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General Committees

Debated on Wednesday 12 July 2023

Delegated Legislation Committee

Draft Immigration and Nationality (Fees) (Amendment) Order 2023

The Committee consisted of the following Members:

Chair: Sir Robert Syms

† Aldous, Peter (Waveney) (Con)

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

† Blunt, Crispin (Reigate) (Con)

† Burgon, Richard (Leeds East) (Lab)

† Courts, Robert (Witney) (Con)

† Day, Martyn (Linlithgow and East Falkirk) (SNP)

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

† Hardy, Emma (Kingston upon Hull West and Hessle) (Lab)

† Hart, Sally-Ann (Hastings and Rye) (Con)

† Holmes, Paul (Eastleigh) (Con)

† Hunt, Jane (Loughborough) (Con)

† Jenrick, Robert (Minister for Immigration)

† Jones, Gerald (Merthyr Tydfil and Rhymney) (Lab)

† Kinnock, Stephen (Aberavon) (Lab)

† Mann, Scott (Lord Commissioner of His Majestys Treasury)

† Rimmer, Ms Marie (St Helens South and Whiston) (Lab)

† Smith, Nick (Blaenau Gwent) (Lab)

Paul Owen, Committee Clerk

† attended the Committee

Fourth Delegated Legislation Committee

Wednesday 12 July 2023

[Sir Robert Syms in the Chair]

Draft Immigration and Nationality (Fees) (Amendment) Order 2023

I beg to move,

That the Committee has considered the draft Immigration and Nationality (Fees) (Amendment) Order 2023.

It feels like only yesterday that we were talking about immigration. This draft fees order sets out the immigration and nationality functions for which a fee is to be charged, and the maximum amount that can be charged for each such function. Within the order, we propose a number of changes that will facilitate major Government policy, play an important part in the simplification of our fees structure and allow the Home Office to make vital decisions to ensure that the migration and borders system functions properly and is adequately funded.

I will go into more detail on each of the changes that we propose. To summarise, however, the draft order will: set a power to charge a fee for an electronic travel authorisation, or ETA, and set the maximum fee that can be charged for an application; increase the maximum fee that can be set for visa visits, certain applications for entry clearance and leave-to-remain visas, certain nationality products and services, and priority services; introduce a power to charge a fee for a contact-point meeting with endorsing bodies on the innovator founder route, and set the maximum fee that can be charged; introduce a power to charge a fee for the new “sponsor a worker” function; and remove certain fees relating to biometric enrolment, transfer of conditions, and the replacement and amendment of biometric documents in certain circumstances.

At the outset, it is important to be clear that the fees charged by the Home Office for immigration and nationality applications are an essential part of the Home Office’s funding settlement. Our aim is to reduce the burden of operating the system on the taxpayer and the draft order plays a key role in that, by providing flexibility to adjust fee levels across all immigration and nationality routes through separate legislation. Without that flexibility, it is not possible for the Home Office to take a balanced approach to setting fees. It is therefore vital that the maximum amounts set out in the fees order allow appropriate choices to be made on individual routes to support a balanced approach overall, avoiding the potential for increases to fall disproportionately on routes where there is flexibility to adjust fee levels.

Turning to the changes we propose to the fee maxima, the figures set in the draft order act as a ceiling beneath which the Home Office is able to make changes to fee levels, by separate legislation and seeking agreement across Government. In the majority of cases, we have not made changes to fee maxima since this order was last laid in 2016. I am sure Members will agree that it is prudent to keep those maxima under review to ensure that the order continues to support our fees and funding objectives. The changes we propose, which are accompanied by an economic impact assessment, will provide the necessary flexibility to make changes to fee levels where they are required to ensure the sustainability of our migration and borders system.

The actual fee levels charged to those seeking to enter or remain in the United Kingdom are not changing under the draft order; any changes to the fee levels will be made through separate legislation and will again be accompanied by a full economic impact assessment.

Members will be aware that the UK is launching an ETA scheme that will strengthen the security of our border and support our wider ambition to digitise the UK border. Such a scheme will be a familiar concept for the majority of international travellers and is in line with the approach taken by many of our international partners, such as the EU and the United States.

In the written ministerial statement I made on 6 June, I outlined our intention to set a fee of £10 for each application on initial roll-out of the scheme. The draft order plays a key role in that process by providing a power to charge a fee for the scheme and setting the maximum fee that can be set by the Home Office for each application. To be clear, although we have announced our intended fee level of £10, the fee cannot be set through this order. We will set the fee formally in regulations that will be subject to approval by Parliament later this year.

