate matter than burning wood that has been seasoned. Burning seasoned wood also reduces emissions of smoke and soot by up to 50%. I have just texted my son to say, “Will you get those logs chopped and stored?”, because they need to be there for a long time so that they will be dry enough to burn. That is our supply at home. It is important that we consider these things.

On the basis of extensive surveys, we believe that wood sold in smaller units is more likely to be bought for immediate use and to be used by occasional wood burners, who might not be aware of the impacts of burning wet wood. The SI will require that all wood sold in smaller units must have a moisture content of 20% or less, and it will need to be certified and to bear a logo indicating that this is the case.

This legislation encourages traditional household coal users to switch to manufactured solid fuels. We recognise the importance of ensuring that such fuels are made to the cleanest specifications. It is possible to control the amount of sulphur and smoke emitted by manufactured solid fuels, as they are naturally forming; it is not possible to do that with coal. Setting limits on these emissions encourages industry to use the cleanest base materials during the manufacturing process and to avoid unintended consequences resulting from the intended switch in fuels. That is why we are extending the sulphur and smoke requirements that currently apply in smoke control areas across the whole of England. There will be an England-wide 2% sulphur limit and a requirement throughout England for these fuels to emit less than 5 grams of smoke per hour. Again, householders will easily be able to tell whether the fuel meets the requirements, as such fuels will bear a logo to show that they have been tested and certified. We will be taking forward processes to appoint the relevant certification bodies once the legislation has been introduced.

Some people have expressed concern about the potential negative impacts of these measures on those in fuel poverty. We have taken this extremely seriously, and there has been a great deal of work and engagement on this issue. We consider that people in fuel poverty should be protected from the effects of more polluting fuels as much as anyone else. We have taken steps to ensure that people in fuel poverty who are reliant on coal are not adversely affected by these measures. We have commissioned research that demonstrates that, when energy efficiency is taken into account, manufactured solid fuels are actually cheaper than traditional house coal, because they burn much more efficiently.

We also recognise that far more people who are reliant on coal need to be supported in making the change to appropriate alternative fuels. For a transitional period, approved coal merchants will be able to sell loose traditional coal directly to their customers. This will run until May 2023. Coal merchants can use the transitional period to refocus their businesses on the sale of manufactured solid fuels. The transitional period will allow them to work with their customers to help them identify alternative fuels that are cost-effective and that will meet their needs and protect their health in the long run. We have already started the process of working with industry to help coal merchants educate their customers, and we will ramp up this work once the legislation has been introduced.

We have also engaged with colleagues in the Department for Business, Energy and Industrial Strategy on the steps that they are taking to address fuel poverty—for example, on the updated fuel poverty strategy for England, which is due to be published later this year. I want to make it clear that people who are entitled to concessionary fuel under BEIS’s national concessionary fuel scheme will remain entitled to it under this legislation. Hon. Members who have old coalmining areas in their constituencies might know about the concessionary allowance—rest assured, people will remain entitled to it under this legislation. Interestingly, over 90% of concessionary fuel recipients receive fuels that would already comply with the new requirements. For the remainder, we will work through approved coal merchants to ensure a smooth transition to alternative fuels that will comply with the new legislation. They will be available at no extra cost.

We understand that small wood producers might struggle to meet the 2% moisture requirement straightaway. Small wood suppliers will therefore have an extra year to comply. The transitional period will cover those producing less than 600 cubic metres of wood a year, as such suppliers might find it difficult to invest in the equipment necessary for seasoning. This will give them time to season their wood down to the required level or to consider changes to their business model.

I am aware that concerns have been raised by those in the heritage railway sector, and I would like to reassure hon. Members that these proposals will not directly apply to heritage sectors. We have had quite a number of meetings with those sectors. There may be implications for how they source their coal, but these draft regulations give them time to adjust to that.

Guidance will be provided for manufacturers, distributors and suppliers of relevant fuels to ensure that they understand the legislation and the requirements around certification, so that they are compliant when these regulations come into force. Separate guidance will also be made available to local authorities, so that their enforcement officers have a clear understanding of the certification scheme and their role in enforcing the regulations.

