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General Committees

Debated on Wednesday 7 October 2020

Delegated Legislation Committee

Draft European Qualifications (Health and Social Care Professions) (EFTA States) (Amendment Etc.) (EU Exit) Regulations 2020

The Committee consisted of the following Members:

Chair: †Yvonne Fovargue

† Argar, Edward (Minister for Health)

Bradshaw, Mr Ben (Exeter) (Lab)

Bryant, Chris (Rhondda) (Lab)

† Buchan, Felicity (Kensington) (Con)

† Colburn, Elliot (Carshalton and Wallington) (Con)

† Double, Steve (St Austell and Newquay) (Con)

Huq, Dr Rupa (Ealing Central and Acton) (Lab)

† Jenkinson, Mark (Workington) (Con)

† Johnston, David (Wantage) (Con)

† Madders, Justin (Ellesmere Port and Neston) (Lab)

Morris, Grahame (Easington) (Lab)

† Russell, Dean (Watford) (Con)

Thompson, Owen (Midlothian) (SNP)

† Throup, Maggie (Lord Commissioner of Her Majesty's Treasury)

† Vickers, Matt (Stockton South) (Con)

† Webb, Suzanne (Stourbridge) (Con)

† Western, Matt (Warwick and Leamington) (Lab)

Nicholas Taylor, Committee Clerk

† attended the Committee

Fourth Delegated Legislation Committee

Wednesday 7 October 2020

[Yvonne Fovargue in the Chair]

Draft European Qualifications (Health and Social Care Professions) (EFTA States) (Amendment Etc.) (EU Exit) Regulations 2020

Before we begin proceedings, I thank colleagues for social distancing – the spaces are clearly marked. Hansard colleagues would be grateful for speaking notes to be sent to hansardnotes@parliament.uk.

I beg to move,

That the Committee has considered the draft European Qualifications (Health and Social Care Professions) (EFTA States) (Amendment Etc.) (EU Exit) Regulations 2020.

It is pleasure to serve under your chairmanship, Ms Fovargue. I suspect that this will be one of a run of such delegated legislation committees that we will consider in the coming weeks.

The regulations relate to the recognition of professional healthcare qualifications in the UK, and social work qualifications in England. They are part of the Government’s preparations for the end of the transition period.

As members of the Committee will know, the Government have signed agreements with three European Economic Area European Free Trade Association states and Switzerland in relation to the UK’s withdrawal from the EU at the end of the transition period. The agreements include provisions that protect the rights of EEA EFTA state professionals with qualifications covered by the directive, and Swiss nationals living and working in the UK, and vice versa.

On 14 September 2020, the House considered legislation brought forward by the Department for Business, Energy and Industrial Strategy that set out arrangements for the recognition of professional qualifications from Switzerland and the EEA EFTA states. The regulations before us cover a similar area. They implement the Swiss citizens’ rights agreement and the EEA EFTA separation agreement in relation to the recognition of professional qualifications, or RPQ, as I will now to refer to it for the sake of brevity, for healthcare in the UK and social work in England. They also make some minor changes to ensure that recognition arrangements for EU health and social work qualifications continue to function effectively after the transition period.

I will remind the Committee briefly of the background to RPQ. The current system for RPQ is derived from EU law. It allows UK professionals to have their qualifications recognised in the EEA and Switzerland, and vice versa, with minimal barriers. There are seven professions where standards are harmonised under the relevant directive. That means that qualifications must comply with minimum agreed standards and, where these are met, that such qualifications are automatically recognised by regulators throughout the EU and, by virtue of additional treaties, the EEA EFTA states and Switzerland. Five of those harmonised professions are health professions: doctors, nurses, midwives, pharmacists and dentists.

The recognition arrangements under the directive have supported the movement of European health and care professionals to the UK. At the end of the transition period, the EU directive will cease to apply to the UK and the mutual recognition of professional qualifications will end. Let me be clear that this will allow for some improvements on the current system.

Last year, in preparation for the UK leaving the EU, Parliament passed regulations to amend the domestic law that implements the current EU system for RPQ, including regulations in relation to recognition arrangements for health and care professional qualifications, namely SI 2019/593. I believe that when that measure was considered in Committee by my predecessor but one, the shadow Minister, the hon. Member for Ellesmere Port and Neston, was the Opposition spokesman.

Today’s regulations, which will come into force at the end of the transition period, include provisions that ensure that healthcare qualifications that are currently recognised automatically continue to be so, for up to two years after exit day; protect previous recognition decisions; and allow applications for recognition submitted before exit day to be concluded after exit day on the basis that they are already in train. They also remove the provision for healthcare professionals to deliver temporary and occasional services in the UK once such current registrations come to an end.

