Tuesday 10 November 2020
Transparency of Intergovernmental Relations: Update
Today, the Government are announcing new measures to improve the transparency and accountability of relations between the UK Government and the devolved Administrations.
We are taking these steps because the Government recognise that effective transparency, accountability and parliamentary scrutiny of the Government’s participation in intergovernmental structures will support relationships between the Government and devolved Administrations so that we work together effectively on behalf of citizens across the UK.
A new dedicated www.gov.uk page for intergovernmental relations (IGR) has been created. On this website, all documents relating to IGR, including the memorandum of understanding on devolution, relevant documents and reports related to intergovernmental forums will be published at timely intervals. This includes uploading communiqués after each formal intergovernmental meeting containing information on the date, location, chair, participants and discussion points of meetings. This collection will grow and evolve as we revise and strengthen our intergovernmental structures and conclude the review of intergovernmental relations. However, we are launching the website today as we recognise the benefits of implementing new behaviours and good practice immediately to support parliamentary and public scrutiny of the UK Government’s participation in existing intergovernmental forums.
Our long-term strategy for strengthening transparency of IGR will involve publishing a quarterly report on this gov.uk page. This report will include a list of all engagements for each forum, any resolved disputes and their outcomes and associated third-party reports when relevant. The first report will be published in 2021.
On an annual basis, a report will be laid in both Houses of Parliament by Command Paper. This will collate the key information from the quarterly reports, as well as include any written or service-level agreements reached between Administrations over the reporting period, background information and a list of ministerial appearances before parliamentary committees. The Government also commit to making regular statements to Parliament on IGR, including appearances before relevant committees when requested.
The measures will not apply universally including where issues are commercially or market sensitive or matters of national security. They will not apply to the myriad regular official meetings or to informal bilateral discussions.
These measures apply to the participation of Ministers of the Crown in formal, intergovernmental structures and are intended to support Parliament’s capacity to scrutinise intergovernmental relations. The measures do not place any obligations on other Administrations to report to their legislatures, although they mirror the approaches taken by the Welsh and Scottish Governments.
In tandem, the joint review of intergovernmental relations continues to progress with the devolved Administrations and the UK Government remain committed to finalising a product at pace. These measures will complement any future structures at the outcome of the review.
Financial Services for the EEA: Ministerial Equivalence and Exemption Directions
The Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019 (S.I. 2019/541) provides powers for the Treasury to make equivalence directions and exemption directions for the European Economic Area (“EEA”) states, including the member states of the European Union (“EU”), before the end of the transition period.
I have today laid before Parliament eight directions which exercise the powers across an extensive range of areas. The directions cover 16 equivalence decisions in total, which serve to maintain the stability and openness of the UK financial services sector beyond the end of the transition period.
For the decisions below, it is both the legally binding requirements, and the effectiveness of the regulation and supervision of adherence to these requirements in the EEA states, which have been deemed equivalent on an outcomes basis.
The European Market Infrastructure Regulation (Article 13) Equivalence Directions 2020 determine that, for the purposes of paragraphs 1 and 2(a) and (d), of article 3 of the European market infrastructure regulation (intragroup transactions), the legal, supervisory and enforcement arrangements of EEA states are equivalent to articles 4 and 11 of the European market infrastructure regulation, as it will form part of UK law at the end of the transition period (“EMIR”). This decision paves the way for UK firms to seek or apply an exemption from the requirement to clear through a CCP or meet margin requirements for transactions with an EEA entity in the same group. The granting of this decision means these exposures can qualify as intragroup exposures in the credit valuation adjustment (“CVA”) calculation, ensuring that UK firms will in many cases not have to capitalise CVA on over the counter (“OTC”) exposures to EEA affiliates.