In closing, this statutory instrument delivers an important component of the clean air strategy and dovetails with measures being brought forward in the forthcoming Environment Bill, which I hope will be back in Committee very soon. The SI will ensure that consumers are armed with reliable information, enabling them to make informed choices to protect themselves, their families and their neighbours.

The SI has been informed by intensive engagement with a wide range of stakeholders. For example, we have worked closely with coal merchants and listened to colleagues in former mining areas to ensure that the switch from coal to manufactured fuels is taken forward with minimum disruption to householders and businesses. We have also worked closely with chimney sweeps, who play a key role here as a trusted source of advice for people with domestic burning appliances. That means that the measures in this SI will deliver environmental benefits and, crucially, protect people’s health. They will also reduce the burden that illness caused by air pollution places on the national health service. I commend the draft regulations to the Committee.

It is a pleasure to serve under your chairmanship today, Mr Davies. It is also a pleasure to speak on behalf of Her Majesty’s Opposition and to say a few words about the draft Air Quality (Domestic Solid Fuels Standards) (England) Regulations 2020.

As the Minister has said, these draft regulations are designed to restrict the sale of some types of solid fuels used for domestic purposes. The ultimate purpose, so we hear from Ministers, is to improve air quality and prevent the release of harmful air pollutants. Those are noble aims, but the Opposition are very clear: we need real action, not more hot air.

This instrument contains lots of language along the lines of “We are looking”, “We are considering” or “We are working towards”. We do not want Ministers to be “looking”, “considering” or “working towards”; we want, and our planet desperately needs, Ministers to be doing. As colleagues on both sides of the Committee will know, and as the Minister indicated in her comments, the instrument introduces restrictions on the sale of wet wood for domestic burning, limits the emissions of sulphur and smoke from manufactured solid fuels and phases out the sale of bituminous coal. We note further that Ministers have no plans to ban stoves or open fireplaces, but are instead shifting people from more polluting to less polluting fuels. That is a noble aim, but I ask the Minister: what does this mean and how will it work?

I begin by making it clear that we do not oppose the draft regulations. The Opposition recognise that there is a devastating climate emergency, and we want to do something about it. Our major concern is that the Government appear to have neither any real ambition nor the energy required to deliver the bold, history-making, planet-saving agenda that we need to make progress.

This instrument does recognise the importance of clean air and the desperate need to act to tackle England’s toxic levels of air pollution. In oral questions in the Chamber last week, I raised the fact that almost 60% of people in England are now living in areas where levels of toxic air pollution exceeded legal limits last year. We cannot go on as we are, but we do need to take the correct course that delivers real change and we want actions, not fine words.

In preparing for this morning’s debate, Mr Chairman, I had a look through the Government’s summary of responses to the 2018 consultation on air quality. I congratulate the Government on the 500 responses to the consultation but, while the Minister claims it was “intensive”, I am not sure that is the word I would have used. It is not always easy to secure responses to Government consultations, so I must say, it is no surprise that there were more responders from stakeholders in the fuel industry than from the people who will be targeted by the changes to domestic usage in the instrument.

Opposition Members have outlined and discussed a number of concerns, which I will touch on briefly. First, as the Minister knows, there are real-time and long-term costs associated with enforcement. Local authorities in England have had more than a decade of Tory and Lib Dem cuts, which have had a huge impact on their ability to provide basic services. I ask the Minister to set out clearly how, when and what scale of resources will be provided for local councils across England for the enforcement of the proposals. If local authorities do not have the resources they need, they cannot enforce the regulations, and that would be another missed opportunity.

Another major concern is the impact of the changes on people living on low incomes in rural areas right across England. The Minister has touched on that already. Opposition Members are standing up for people across England in small towns and rural communities. We urge the Government to be conscious of what their actions mean for people who may not respond to consultations, but will be forced to respond to the effects.

It will be helpful to know where fossil fuels come into this. This cannot simply be about targeting working people and domestic usage to take the burden of cleaning our air; it is vital that big business plays its part too. It would also be helpful if the Minister explained some of the background to the approach to the exemptions. She mentioned the heritage sector, and the statutory instrument’s associated papers state:

“We intend to grant an exemption to freeminers in the Forest of Dean, given the importance of this activity to local heritage and identity.”