During the period of continued automatic recognition, UK regulators of healthcare professionals will further refine arrangements for registering all international health and care professionals, including those who hold European qualifications.

Since the passing of the EU exit regulations, the Government have secured further agreements with Switzerland—the Swiss citizens’ rights agreement—and the EEA EFTA states—the EEA EFTA separation agreement. Those agreements go further than the arrangements set out in the regulations that were passed last year. The regulations before the Committee today amend the previous statutory instrument in order to implement the improved terms of the Swiss and EFTA agreements. I will briefly set out the main changes.

First, they allow Swiss nationals—and their spouses and dependants—who hold qualifications that are currently recognised automatically to have those qualifications recognised on an automatic basis where the application is made for up to four years after the end of the transition period, rather than the current two in the original SI. Secondly, they allow Swiss healthcare professionals and their dependants to continue to provide temporary and occasional services, in accordance with their contract, for up to five years after the end of the transition period, with a limit of 90 days’ service per calendar year.

In addition, for both EEA EFTA state EU-qualified professionals and Swiss nationals, the regulations will require that UK regulators co-operate with their EEA EFTA state and Swiss counterparts to facilitate the smooth completion of applications ongoing at the end of the transition period; and ensure that individuals whose professional qualifications are recognised are treated on the same basis as UK nationals. It is important to emphasise that the arrangements under this new SI will be reciprocated by the EEA EFTA states and Switzerland respectively.

I would remind the Committee that these regulations only concern the healthcare professions across the UK and social workers in England. All other regulated professions are covered by separate but similar legislation made by the different and responsible Government Departments and, where appropriate, the devolved Administrations.

For completeness, the regulations also make minor amendments to ensure that the frameworks for RPQ will function as intended after the transition period: they will ensure that GP qualifications obtained before the reference date specified in the MRPQ—mutual recognition of professional qualifications—directive are recognised in the same way as specialist medical qualifications obtained before that date, and are not eligible for automatic recognition.

On consultation, it is important to note that UK regulators of healthcare professions have been consulted on an informal basis throughout the development of RPQ EU exit legislation, including these regulations.

To conclude, the regulations are a small but necessary step forward to implement the Swiss citizens’ rights agreement and the EEA EFTA separation agreement, in respect of the recognition of professional qualifications. Those agreements were signed after the making of the previous EU exit legislation on this matter, hence this statutory instrument. The regulations enable health and social care professionals and businesses to better prepare for the end of the transition period, and represent a further degree of continuity and co-operation.

I commend the regulations to the Committee.

It is a pleasure to serve under your chairmanship today, Ms Fovargue.

I thank the Minister for his introduction to the regulations. Dry and technical though they are, they are none the less extremely important, as he outlined. As we have heard, the regulations seek to implement parts of the Swiss citizens’ rights agreement and the EEA EFTA separation agreement concerning RPQ—the recognition of professional qualifications of health and care professionals and those that are not covered by the existing “no deal” RPQ legislation, which was adopted in March 2019. As we also heard, these regulations will also make minor corrections to the 2019 EU exit regulations.

Current EU law sets out a reciprocal framework of rules for the recognition of doctors’ professional qualifications. This enables EEA and Swiss nationals to have their qualifications recognised and gain access to the regulated profession in which they are qualified, in order to work on a permanent or temporary basis. After the end of the Brexit transition period, those arrangements will no longer apply to the UK because current legislation to implement them will not operate effectively.

New provisions detailing the route that EEA qualified health and social care professionals will take to join the register were added in March 2019. The regulations ensure that the same provisions are available for Swiss and EFTA qualified health and social care professionals.

With just under three months until the end of the transition period it is not only right but prudent to put arrangements in place to clarify how Swiss and EFTA health and social care professionals will join the relevant UK medical registers. That is vital to mitigate any possible disruption to the NHS medical workforce, and it is a matter of regret that we are dealing with this rather late in the day. I am sure that the individuals concerned would have liked greater certainty earlier, but we are where we are.

I have several questions about the possible impact of the regulations on the delivery of health care. As we know, the nationals of the EU and other countries make up 9.1% of doctors in England’s hospitals and community health services. They account for 6% of all nurses and 5.8% of scientific, therapeutic and technical staff. Given the record number of NHS vacancies, there is clear potential for workforce disruption if EEA and Swiss nationals cannot register in the UK. We must do all that we can to minimise that risk in a no-deal scenario. That is a particularly important consideration given that, prior to the covid-19 outbreak, there were 106,000 vacancies across the NHS, including 44,000 nursing vacancies and around 120,000 vacancies in social care.