The Capital Requirements Regulation Equivalence Directions 2020 determine that each EEA state (i) applies prudential, supervisory and regulatory requirements equivalent to those applied in the UK, for the purposes of article 107(3) and 391 of the capital requirements regulation as it will form part of UK law at the end of the transition period (“CRR”); and (ii) applies supervisory and regulatory arrangements equivalent to those applied in the UK, for the purposes of articles 114(7), 115(4), 116(5), 132(3) and 142(2) of CRR. For UK firms, equivalence here ensures they will not be subject to increased capital requirements as a result of their EEA exposures.
The Solvency 2 Regulation Equivalence Directions 2020 determine that for the purposes of Commission Delegated Regulation (EU) 2015/35 (supplementing the solvency II directive on the taking-up and pursuit of the business of insurance and reinsurance): (i) the solvency regime of each EEA state that applies to certain reinsurance activities is equivalent to that laid down in the relevant UK law; (ii) the solo prudential regime of each EEA state is equivalent to that laid down in the relevant UK law; and (iii) the groups prudential regime of each EEA state is equivalent to that laid down in the relevant UK law. In doing so, The Solvency 2 Regulation Equivalence Directions 2020 cover all three solvency II equivalence decisions, i.e. articles 378, 379 and 380 of the solvency II regulation. Solvency II is an EU regime which will form part of retained EU law in the UK from 11pm on 31 December 2020 (in accordance with the European Union (Withdrawal) Act 2018) so that it continues to apply in the UK.
The European Market Infrastructure Regulation (Article 2A) Equivalence Directions 2020 determine that, for the purposes of article 2A of the EMIR, markets in each EEA state comply with legally binding requirements which are equivalent to the requirements laid down in UK law, and are subject to effective supervision and enforcement in each such EEA state. This will enable UK firms to continue to treat derivatives traded on EEA regulated markets as exchange traded derivatives rather than OTC derivatives. Facilitating this continuity for firms minimises the disruption they will experience following the end of the transition period.
The Central Securities Depositories Regulation Equivalence Directions 2020 determine that central securities depositories (“CSDs”) in each EEA state comply with legal requirements which are equivalent to the central securities depositories regulation as it will form part of UK law at the end of the transition period (“CSDR”) and are appropriately supervised in the relevant EEA state. With equivalence granted, the Bank of England can then assess CSDs in the EEA for recognition (subject to establishing co-operation arrangements with the relevant EEA authorities), allowing those CSDs, once recognised, to continue to service UK securities and to exit the transitional regime contained in onshored article 69 CSDR and part 5 of The Central Securities Depositories (Amendment) (EU Exit) Regulations 2018.
The Benchmarks Regulation Equivalence Directions 2020 determine that benchmark administrators in each EEA state comply with legal requirements which are equivalent to the benchmarks regulation as it will apply in UK law at the end of the transition period (“BMR”), and are appropriately supervised in the relevant EEA state. This equivalence decision acts as a mechanism to enable such administrators to be added to the FCA’s benchmarks register, and to enable them to provide benchmarks to supervised entities in the UK.
The Credit Rating Agencies Regulation Equivalence Directions 2020 determine that, for the purposes of article 5 of the credit rating agencies regulation as it will form part of UK law at the end of the transition period (“CRAR”), the legal and supervisory framework of each EEA state ensures that credit rating agencies (“CRAs”) authorised or registered in each EEA state (i) comply with legally binding requirements which are equivalent to the requirements resulting from CRAR; and (ii) are subject to effective supervision and enforcement in each such EEA state. This means non-systemic credit rating agencies authorised or registered in the EEA can apply to be certified in the UK.
The Short Selling Regulation Equivalence Directions 2020 determine that EU markets are subject to the appropriate law and supervision for the purposes of article 17 the short selling regulation as it will form part of UK law at the end of the transition period (“SSR”). This means that EEA market makers will be eligible to make use of the exemption in article 17 of SSR (which disapplies certain short selling restrictions and reporting requirements) subject to complying with certain regulatory requirements.