Can the Minister clarify and explain that?

As you can tell by my voice, Mr Davies, it is no secret that I am Welsh, and my constituency of Newport West reinforces that point. I am proud of the fact that this is a United Kingdom and I was interested to read the papers for the statutory instrument. They say that Ministers kept the devolved Administrations informed. I ask Ministers to go a bit further and think about what best practice they can learn, what lessons they can pick up and what decisions they need to heed from devolved Governments in Belfast, Cardiff and Edinburgh.

We cannot continue down the line of government by statutory instrument. Yet again, I ask the Minister: when is the Environment Bill coming back to the House? We have had day one of the Committee and many Opposition Members are raring to go. In fact, they are resting up today and getting ready for it, so that is fine. I know that many of the stakeholders I have spoken to in recent days and weeks are also raring to go. It is an important Bill and we should use that once-in-a-generation legislation to tackle many of these changes. I call on the Government to bring the Bill back to the House.

As I indicated earlier, the Opposition will not oppose the regulations, but that said, we urge the Government to think bold, think big and get to work. We are in desperate need of real action, not empty words.

It is a great pleasure to serve under your chairmanship, Mr Davies, and to follow the hon. Member for Newport West. I shall support the SI today, but with a heavy heart. I came to this House to relieve the regulatory burden on our citizens and on businesses. I regret the fact that, while the aims are more than laudable and the Government have a fine record on seeking to improve the environmental quality of this country, we have not pursued and exhausted every other means in terms of education, working with the supply chain on a voluntary basis and the use of technology such as moisture meters. They would have achieved many of the same aims, but without the legislative sledgehammer that we so often resort to as a first rather than a last resort.

I represent a rural constituency—with fine air quality, I should add—but many of my constituents who are far off the grid and not connected to any other source of heating their homes will be genuinely worried about the impact of the regulations. There is also the timeframe in which they are being introduced. We are sitting here in September 2020 and, in some cases, the legislation bites as early as February 2021, when only an optimist would imagine that we will be fully free of the effects of the pandemic. Regardless of what we think about the SI, it will have a disproportionate impact on our rural citizens.

I put it to my colleagues that, while we should worry about particulates—the nasty, foul substances that imperil the growth, education and attainment of children—with lower bridge capacity to cross the Thames than at any time in the last 120 years, and with congestion on our streets owing to a lack of urban leadership in many of our great urban areas, devoting legislative time to a matter such as this, although I understand and fully respect the Minister’s great work in bringing it to the House, should perhaps not be the Government’s top priority at the moment.

I thank my hon. Friend the Member for Arundel and South Downs for taking part in the debate, and I of course thank the shadow Minister for her words and analysis of the legislation. As ever, it is a pleasure to work with her, and I welcome the fact that the Opposition will not oppose this statutory instrument. She rightly raises some issues, which I will endeavour to answer.

First, I look forward to introducing legislation that will actually lead to real improvements in air quality and have a positive impact on people’s health. That is what the regulations are all about—health. This is a key part of our clean air strategy and shows the Government’s commitment to the environment.

I will quickly address some of the comments. The shadow Minister asked what the legislation is all about and what it addresses. First, she intimated that we were just going to do more looking, checking and investigating without actually doing anything. Perhaps she was not listening, because we are bringing forward regulations that will genuinely make a difference. We are not doing more looking, checking and reviewing; we have done all that stakeholder engagement, and the clear indication was that the best way forward was to switch people from coal to cleaner fuels and to stop the burning of wet wood. That is what all our looking and checking led us to conclude. There is a great deal of evidence to support that. Maybe she just did not find it when she was searching, but it is definitely there.

The shadow Minister touched on the devolved Administrations. This legislation is for England—the devolveds have their own procedures for dealing with clean air—but we have been in very close contact with them, because air does not have a boundary and it circulates everywhere, so it is important that we keep talking. We will continue to do that, because obviously we all have a duty to improve health, given the desperate situation regarding air quality.