There is no doubt that the current workforce challenge has been exacerbated by the referendum result, or since then at the very least. The percentage of doctors and nurses with EU nationality grew between 2009 and 2016, but since then the percentage of EU national nurses has fallen and the Nursing and Midwifery Council has reported that the number of people from the EEA on its permanent register has decreased steadily from 38,024 in 2016-17 to just 31,385 in 2019-20, with 1,650 people, or equivalent to 5%, leaving the register in the last year. At the same time, the number of EU nurses and midwives coming to work in the UK has also fallen from 6,382 in 2016-17 to just 913 who joined the register in 2019-20.

Given the contribution of EEA and Swiss-qualified professionals to the NHS, it is vital that we stem the tide of vacancies. For that reason, when we debated the previous regulations more than 18 months ago, I asked the then Minister what assurances he could give that the NHS would be able to stem the huge losses of those important health and social care staff. Given the numbers I have cited today, I ask that question of the current Minister.

The Government have previously acknowledged that changes to the procedures for recognising qualifications could make access to health and care professions more difficult. That too could affect the availability of professionals. Given that no impact assessment was published alongside today’s measure, can the Minister confirm whether any study has been made of the costs or barriers that may prevent applicants from the EEA and Switzerland from entering the country, and the possible impact on the health service?

Can the Minister clarify who would be captured by enforceable EU rights, as drafted? I know that EU regulators have raised concerns about that. The regulations allow a four-year period for Swiss and certain UK nationals who have professional qualifications, or are in the process of obtaining a qualification before the completion of the transition period, to apply for recognition under pre-exit rules, and that includes those with third-country qualifications that have been recognised or are in the process of being recognised in Switzerland at the end of the transition period. Regulators are concerned that it is not clear whether that requirement is just intended to capture third-country nationals with enforceable EU rights or EEA nationals with enforceable EU rights. I understand that the current drafting refers to third-country nationals, which appears to suggest that it applies to the former example rather than to the latter. Some regulators are calling for clarity and guidance so that they can operate within the new rules from 1 January 2021. Can the Minister confirm that such guidance will be available ahead of that date?

Although it is clear that the regulations are temporary, there is no clarity about plans to introduce sustainable, long-term arrangements for registering and licensing EEA and Swiss nationals. Will the Minister give us some further information on what plans he has beyond the current timeframe, and the four-year period provided for by the statutory instrument? I recognise that the measure is an improvement on where we were before, but clearly work will still need to be done at the end of that four-year period, so can he confirm that he will work with health and care regulators to design a bespoke system for the recognition of professional qualifications? How will he ensure that such a system puts patient safety at the forefront, applies consistent standards and is fair and transparent for all overseas-trained professionals to join the relevant professional register, regardless of where in the world they qualified?

Finally, the impact on UK professionals wishing to work in the EEA must not be forgotten. Of course, under the current rules, up until the end of 2020 the current UK qualifications will be recognised in other EEA member states under the current legal framework. But while the amendments to the Medical Act 1983 that were adopted in March 2019, and which are being tweaked by today’s regulations, allow for the majority of EEA-qualified professionals to have their qualification recognised by UK regulators after the end of the transition period, those provisions are not automatically mutually reciprocated by the EU. So, after 31 December 2020, UK nationals and EEA nationals holding a UK medical qualification will be treated as third-country nationals if they seek to have their qualification recognised in an EEA state. Has the Minister had any discussions with his EU counterparts about the impact on UK professionals wishing to practise in the EU after the end of the transition period? I think he said there were some talks about mutual recognition, but can he confirm whether EU countries are intending to continue to recognise UK qualifications once that becomes a matter for the regulators in the EEA area? Does he have an estimate of how many UK professionals will be affected by that issue?

We do not oppose the regulations or what they seek to achieve. We recognise, as the Minister—and I believe every hon. Member—does, the valuable contribution to the NHS of staff from the EEA and Swiss areas.

It is, as always, a pleasure to serve opposite the shadow Minister, who always approaches these debates in a spirit of common sense and constructive challenge; so I am grateful to him, although I am not quite sure what I should read into his reference to me as the “current” Minister, and whether he knows something that I do not. Maybe it is a reflection on the number of my predecessors that he has seen standing in this place opposite him during his tenure.

I meant that the Minister is a very talented individual, and no doubt will be elevated to higher service in the not too distant future.

The hon. Gentleman is very kind, but I am not sure whether his comments will help or hinder that cause—as the Whip takes note.

The hon. Gentleman is right that the statutory instrument is dry and technical but important. It represents our taking—in co-operation with the Opposition, for whose support we are grateful—a prudent series of steps to help address concerns about what will happen for those professionals from this country who work in Switzerland and EFTA and, likewise, the reciprocal rights.