We are continuing with the simplification of our fee structure, which includes those fees that have become increasingly redundant as part of the wider transition to digital evidence of immigration status or are no longer required to support wider policy objectives. As such, we will remove the chargeable function for biometric enrolment for all remaining instances of the £19.20 fee in the fees regulations, reducing the number of fees that customers are required to pay in relation to an application.

With all new customers applying in-country now issued with a biometric residence permit or a digital status, the £161 fee charged in-country for a transfer of conditions for those with limited leave to remain is largely obsolete. The removal of this fee reflects that this application is made by those seeking to upgrade legacy documents to a biometric residence permit.

We are removing the fee to amend details on physical documents such as name, sex marker, nationality and photograph, and for those with limited leave to remain. That will bring these customers in line with those who are issued digital status and those with indefinite leave to remain, who are not charged a fee to make this sort of amendment.

We will no longer charge a fee for a like-for-like replacement of a biometric residence permit where the document has expired. That will primarily benefit those with indefinite leave to remain, whose cards have a maximum 10-year validity, with most due to expire in 2024.

The final changes we propose in this order will ensure that the subsequent fees regulations are aligned with wider policy changes being made within the migration and borders landscape. Under new arrangements being rolled out as part of broader reform to the innovator route, checkpoint meetings will be required between an endorsing body and the individual applicant to assess progress against their business plan. The maximum fee for these meetings is being set at £500. The fee for each assessment will be £500 and will be set in regulations in the next year, ahead of these meetings being chargeable in April 2024.

The current sponsorship scheme is being reformed, with the existing system of certificates of sponsorship being phased out and replaced with the “sponsor a worker” scheme. That will happen in stages, with a limited test in 2024, during which both the certificates of sponsorship and “sponsor a worker” scheme will operate side by side. The amendment we are making in this order will facilitate that change, providing a maximum fee to be set at the same level as the certificate of sponsorship, which is £300.

The changes we propose through this order are vital to provide enough flexibility to amend fee levels with the approval of Parliament, to ensure that the system is sustainable. I am grateful for Members’ support. The changes we are making will ensure the sustainability of our immigration and border system, while setting appropriate levels of fees for those entering or choosing to remain in the United Kingdom.

It is a pleasure to serve under your chairship, Sir Robert, and I thank the Minister for his opening remarks. Following the passage of the Nationality and Borders Act 2022 and related changes to the immigration rules in March this year, this order is the next stage of a lengthy process to implement the Government’s planned electronic travel authorisation system. Ministers have set themselves the ambitious target to begin issuing ETAs to people from Qatar and other Gulf states this autumn and for the scheme to be fully operational by the end of next year.

With respect to the new ETA system, the scope of this order is limited to fees to be charged and requirements for applicants to submit biometric information. A number of the most important issues about how the scheme will work and what impact it will have are left for another day. Nevertheless, while we are here, I would like to put a few questions to the Minister on issues where further detail about the Government’s plans would be of great assistance to Members, to ensure that the process is being adequately managed and scrutinised.

The new ETA system is a major undertaking, and its effects will be wide ranging. Significant numbers of UK-bound travellers who do not need a visa will be required to obtain formal clearance to enter the UK for the first time. Whether or not the system will function as it should depends, to a substantial degree, on the effectiveness of new technologies that are still in development. That is an important point, not least because the history of Departments and major IT projects is not a particularly happy one.

In this case, the ETA system will require applications to be made, and eventually biometric information to be submitted, online or via a new app, which has yet to see the light of day. The Government say that even the decision-making process may be automated. That will take highly sophisticated technologies, and robust testing will be essential before the new system comes online. Can the Minister therefore provide an update on what progress has been made with the development of those technologies to date, and whether he believes that the Home Office is currently on track to meet the deadlines that it has set for the roll-out of those changes?

If we look beyond the administration of the new system, there are serious questions about its potential impacts, especially on the tourism sector and the wider economy, including how travel across the border with Ireland might be affected. As things stand, I have yet to be convinced that Ministers are taking adequate steps to address the concerns raised by stakeholders and to mitigate any unintended consequences.