Just to reiterate: the SI is about fine particulate matter, which is a really serious pollutant; it was identified by the World Health Organisation as one of the most damaging air pollutants. Those tiny particles of smoke get into our bloodstream and affect our internal organs, causing long-term health issues, which can be as devastating as cancer and heart problems and can cause asthma attacks. Domestic burning was identified as a major source of this PM emission in the national statistics on emissions of air pollutants in the UK. We have all the data and evidence, which is why we are moving, and I know that, deep down, the shadow Minister supports that.

The shadow Minister made a good point about enforcing legislation. For clarity, enforcement will be undertaken through a mandatory certification scheme, which will be backed up by local authority enforcement. The certification scheme, which is basically producer funded, will see approved products labelled by suppliers with the appropriate logo and certification number, to ensure that the public can easily identify the product—the manufactured solid fuel or dry wood. Retail outlets will only be able to sell fuel that is certified and correctly labelled, and they will be required to store wood so that it contains no more than 20% moisture when sold. We do not want a garage, for example, to store the dry wood with the logo on it outside, where rain might seep in. Those are important matters.

The Department for Environment, Food and Rural Affairs will run an open tender for the contract to run the certification schemes. The appointed certification body or bodies will charge fuel manufacturers a fee, which will cover the cost of administering the scheme, which will include fuel tests, assessment of compliance, and audits. Any fees chargeable will be agreed under the terms of the contract.

Regarding local authorities, the enforcement is intended to be light touch. It will involve checks at retail outlets so that the correct fuels are being sold in compliance with legislation. They will have the certification number and the logo, so it will be straightforward to check that that is all above board. The regulations will make the supply of non-compliant fuels a criminal offence with an unlimited fine. They also provide powers to local authorities to alternatively issue a fixed penalty notice to businesses that supply non-compliant fuels, if they deem that this is appropriate.

We are working closely with local authorities in supporting them through this. The regulations come alongside measures in the Environment Bill that will make it easier for local authorities to tackle air pollution in their areas. That is an important element of the Environment Bill under the air section. We can write to the shadow Minister if she would like more detail on that.

I will quickly touch on the dear old miners in the Forest of Dean, for whom a special exemption has been made. Those freeminers traditionally supply small quantities of coal to local households by virtue of the Dean Forest (Mines) Act 1838 and subsequent legislation. I believe the shadow Minister’s constituency is not far from the Forest of Dean, which is a wonderful place. The exemption is unique to the Forest of Dean. The Act was passed in 1838 and the pits in the area have produced less than 500 tonnes of coal a year, meaning that the volume of coal sold and the impact on air quality is very low.

The shadow Minister stressed the overall aim of tackling air pollution. Our clean air strategy will address all sources of particulate matter, including emissions from agriculture, industry, transport and domestic settings, as well as introducing legislative changes and undertaking research into new technologies that could effectively reduce particulate matter emissions.

Our groundbreaking Environment Bill will protect and improve the environment for future generations, which is absolutely necessary, as the shadow Minister knows. The Bill will improve air quality by setting a duty to introduce a legally binding target to reduce fine particulate matter, which is the most damaging to human health. The target will be among other ambitions worldwide and improve the quality of millions of people’s lives. The Bill will also make it easier for local authorities to tackle air pollution from domestic solid fuel burning by providing powers to issue civic penalties, i.e. fines, for smoke emissions from chimneys in smoke control areas, rather than prosecuting in court. I hope that answers all the shadow Minister’s queries.

I want to touch on the points made by my hon. Friend the Member for Arundel and South Downs—a beautiful, rural area, as he described. We have taken into account the issue of rural areas, where a lot of people are off grid and have stoves and fires. The regulations will not prevent them from using those at all. They just ask them to move on to less polluting fuels, manufactured solid fuels or dry wood. Many people store their wood, season it for one year and burn it the next year. That is absolutely fine. They could get a little hand auditor to test the moisture. They are cheap and easily available.