The hon. Gentleman asked several questions; I will try to respond to them all. He mentioned the timing. Everyone would wish that we were able to bring measures such as this forward as soon as possible, to give those affected as much time as possible to prepare, but in the nature of things, with all the multiple strands being negotiated, these matters came to be negotiated after the 2019 SI and we have brought them forward as soon as we could following the conclusion of those treaties.

The hon. Gentleman reflected a great deal on workforce numbers, and the impact on the workforce more broadly of the decision in the referendum to leave the EU and what steps we were taking to ensure that the NHS and social care continued to have the numbers they needed to provide the extraordinary service that all those professionals perform for people. He was right to highlight a small drop in the number of registered nurses from EU and EFTA countries—although I would point out that the number of doctors from those countries has remained broadly constant since 2016. Actually, that small reduction has been more than offset by the significant increase in the number of nurses coming from outside EU and EFTA states—an increase of around 29,500. In reply to his perfectly reasonable question on what guarantees, what reassurances, I can offer about the continued supply of nurses, doctors and social care workers to our caring services, I remind him that the Government are well on target to meet their pledge of 50,000 more nurses in the NHS in the course of this Parliament. I think—I may be slightly out—we are well over 13,000 up. While I note his point, if we look at the overall nursing, social care and medical workforce in the round, any slight reduction from EU sources has been more than offset by increases from elsewhere.

The hon. Gentleman asked whether there were any other costs or barriers or assessments thereof for Swiss or EFTA nationals. None has been drawn to our attention. The regulations address one of the key things that was a risk and a barrier, but if he is aware of any specific issues, I am happy for him to raise them with me.

The hon. Gentleman’s final point was on EU enforceable rights. I will endeavour to give him clarity. This answer is slightly technical, so if he feels his question is not answered fully, I am happy for him to write to me following the Committee and I will try to provide more detail. The regulations apply to both Swiss nationals with qualifying professional qualifications and to a national of a third country who has an enforceable EU right through their relationship with a Swiss national. That means, in effect, that spouses and dependants of Swiss nationals must have their health and care qualifications assessed in the same way in which a Swiss national would. There is a single exception relating to EU nationals who are spouses or dependants of particular groups. I will write to him with some of the technical points around that if he wishes, because I think he seeks a greater degree of clarity.

The hon. Gentleman also raised more broadly the long-term arrangements for the EU workforce in our health and social care sector. I would have been surprised had he not done so. My answer, which will not surprise him—I suspect it is the same one he has received from many of my predecessors—is that these are matters outwith the treaty and outwith Switzerland and EFTA. They are matters for the ongoing negotiations with the EU that we are engaging in continuously and constructively. I do not want to prejudge the outcome of those negotiations, but I hope that both sides can find a way forward to an agreement in the coming weeks.

Question put and agreed to.

Committee rose.

Draft Electricity (Risk-Preparedness) (Amendment etc.) (EU Exit) Regulations 2020

The Committee consisted of the following Members:

Chair:†Julie Elliott

† Anderson, Lee (Ashfield) (Con)

† Bacon, Gareth (Orpington) (Con)

† Barker, Paula (Liverpool, Wavertree) (Lab)

† Baynes, Simon (Clwyd South) (Con)

† Clarke, Theo (Stafford) (Con)

† Fletcher, Mark (Bolsover) (Con)

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

† Goodwill, Mr Robert (Scarborough and Whitby) (Con)

† Kwarteng, Kwasi (Minister for Business, Energy and Clean Growth)

† Longhi, Marco (Dudley North) (Con)

† Russell, Dean (Watford) (Con)

Slaughter, Andy (Hammersmith) (Lab)

Smith, Nick (Blaenau Gwent) (Lab)

† Tarry, Sam (Ilford South) (Lab)

Thompson, Owen (Midlothian) (SNP)

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

† Whitehead, Dr Alan (Southampton, Test) (Lab)

Sarah Ioannou, Anwen Rees, Committee Clerks

† attended the Committee

Fifth Delegated Legislation Committee

Wednesday 7 October 2020

[Julie Elliott in the Chair]

Draft Electricity (Risk-Preparedness) (Amendment etc.) (EU Exit) Regulations 2020

I beg to move,

That the Committee has considered the draft Electricity (Risk-Preparedness) (Amendment etc.) (EU Exit) Regulations 2020.

It is always a pleasure to see you in the Chair, Ms Elliott.

The regulations were laid before the House on 17 September. As members of the Committee will know, the transition period ends on 31 December 2020. At that point, direct EU legislation that forms part of the legal framework governing our energy markets will be incorporated into domestic law by the European Union (Withdrawal) Act 2018. This statutory instrument forms part of my Department’s work to ensure that the United Kingdom’s energy legislation continues to function smoothly after the end of the transition period.