With regard to tourism, the impact assessment published alongside this order recognises that it is reasonable to expect a fall in tourist numbers once the ETA has been implemented, and revenues can be expected to decrease as a result. Concerns about the implications for cross-border travel between Northern Ireland and the Republic are especially acute in this sector. However, the impact assessment fails to capture the different effects that the ETA may have across the UK’s different nations and regions. That is a significant oversight and one that I hope Ministers intend to address.

Will the Minister therefore set out what steps the Home Office plans to take to mitigate any adverse effects on the tourist trade that these changes may have across the UK—including but not limited to the effects in Northern Ireland? Given that we are dealing with an order that addresses fees, can the Minister tell us what consideration the Government have given to the potential merits of ringfencing some of the income generated from applicants’ fees as a means of providing financial support to any businesses that may find themselves struggling with the transition?

Alongside the measures pertaining to ETAs, this order makes changes to the maximum fee levels applicable to a range of UK visa routes. For the most part, the proposed increases are relatively modest. The notable exception is for student visas. At present, applicants cannot be charged more than £490, but the order would increase the maximum fee to £600. That equates to a more than 20% increase on the current level, with significant potential implications for international student numbers. As the Secondary Legislation Scrutiny Committee in the other place has noted, the scale of the increase is particularly striking when measured against the actual cost to the Home Office of processing those visas, which is less than half of what the applicants have to pay.

The Government’s impact assessment for the student visa fee increase acknowledges that this potential change is likely to have significant knock-on effects on the number of visas granted to international students and, as a result, the revenue from tuition fees, on which so many of our leading universities remain reliant. On the face of it, that appears to be in direct contradiction to the strategy of the Minister’s colleagues at the Department for Education, which—the last time I checked—was to increase the overall number of international students. Whether this is more an example of poor Government co-ordination or whether increasing application fees is part of a new, deliberate strategy overall to reduce the number of student visas is unclear to me. Again, any light that the Minister can shed on what otherwise looks to me like some fairly muddled thinking between different Departments would be much appreciated.

I thank the Minister and look forward to his comments.

I am grateful to the shadow Minister for his support for many of the measures in this package—in particular, the ETA, which is an important long-term project for the United Kingdom that will go a significant way to improving our border security and bring us in line with many other developed countries. I said in my opening remarks that all of us who travel to the United States, for example, will have long been familiar with its equivalent. It is right that the UK now produces its own version. We are not alone in this. The European Union is in the process of developing its version of the ETA, which was due to be rolled out this year. It is likely to be delayed, but we await news from the European Commission. All of us are united in our shared view that it is right that sovereign countries—such as the United Kingdom—should know as much as possible about individuals prior to their arrival on the soil of those countries, and the ETA is the key way in which we do that.

We have chosen to begin later this year with Qatar, which is a small but important partner of the United Kingdom and will enable us to pilot the scheme. After that, a small group of other countries will be included before a wider roll-out next year. As the shadow Minister may be aware, we have chosen to adopt a modest delay to the broader roll-out to ensure that the technology is right, because it is important to the United Kingdom, reputationally and economically, that we get this right and that there are not issues with technology when it is launched.

With regard to the maximum fee of £10, we have considered it very carefully. We want to ensure that that fee meets the true cost of the scheme, which is significant because of the new technology that we are standing up, but also that we are competitive and that we do not put people off, whether they be well-paid business travellers, students or those coming on visit visas or school trips to the United Kingdom, whose income and pockets may not be so deep. We think that £10 is an appropriate level that compares favourably with other countries around the world.

The hon. Gentleman asked an important question about the interface between Northern Ireland and the Republic of Ireland in that regard. That is one of the complexities of launching the ETA, because, as he suggests, it does interface with the common travel area. We have had extensive conversations with the Republic of Ireland and with stakeholders in Northern Ireland. I myself have met with the tourist board to discuss its concerns.

As the hon. Gentleman suggests, those concerns are that international visitors coming in on international flights to the Republic, but looking to do short trips to Northern Ireland—either a day trip or a couple of nights for sightseeing, for golf holidays, or for the various other sources of income from tourism in Northern Ireland—might be deterred as a result of the ETA fee. We conclude that the deterrence is limited, bearing in mind the £10 fee and the simple process. In most cases, it can be done by the individual themselves on a smartphone, or with the help of their travel agent or tour-booking company.