My hon. Friend touched on education, which was a good point. Why are we legislating? Why do we not do it through education? I cite the carrier bag issue. We tried to get people voluntarily to reduce their use of carrier bags, but the paradigm shift, in terms of billions of bags, was caused by the 5p charge that was introduced through legislation. That is one example of how educating does not always work, but it plays a big part. We are working with chimney sweeps and coal merchants to give all that background to our rural constituents so that they understand what is going on. I hope that clarifies the matter. I thank him for raising those issues because many people have raised them, and we have gone to a great deal of effort to cover them.

I hope that covers everything. The regulations will phase out the supply of the most polluting fuels used in domestic burning and have a real impact on air quality. People will still be able to enjoy their open fires and wood-burning stoves. The Labour party suggested that it would ban all those. We are not doing that; we are just moving people on to cleaner fuel. They will be able to do that with confidence, knowing that they are using cleaner fuels and protecting the health of their families, their neighbours, the wider environment and themselves. I commend the regulations to the Committee.

Question put and agreed to.

Committee rose.

Draft Representation of the People (Electoral Registers Publication Date) Regulations 2020

The Committee consisted of the following Members:

Chair: †Mrs Maria Miller

† Bell, Aaron (Newcastle-under-Lyme) (Con)

Betts, Mr Clive (Sheffield South East) (Lab)

Cates, Miriam (Penistone and Stocksbridge) (Con)

† Eastwood, Mark (Dewsbury) (Con)

† Fletcher, Colleen (Coventry North East) (Lab)

† Gibson, Peter (Darlington) (Con)

† Hunt, Jane (Loughborough) (Con)

† Linden, David (Glasgow East) (SNP)

Mearns, Ian (Gateshead) (Lab)

† Rutley, David (Lord Commissioner of Her Majesty's Treasury)

† Smith, Cat (Lancaster and Fleetwood) (Lab)

† Smith, Chloe (Minister of State, Cabinet Office)

Timms, Stephen (East Ham) (Lab)

† Wakeford, Christian (Bury South) (Con)

† Wheeler, Mrs Heather (South Derbyshire) (Con)

† Winter, Beth (Cynon Valley) (Lab)

† Wright, Jeremy (Kenilworth and Southam) (Con)

Zoe Backhouse, Committee Clerk

† attended the Committee

The following also attended, pursuant to Standing Order No. 118(2):

Kruger, Danny (Devizes) (Con)

Ninth Delegated Legislation Committee

Wednesday 16 September 2020

[Mrs Maria Miller in the Chair]

Draft Representation of the People (Electoral Registers Publication Date) Regulations 2020

I beg to move,

That the Committee has considered the draft Representation of the People (Electoral Registers Publication Date) Regulations 2020.

It is an absolute pleasure to serve under your chairmanship for the first time, Mrs Miller. I welcome you to your position on the Panel of Chairs.

The regulations follow on from my announcement in a written ministerial statement in June that, in the light of the many challenges posed by the covid-19 pandemic, we intended to introduce legislation to delay the deadline for the publication of this year’s revised parliamentary and English local government registers by two months, from 1 December to 1 February. I will briefly run through what we are doing and why before I take questions from the Committee.

The annual canvass, which is run by electoral registration officers in each local authority, is, as I am sure hon. Members know, an information-gathering exercise that ordinarily runs for five months from 1 July to 1 December. The aim is to ensure that the electoral registers are as complete and accurate as possible. The information gathered during the canvass is used to identify electors who should be deleted from the registers for reasons such as death, ineligibility, or moving address. It also identifies eligible citizens who are not on the register and should therefore be invited to register. The process of inviting to register involves a separate form to the canvass: a process with which I think hon. Members are familiar.

The revised register is then published on or before 1 December, normally with an exception if, for example, an election is held in the ERO’s area during that period. In that exceptional case, the final deadline is automatically delayed to 1 February the following year. Today’s legislation allows flexibility, but follows in some ways the shape of the December to February exceptional approach. The regulations give the EROs an additional two months to conduct their work should they need that due to the challenges caused by the pandemic. They will still be able to publish before 1 February if they want to, which is still in line with current legislation.