This particular statutory instrument makes amendments and revocations to regulation EU 2019/941 on risk-preparedness in the electricity sector. It does two things primarily: first, it amends rules to ensure that they operate effectively in domestic law. Secondly, it revokes provisions that will no longer be relevant to us after the conclusion of the transition period. Specifically, it amends provisions relating to the development of electricity crisis scenarios and a risk-preparedness plan to ensure that they operate properly after the transition period. As of 1 January next year, the United Kingdom will make independent decisions on our energy policies. The statutory instrument applies to Great Britain and revokes certain obligations, for example, to submit information on our risk-preparedness to EU bodies and institutions.

In summary, the statutory instrument will ensure the operability and integrity of Great Britain’s energy legislation. It will provide certainty for market participants and safeguard the resilience of the electricity system. It will also ensure that the continued functioning of risk-preparedness is maintained, so we will have just as much provision for and foresight of risks as we had before, but we simply will not have to report back to the EU about our plans.

We have an interconnector between the UK and Europe. Will there be an impact on that, given that there will be an EU implication for the sale of electricity in both directions through the interconnector?

We have more than one interconnector connecting us to European countries, and we intend to build many more. This statutory instrument relates to our risk-preparedness. When we were in the EU, we had to report back to it to say how risk-prepared we were and what risks we were mitigating. We will no longer have to do that, and the statutory instrument is a good transition out of an EU-regulated system into one that we independently manage ourselves. That is broadly what it does.

The regulations are an appropriate use of the powers of the withdrawal Act, and we fully intend and believe that they will support a well-functioning, competitive and resilient energy system for consumers. On that basis, I commend the regulations to the Committee.

It is a pleasure to serve under your chairmanship this afternoon, Ms Elliott.

As the Minister set out lucidly and briefly, the SI is essentially about putting in place what will happen on risk-preparedness in a UK rather than an EU context. It does that by keeping in place most of EU regulation 2019/941 as retained law, but making a number of changes to the retained law to place it in a UK context, independent of what occurs in the EU. Of course, that process is essentially non-controversial and has to happen for our exit from the EU next year. Therefore, having these provisions in place in a timely fashion before that exit takes place is a straightforward and necessary process.

I have, however, some concerns about the consequences of that change, and I would like one or two assurances from the Minister about how that process will take place and what he has in mind for making it happen over the period, because the SI does not just make those changes. It commits the UK to publishing, by 5 January 2022, its own risk- preparedness plan. In a sense, that is not an enormous difference from what was the case previously under the EU regulation, inasmuch as the UK was supposed to publish its own plan, but it was then supposed to circulate that plan around EU member states, in both draft and final form, for comments and consideration. That particular process is excised by the SI this afternoon. It excises that process and sets up a UK process, with the addition of one or two differences from the position previously. In particular, it excises provisions in article 8 of the EU regulation, which describes the process of setting up a draft, circulating that and then publishing. We are now in a position, as a result of the SI, in which the UK will produce its own risk-preparedness plan, but is not required to produce in any way a draft for discussion or circulation to anybody—

To anybody in the UK. That is the effect of the SI: there is no provision to publish, reveal or circulate any draft plan before publication of the actual plan, or the agreement of the actual plan, in 2022. That seems to me to be a bit of an omission, frankly, concerning our plans, because it is important that these plans are known about and discussed publicly and scrutinised well in advance of their final adoption. Therefore, I hope that the Minister will at least be able to say—even if he is not prepared to row back on any of the excisions that he has made in relation to the process of adopting a plan—that he will ensure that any draft plans are fully public, circulated and discussable before the final plan is produced, which will be by January 2022.

My second concern is that the terms of the SI effectively mean, as the Minister said, that we do not tell the EU anything we are doing as far as risk-preparedness is concerned, which we would be required to do under the previous regulations; we go our own way as it were on risk-preparedness. In reality, most of the risks that may arise in the UK electricity sector are likely to be common within the EU. Indeed, the right hon. Member for Scarborough and Whitby mentioned interconnectors, and they could easily be a substantial common risk for the UK and EU members, at least on a regional basis.

As the Minister will, I am sure, be aware, because he was very much involved in the process, as part of the comprehensive free trade agreement draft in May 2020, we as a country submitted an energy co-operation draft, which among other things suggests that we should continue to sit as an observer on the ENSO-E body, which is the body that oversees risk-preparedness across the EU. It is very likely, I would have thought, that if the EU agrees that energy co-operation draft, and agrees to our observer status on ENSO-E, it would want at least some transparency as to our risk-preparedness plans, and indeed some mechanism whereby those plans can be translated across to our partners and friends in the EU, so that we can proceed as far as possible on assessing risk and dealing with it on a joint basis, which I am sure the Minister would agree is a thoroughly sensible thing to do given the nature of those risks. Is the Minister able to address what observer status on ENSO-E may consist of, and confirm, should that provision go through, that our risk-preparedness plans will be shared in an appropriate and collaborative way, both with other EU member states and with ENSO-E?