However, we do take those concerns seriously and have worked to try to alleviate them. We will be working on the roll-out to ensure that there is a smooth communication plan with all international tour operators that bring travellers to the island of Ireland. We are also working with some of the other important stakeholders, such as insurance companies, so that they understand the scheme and so that someone who unwittingly crosses the border in a car hired in the Republic does not find themselves in a difficult position should they get into an accident in Northern Ireland without having completed the ETA. I can therefore provide the hon. Gentleman with some assurances that we have given the matter a great deal of thought.

I thank the Minister, and I am reassured to hear that a great deal of thought has been given. I have also met with members of the Northern Ireland tourist board, and they have expressed extreme concern about this issue. They feel that their marketing strategy is very much based on an all-of-Ireland approach, and the communication of that to potential customers is, they feel, significantly undermined just by this additional measure. It is almost the symbolic nature of it that impacts on their overall marketing strategy. I want to underline that point and urge the Minister to continue that dialogue with the key stakeholders.

I am grateful to the hon. Gentleman for meeting with stakeholders. I do not want to represent their views, because they remain deeply concerned about this.

However, my point was that we have gone to a lot of trouble both to engage with them and to seek mitigations. The alternatives are not ones that we would consider palatable: not continuing with the roll-out of the ETA; rolling out the ETA only for Great Britain and not for Northern Ireland, which would create a significant security loophole in the ETA and undermine the Union; or, linked to that, imposing some checks at the border between GB and Northern Ireland, and asking individuals who choose to cross from NI to GB to have an ETA and to be willing to show it at that point—again, that is not something that the Government are willing to consider. I am happy to write to the hon. Gentleman, perhaps with a full explanation of our work with the Republic and stakeholders in this regard.

Lastly, the hon. Gentleman asked about student visa fees. The first point to make is that the fees charged with respect to all these visa and immigration matters are not linked directly to the individual cost of the visas, but to the sustainability of the wider system. We seek to raise sufficient funds that general taxpayers do not fund, or fund to a lesser extent than they would otherwise, our visa and immigration system. There is not a direct link between the cost of any one visa and the fee charged for those reasons.

Furthermore, the policy has been agreed across Government. We worked with the Department for Education, and it supports our proposals. The international education strategy to which the hon. Gentleman referred has been a huge success. It set out a 10-year plan to attract 600,000 students to the United Kingdom, and we met that many years early. Demand for student visas is high, and from the operating data that I have seen—as yet unpublished—it continues to be high. It is not unreasonable to ask international students to pay a higher fee in support the general funding of our immigration and visa system and reduce the cost to the taxpayer of managing the system more generally.

The Secondary Legislation Scrutiny Committee noted that the actual cost to the Home Office of processing the visas is less than half of what applicants have to pay. So that we can have some transparency on how the increased costs were calculated, does the Minister agree with that analysis

I do not have those exact costs to hand, but my point is that it is not right for the taxpayers of this country—with taxes at their current level—to pay yet more to fund our immigration and borders system. It is right that we recover as much of that cost as possible from visitors to the United Kingdom. Of course that is a careful balance, because we want to support the UK being an open country that attracts businesses, tourists and indeed students, but wherever possible, and where it is reasonable, we should try to get that money from international visitors to the UK, rather than leaning yet more on domestic taxpayers.

With that, I thank the members of the Committee for their support this morning. I commend the draft order to the Committee.

Question put and agreed to.

Committee rose.

Draft Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017 (Amendment) (Northern Ireland) Regulations 2023

The Committee consisted of the following Members:

Chair: Martin Vickers

† Cadbury, Ruth (Brentford and Isleworth) (Lab)

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

† Green, Chris (Bolton West) (Con)

Gullis, Jonathan (Stoke-on-Trent North) (Con)

† Hayes, Sir John (South Holland and The Deepings) (Con)

† Hollinrake, Kevin (Parliamentary Under-Secretary of State for Business and Trade)

† Leadbeater, Kim (Batley and Spen) (Lab)

† Mahmood, Mr Khalid (Birmingham, Perry Barr) (Lab)

† Maynard, Paul (Blackpool North and Cleveleys) (Con)

† Morton, Wendy (Aldridge-Brownhills) (Con)

Osborne, Kate (Jarrow) (Lab)

† Saxby, Selaine (North Devon) (Con)

† Stafford, Alexander (Rother Valley) (Con)

† Tolhurst, Kelly (Rochester and Strood) (Con)

† Wakeford, Christian (Bury South) (Lab)

† Wood, Mike (Dudley South) (Con)

† Yasin, Mohammad (Bedford) (Lab)

Bethan Harding, Committee Clerk

† attended the Committee

Sixth Delegated Legislation Committee

Wednesday 12 July 2023

[Martin Vickers in the Chair]

Draft Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017 (Amendment) (Northern Ireland) Regulations 2023

I beg to move,

That the Committee has considered the draft Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017 (Amendment) (Northern Ireland) Regulations 2023.