I want to touch on the impact of some other reforms that we have made to the annual canvass as a result of the secondary legislation that we introduced last autumn, as hon. Members will remember. Certainly the elections team in this room—we see a lot of each other—will be very familiar with what we are doing to reform the annual canvass so that it moves away from a cumbersome one-size-fits-all paper-based system to a more modern and adaptable model in which registration officers are able to focus their resources where they are most needed and use more modern communication methods, which is convenient for voters as well as a sensible use of resources.

Thanks to the reforms, this year’s annual canvass is already allowing EROs to conduct safer and more responsive canvasses than ever before. The canvass still involves a certain amount of paperwork and paper responses, and, where phone calls are impossible, door-knocking still applies if a household has not responded to previous attempts to contact them. The in-person contacts and paper elements are still important in ensuring the completeness and accuracy of our electoral registers and cannot be discounted.

In spite of the impact that covid-19 has had so far, the 2020 annual canvass under the reformed system is successfully and safely under way. The roll-out of the new data matching in the reformed system has been impressive and helpful. I want to put on the record my thanks to all the registration officers who have done that work, and I thank them for their continuing dedication and hard work, despite the challenges.

As I say, there are still in-person and paper elements that need to be considered, given the concerns about the impact of covid-19 on ways of working, so we have been speaking to electoral registration officers to see how they can best be met. A number of options were raised for overcoming that challenge: for example, arguments for cancelling the canvass entirely or for removing the in-person contact entirely could be envisaged. We think that the regulations are the better option, allowing for the completeness and accuracy of registers to continue to be prioritised, but also allowing registration officers the flexibility to complete the overall project as safely as they can, using the various methods that they think necessary, and with two months’ additional time in hand.

We have, of course, consulted with others for this, working in close co-operation with the public health agencies in England, Wales and Scotland. We have already issued guidance to electoral registration officers for carrying out a covid-19-secure canvass. My officials at the Cabinet Office are closely monitoring the situation across the country to provide any further non-legislative support that may be needed. Altogether, those actions—in concert with extending the deadline, as the regulations will—give EROs the flexibility and support to deliver the first-class public service that we ask of them for our local areas.

I put on the record that the Electoral Commission, the Association of Electoral Administrators, the Scottish Assessors Association—try saying that one too early in the morning, Mrs Miller—the Local Government Association and the Society of Local Authority Chief Executives have all expressed their support for the legislation. I thank my counterparts in the Scottish and Welsh Governments for their proactive and positive engagement on the issue. They have each brough forward complementary legislation in their legislatures to apply the same delay to the deadline for publication of their local government registers. I think that is a good and welcome example of our Administrations working in partnership on a sensible measure.

To conclude, the instrument will provide the flexibility needed to run a secure canvass without compromising on completeness and accuracy, and will do so in what I hope will be a well-supported manner behind the scenes. I commend the regulations to the Committee.

Before I call Cat Smith for the Opposition, I remind the Committee that these are very specific regulations, and speeches should reflect that.

Thank you, Mrs Miller; it is a pleasure to serve under your chairmanship, and I congratulate you on your appointment to the Panel of Chairs. It is a pleasure to have the Front-Bench election teams back together again.

I want to start by making it clear that the Labour party will not oppose the regulations. We welcome the steps that have been taken to give electoral registration officers flexibility in carrying out the annual canvass and publishing electoral registers. The two-month delay of the final deadline is a reasonable step in the circumstances. I put on the record my thanks to EROs, who do an incredibly difficult and stressful job at the best of times, but in the current context, they are doing an incredibly challenging job in difficult times. Asking them to complete the annual canvass to the usual strict deadline during a global pandemic would, of course, have been entirely unfair. The measures are practical and necessary given the health emergency that we face.

I would urge a slight word of caution: an annual canvass has not been completed since the new reform was brought in, and I have serious concerns and questions about whether that light-touch approach to electoral registration could leave troubling gaps in the electoral register. The changes could jeopardise the primary purpose of the annual canvass, which is to ensure that the electoral register is as accurate and complete as possible.