I think the Minister will have gathered that the Opposition do not intend to oppose these regulations—

They are absolutely the right thing to do under the present circumstances, but I am sure that the Minister will also agree that there are issues that arise, and that we need some clarification as to where things will go once these changes have been made.

The hon. Gentleman raised a number of points and I want to address them briefly. He is quite right that the very fact of leaving the EU means that we do not have to give EU member states sight of our plans, and we do not need them to, essentially, review our homework on this. That is what the SI does; it means that we do not have to refer back to them, and that is what having an independent energy policy means. So he is right to say that, but there will be scrutiny and debate and, I would expect, wide consultation ahead of the publication of such plans.

Every Energy Minister spends a lot of his or her time engaging with the industry, engaging with resilience issues, engaging with security issues, not only with domestic stakeholders, but with partners in the EU and across the world. It is a very outward-focused, engaged Department, and energy, with all its international implications, is particularly needful of international co-operation and international engagement. I would have no worries on his part about our ability to engage in a very co-operative spirit with allies and partners.

The hon. Gentleman said that the SI is non-controversial, and he is right about that – it is straightforward and necessary. He is also right about that. I disagreed with him when he characterised our position as ‘we go on our own way’. Well, of course, we have that independence, but as I have said, there is constant engagement with our French and German colleagues, and all sorts of countries across the EU. That will continue.

As the hon. Gentleman said, the regulations are straightforward and necessary. They will ensure continuity for our energy system. They will correct deficiencies arising from withdrawal from the EU—we are cleaning up all the redundant references in the legislation to member states and obligations that we owe EU bodies and institutions. They will retain relevant functions with a view to increasing resilience in terms of risk- preparedness, and above all, they will provide certainty for the market and market participants.

I think that the measure is a very simple piece of legislation. It is straightforward and necessary, as the hon. Gentleman suggested, and on that basis, I am very happy to commend the regulations to the Committee.

Committee rose.

Draft Debt Respite Scheme (Breathing Space Moratorium and Mental health Crisis Moratorium) (England and Wales) Regulations 2020

The Committee consisted of the following Members:

Chair: Mark Pritchard

† Aiken, Nickie (Cities of London and Westminster) (Con)

† Coutinho, Claire (East Surrey) (Con)

Cruddas, Jon (Dagenham and Rainham) (Lab)

† Glen, John (Economic Secretary to the Treasury)

† Henry, Darren (Broxtowe) (Con)

Hill, Mike (Hartlepool) (Lab)

Jarvis, Dan (Barnsley Central) (Lab)

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

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

† Marson, Julie (Hertford and Stortford) (Con)

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

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

† Saxby, Selaine (North Devon) (Con)

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

† Stafford, Alexander (Rother Valley) (Con)

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

† Young, Jacob (Redcar) (Con)

Seb Newman, Committee Clerk

† attended the Committee

Sixth Delegated Legislation Committee

Wednesday 7 October 2020

[Mark Pritchard in the Chair]

Draft Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020

I beg to move,

That the Committee has considered the draft Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England And Wales) Regulations 2020.

It is a pleasure to serve under your chairmanship, Mr Pritchard. This scheme is a priority of mine; I have spoken about problem debt and its corrosive effects on individuals and their families. I know that hon. Members present will know only too well the challenges that we face and will share my determination to help.

The draft regulations come at a crucial time. Despite the Government’s unprecedented interventions, the impact of covid-19 has put many people’s finances under enormous strain. No one should feel pressured or panicked into making decisions about debt, and today’s announcement on default notices is the latest example of how the Government are making efforts to help where we can.

A breathing space, or “moratorium” in the regulations, is a temporary period of respite to help people consider their options and engage with professional debt advice. It will pause most enforcement action, creditor contact and interest and charges on debts in the scheme. There are two kinds of moratorium: a breathing space moratorium, which lasts up to 60 days for anyone who engages with debt advice and meets the eligibility criteria; and a mental health crisis moratorium, where someone who is in mental health crisis treatment is protected for the length of that treatment plus 30 days.