Alongside the above directions, today I am also laying before Parliament The Central Counterparties (Equivalence) Regulations 2020 pursuant to regulation 14(1) of the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (S.I. 2018/1184). The former statutory instrument specifies that the regulatory framework for central counterparties in EEA states is equivalent to the UK’s framework. After the end of the transition period, these regulations will have effect as if made under article 25(6) of EMIR. Therefore, subject to entry into an appropriate co-operation arrangement between the Bank of England and the relevant national competent authority in that EEA state, and a CCP-specific recognition determination by the Bank of England, after the end of the transition period UK firms will be able to continue using EEA CCPs and to exit the transitional regime contained in part 6 of The Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (S.I. 2018/1184).
The Department for Business, Energy and Industrial Strategy will be laying The Statutory Auditors and Third Country Auditors (Amendment) (EU Exit) (No. 2) Regulations 2020 to grant audit equivalence to the EEA states and approve as adequate their audit competent authorities.
To provide clarity and stability to industry, we are announcing as many decisions as we can in favour of openness, and where it makes sense to do so. The granting of these equivalence decisions provides a broad range of benefits in terms of having open markets that are well regulated, facilitating firms’ ability to pool and manage risks effectively, and supporting UK and EU clients’ access to financial services and market liquidity.
Digital, Culture, Media and Sport
Public Service Broadcasting and the Licence Fee Settlement
There is an increasing consensus that the UK’s system of public service broadcasting (PSB) needs to evolve if it is to transition successfully to the internet era. That is why today the Government are announcing a new advisory panel to provide independent expertise and advice on this important issue. The panel will bring together representatives from the worlds of broadcasting, production, journalism and technology; and, it will support the Government in responding to Ofcom’s forthcoming report on the future of public service broadcasting. The full terms of reference and membership of the panel are available from gov.uk.
One vital issue that will proceed separately is the negotiation with the BBC and S4C, the Welsh-language broadcaster, regarding the next television licence fee settlement. We are now formally beginning this process to agree the level of the licence fee from 2022. To aid in our assessment of the appropriate level and to ensure we come to a settlement which offers the best value for money for licence fee payers, I have formally requested the BBC and S4C to provide the Government with specific financial information, as required under the BBC’s royal charter.
It is also the first settlement where S4C will receive full funding from the licence fee. S4C will be following the same process as the BBC.
As I have set out previously, the BBC is a world-class broadcaster, trusted and recognised across the globe. However, to ensure its long-term sustainability in a rapidly changing digital world it must also continue to reform. The Government’s priority is a BBC that affordably delivers its mission and public purposes; that truly reflects the whole nation in its activities and content; and that guards its impartiality in all of its output.
To reflect the Government’s priorities, I am asking the BBC to set out its financial information as far as possible in line with its public purposes. I have asked the BBC to consider in particular how it can maximise its commercial revenues and continue to make savings. I have also asked the BBC to include in its submission an assessment of the impact of the licence fee for those on the lowest income, including details of any further plans to support those in vulnerable groups, including the elderly.
In the interest of transparency, alongside this statement we are publishing on gov.uk the formal commissioning letters to the BBC and S4C. We will also publish future correspondence where appropriate. I will ensure that Parliament is informed of the outcome of the discussions with the BBC and S4C, and expect to lay my determination before the House to allow time for parliamentary debate before the settlement takes effect in 2022.
Report of the Independent Inquiry into Child Sexual Abuse: Roman Catholic Church in England and Wales
Today the Independent Inquiry into Child Sexual Abuse has published its latest report, which can be found at www.iicsa.org.uk.
This report relates to its investigation into the extent of any institutional failures to protect children from sexual abuse within the Roman Catholic Church in England and Wales. I pay tribute to the strength and courage of the victims and survivors who have shared their experiences to ensure the inquiry can deliver its vital work.
The Government will review this report and consider how to respond to its content in due course.
I would like to thank Professor Jay and her panel for their continued work to uncover the truth, identify what went wrong in the past and to learn the lessons for the future.