Of course, we know that there are huge issues with electoral registration: in the region of 9 million eligible voters are incorrectly registered and are denied the chance to vote. Will the Minister outline the action that she has taken to remedy that situation and to address the fact that there is a race disparity between different groups in electoral registration? White people are most likely to be on the register, at 84%. According to the Electoral Reform Society, that can drop to nearly 40% for people from other ethnic backgrounds, and of course, millions could join them in being denied their chance to vote if the Government’s voter identity plans come to fruition.

These are all inter-related and vital issues for the integrity of our democracy. I welcome the pragmatic steps taken in this legislation, but there remain some wider trends in electoral registration and participation that the Government must urgently address.

It is a great pleasure to serve under your chairmanship, Mrs Miller, and—as other hon. Members have said—to get the gang back together. It does feel like we see quite a lot of each other these days, but I am sure that will change at some point.

The impact of covid-19 on the UK has been vast, impacting almost every facet of our daily lives, but one area that we cannot let this pandemic impact is our democracy. With the 2021 elections looming across these islands, it is vital that EROs have the full support of the Government, and the ability to carry out their annual canvass with as much time as necessary. We know that covid will certainly affect the ability of EROs to conduct the canvass in the usual five-month time frame, as it is still vital that we all follow social distancing measures and covid-19 guidelines. Therefore, precautions must be put in place to ensure that EROs are able to carry out that essential work, so the regulations before the Committee are ones that should be supported. If they are not supported, EROs in England, Scotland and Wales would face prosecution if they did not manage to complete this process by 1 December. When I was looking at the regulations, I did wonder why 1 February was chosen, rather than 1 March. I suspect it is probably to do with some of the other timescales as we head towards the May elections, but if the Minister could place that on the record, that would be very good.

Increased digitalisation will certainly help ensure that this year’s annual canvass will be safer and more responsive than ever before. However, each year the canvass involves large amounts of paper responses, alongside officers continuing to call people on the phone and sometimes even door-knocking when a household has not responded to any of the previous attempts to contact them. With EROs still needing to sort through paper responses and answer the phones, it is necessary for them to work socially distanced in an office space. With limited numbers allowed, the work will naturally take longer to complete, so it does strike me that the measure before the Committee is a fair one.

Ultimately, the covid-19 pandemic has caused unmitigated challenges for everybody in the UK; however, we cannot risk letting our democracy become impacted by this pandemic. We have to ensure that EROs are able to complete their canvasses while obeying Government guidelines and observing social distancing. My party therefore supports the regulations before the Committee, and we wish EROs well as they carry on their services to uphold the democracy we all cherish.

I thank my Front-Bench counterparts for their remarks. To deal with the simplest of the questions, the 1 February date was chosen instead of 1 March because, as I mentioned earlier, that timetable is already contained in the normal operation of this process. A delay to 1 February is sometimes already familiar to EROs, so we thought it would be most supportive to use a familiar pattern, rather than opting for 1 March. I ought to add that the elections that will occur in May next year will be larger than usual, because of the highly unusual and difficult precaution of delaying the 2020 elections to 2021 in large parts of the country. It is therefore all the more important to be ready for those elections, and I hope that this measure balances the need to be ready for them with the flexibility needed for this year.

I note that the hon. Member for Lancaster and Fleetwood echoed arguments made about canvass reform. I would encourage her to evolve those views, as her colleagues in the Welsh Government have done—they have been supportive of our proposals, and indeed worked with us on them for many years, as have counterparts in the Scottish Government. They are supportive because those canvass reform proposals allow precious public resources to be used precisely for those electors who might be least likely to be registered. They allow EROs to seek those people out more than they had been able to do using the previous, more cumbersome methods in the canvass. That is a good thing, and fundamentally answers some of the hon. Lady’s other concerns about those who might currently be missing from the electoral register and ought to be welcomed on to it. Canvass reform helps with that, rather than hinders it, and I hope she will be able to recognise that in due course.

None the less, though, I thank the hon. Lady for her support of this morning’s measure. I think we are all agreed that this is a pragmatic measure that commands support, and I therefore commend it to the Committee.

Question put and agreed to.

Committee rose.