Debt advice providers are the gateway to the scheme, and their judgment and expertise are central to its success. A debt adviser must first consider whether their client meets the eligibility criteria and conditions. If a person could go into a debt solution straight away, or just needs help with budgeting, a moratorium would not be appropriate. In a breathing space moratorium, the debt advice provider must also carry out a midway review to ensure that their client is complying with the scheme’s rules. The debt advice provider can decide to end a breathing space moratorium early if those rules are not observed—for example, if certain ongoing liabilities, such as a mortgage or rent, are not paid as they fall due. The debtor must engage with debt advice in a way that the debt adviser considers appropriate.

When a person is receiving mental health crisis treatment, expert debt advice is not easy to access. That is why I committed to include an alternative way into the scheme for people in mental health crisis treatment. An approved mental health professional—AMHP, or AMP for short—will be able to certify that a person is in crisis treatment. After an eligibility check, a debt adviser can use this evidence to initiate a mental health crisis moratorium without directly providing debt advice. We are working with the Money and Pensions Service to make this process smooth for AMPs and debt advisers.

The protections in a mental health crisis moratorium last longer, and the conditions on the debtor are relaxed. For example, the ongoing liabilities rule, and other obligations on engaging with debt advice, will not apply. There will be no midway review, but a debt adviser will check in regularly. The protections will end 30 days after crisis treatment ends. However, because crises can recur, there is no limit on the number of times that a person can have a mental health crisis moratorium. These are strong measures to address an important gap in provision, and I hope that they make a difference in many people’s treatment and recovery.

The scheme will start on 4 May 2021. I am conscious that that date will seem too late for some and too soon for others. In the light of the ongoing covid-19 situation, creditors have made extraordinary efforts to help customers over recent months, and I know how demanding it is to make these changes at pace. I am confident that, by May 2021, although it is ambitious, this target will also be achievable. For the 700,000 people who could benefit from breathing space in its first year, we must keep pushing forward. Clear information about the administration of the scheme is necessary to support implementation, and I can confirm that the Government intend to publish detailed scheme guidance by the end of this year.

Lastly, a concern for many is the impact of a moratorium on credit files. Debt advisers need to understand that to advise their clients properly, and lenders also need accurate information to lend responsibly. Reporting the moratorium via a new flag or code in credit files could affect a person’s credit file for a long time after the moratorium, depending on how lenders interpreted it. Reporting the longer “mental health crisis” moratorium could also mean that sensitive health information could be inferred from credit files. That would be unacceptable. We therefore propose that creditors should continue to report in line with their existing arrangements. The Government are mindful to avoid unintended consequences and will keep this position under review.

I hope the Committee agrees that the regulations are an important intervention to protect and support people in problem debt, at a time when that support has perhaps never been so crucial. I hope colleagues from both sides will join me in supporting the regulations, which I commend to the Committee.

It is a pleasure to serve under your chairmanship, Mr Pritchard. I am grateful to the Minister and thank him for his explanation of the regulations. I should make clear at the outset that we support the idea of a breathing space for indebted households and businesses. I am grateful to charities such as StepChange, the Children’s Society, Citizens Advice and others, with whom we have discussed the matter or who have provided information about it.

This idea has been some time in the making. A similar scheme already exists in Scotland. The hon. Member for Rochester and Strood (Kelly Tolhurst) introduced a private Member’s Bill on this issue in 2016. There was a consultation and a response between 2018 and 2019, all leading to the regulations before us today.

Although the regulations themselves are quite detailed, the basis of the scheme is simple: those seeking approved debt advice will be given a breathing space of 60 days, during which they can reach a sustainable repayment plan. That 60-day duration can be longer for people undergoing mental health treatment. During the breathing space, debtors will be protected from fees, charges and enforcement action. The overall aim is that repayment plans will be reached that make returns to creditors and that stop debtors from being financially crushed by the weight incurred.

The regulations are important not only because of the ongoing problems of debt but because a lot of households are under increased financial pressure because of covid, as the Minister said. Those effects are likely to become worse in the coming months as unemployment rises. In the wider context, the Minister might be aware, for example, of the Reset the Debt campaign, organised by a number of UK Churches, that draws attention to the problem of increased debt due to covid and calls for a jubilee fund to help with repayment.

Any help that people can get in coping with such debt is, of course, urgent and important. I have a few questions for the Minister, and I would be grateful if he addressed them. The regulations say that the breathing space should be of 60 days’ duration. For many people, that might be enough time to agree a repayment plan, but for some it might not, particularly if a major event—the death or serious illness of a family member, for example—occurs within that 60 days. Extra covid-induced debt may also make it harder to agree a repayment plan within 60 days. Although the regulations say 60 days at the moment, will the Minister undertake to review the 60-day period at some point in case it needs to be lengthened?

Secondly, the regulations stipulate that there can be only one breathing space within a 12-month period for the non-mental-health part of this. I appreciate that that is designed to stop people from gaming the system by entering repeated breathing spaces over and over, but again there can be drastic changes in circumstances within a 12-month period. Will the Minister keep that aspect of the regulations under review?

Thirdly, there is the question of which kinds of debt qualify for protection under the regulations and which fall outside it. One area raised with us is the question of advance payments under universal credit, which currently fall outside the scope of the regulations and are therefore not protected by the breathing space. Citizens Advice has reported that in 2018, for example, deductions for advance payments were taken from 41% of universal credit payments, and those deductions can be high—they can go up to 30% of a claimant’s standard weekly allowance. Given that everyone expects universal credit claims to grow in the coming months and that, therefore, it is also highly likely that the number of advance payments will grow, will the Minister review the decision to place advance payments from universal credit outside the scope of the breathing space?

Finally, I would like to ask the Minister about the cost-benefit analysis in the impact assessment before us today. There are some sizeable figures here, with an estimated overall benefit to society of some £9.2 billion. Can the Minister tell us how that is calculated and how confident the Government are in that estimate?

This is a welcome measure, which we will support, but it is also one measure coming in after several years of debate and consultation, and it does not come into force until May next year. There is no doubt that on both the household and business debt fronts the issue will grow in importance and it is likely to require further Government action in the coming months.

We saw in the early days of the pandemic what can be done where there is a will and additional resources—on homelessness, for example. As we approve the regulations today, I hope that the Minister can give some indication that the action we are taking today will not stop just with these breathing space provisions and that the Government will also consider what further help can be given to indebted households and businesses in the months ahead.

I thank the right hon. Gentleman for his characteristically constructive approach and for the support of the Labour party throughout the passage of this legislation. There is a wide consensus on this measure. The right hon. Gentleman asks four questions and then makes some wider observations about the debt context in the country, and I will address each in turn.

First, the right hon. Gentleman asks about the duration of 60 days. He drew attention to the fact that there will be a need to review that, given the extra debts and the evolving situation of individuals in the moratorium situation. Through the design of this and through consultation, we looked very carefully at that time period and the flexibilities that should or should not exist, and it was decided that it was necessary to have a standard process. If we had a long list of supplementary conditions, that would make it very difficult for the scheme to be clear and understood by the wide range of debt professionals who will be trained to work with it. In the sense that all measures that the Government take are under review, I give the right hon. Gentleman the commitment that we will look at the issue very carefully. However, I am yet to be persuaded that we can develop a clear model to make that work.

On the second question, the right hon. Gentleman remarks about the fact that there will be a stipulation that an individual can enter the moratorium only once in a 12-month period. I would answer in a similar way: as he acknowledges, that stipulation is to prevent people from gaming the system or not taking the outcome seriously. It is a serious intervention to go into a moratorium, put all one’s debts on the table and actually come up with a plan—for which there are different pathways, which we are working on—in terms of how an individual would move forward. We do not want to diminish the significance of that intervention. Obviously, we will work with the sectors involved in delivering it to see how it works, but at the moment we will stick to that policy.

The right hon. Gentleman then asks about qualifying debts and rightly draws attention to the exclusion of advance payments in respect of universal credit; third-party reductions are also excluded. It is our aspiration as a Government to include all UC debts—indeed, we do include overpayments in the scheme—but the situation is a function of the systematic upgrade of the IT systems of the DWP, which are, of course, under significant strain at the moment. However, we are moving in that direction, and I will work with colleagues across Government to improve the scope of the coverage of UC advances. This is not the final word on the matter.

The right hon. Gentleman then asks about the cost-benefit analysis, which forecasts a social value of £9.2 billion in 2016 prices in economic benefits to businesses, charities and voluntary bodies. The business net present value is forecast to be £6.1 billion. I cannot give him chapter and verse on how that has been calculated, but if I can secure any more details, I will write to him.

The right hon. Gentleman then asks about the broader context and the evolving needs of the nation with respect to debt advice. He is right to say that it is incumbent on Government to move as that situation evolves, and that is why we gave an extra £37.8 million to the debt advice sector: it has £100 million through this financial year. We will keep that under review and, further to the Budgets from 2018 onwards, we will continue to pilot the no-interest loan scheme credit union reform; legislation to do that is on the agenda and has been committed to. I will continue to work with the Minister for Pensions through the Financial Inclusion forum on other interventions in this space.

I acknowledge that there is still a lot of work to do for Government, creditors, debt advice providers and others to make the breathing space a reality, but I do think we can see today as a significant moment of progress. I believe this scheme will have a genuinely transformational effect on the lives of people in problem debt in England and Wales when it comes into effect next May. I hope the Committee agrees and will now support the regulations.

Question put and agreed to.

Committee rose.