It is a pleasure to serve under your chairmanship, Mr Vickers. The purpose of this statutory instrument is to ensure that the Windsor framework, in respect of European Union directive 2014/34/EU, known as the ATEX directive, is properly implemented in Northern Ireland, and to introduce provisions regarding UK(NI) marking.

The ATEX directive aims to prevent equipment or protective systems from becoming sources of ignition in atmospheres that could be explosive if conditions lead to dangerous levels of flammable gases, mist or dust. Settings where these conditions could arise include petrol stations and a range of mainly industrial locations, such as mines, agricultural silos and chemical processing plants. ATEX-compliant handheld radios would, for example, be mandatory for safe communication in environments with potentially explosive atmospheres, where a spark could react with the air to cause an explosion.

There are separate GB and Northern Ireland regulations covering ATEX requirements. The Northern Ireland ATEX regulations—the Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017—were made by the Department for the Economy in Northern Ireland, with the Health and Safety Executive for Northern Ireland enforcing them. Currently the Northern Ireland ATEX regulations refer only to the EU market, which no longer includes Northern Ireland.

Conformity assessment bodies perform the vital role of assessing whether specified requirements relating to a product, process, system, person or body are fulfilled, carrying out calibration, testing, certification and inspection activities. For the ATEX directive, as for other directives, there is a system of mutual recognition of conformity assessment bodies, meaning that a given EU country recognises the results from a conformity assessment body located in another EU country.

This system of mutual recognition does not apply to UK conformity assessment bodies, which are now outside the EU. To address that, relying on a derogation in the framework, the UK previously legislated for a new UK(NI) marking to be applied in addition to the CE marking, where goods requiring mandatory third-party conformity assessment have been tested against EU requirements by a UK body. The UK(NI) marking applies when placing such products on the Northern Ireland market.

This instrument makes the necessary amendments to ensure that the Northern Ireland ATEX regulations reflect the fact that the UK has left the European Union. For example, it ensures that references to member states are replaced with an appropriate term that includes Northern Ireland—but not GB—and the European economic area states. It also ensures that information obligations on the UK to inform the Commission and member states apply only to information in respect of Northern Ireland and not the rest of the UK.

The instrument introduces new provisions on the UK(NI) marking into the Northern Ireland ATEX regulations. In line with the Windsor framework, a manufacturer that wants to supply an ATEX product for the Northern Ireland market will need to manufacture that product to EU requirements. If that product requires third-party conformity assessment under the relevant EU legislation, and if a UK conformity assessment body is used to do that, the manufacturer will be legally required to apply the UK(NI) indication, which must accompany the CE or other relevant conformity marking. Failure to comply with this new requirement will be a criminal offence in Northern Ireland. The Northern Ireland Department of Justice has confirmed that the new offence of failure to comply is consistent and proportionate and will not have a detrimental impact on the criminal justice system in Northern Ireland.

As a result of the additional UK(NI) marking requirements, some businesses may incur costs associated with familiarisation with the new requirements and the labelling itself. However, the impacts of these changes are expected to be very limited.

My officials in the Office for Product Safety and Standards will be providing online industry guidance to coincide with this instrument coming into force, to ensure that businesses have all the information they need on how to comply with the new requirements. They are also liaising with the Health and Safety Executive for Northern Ireland, which is responsible for enforcing the Northern Ireland ATEX regulations and ensuring that it has all the necessary information to do so.

In summary, this instrument is needed to ensure that the Windsor framework, with respect to the ATEX directive, is properly implemented in Northern Ireland. It does that by amending the Northern Ireland ATEX regulations to reflect the fact that the UK has left the EU and by introducing provisions on UK(NI) marking. I urge the Committee to approve this SI.

It is a pleasure to serve under you, Mr Vickers, and to speak for the official Opposition in this Delegated Legislation Committee debate on the draft Equipment and Protective Systems Intended for Use in Potentially Explosive Atmospheres Regulations (Northern Ireland) 2017 (Amendment) (Northern Ireland) Regulations 2023.

I thank the Minister for his speech and for the detail in which he set out this largely technical change, which relates to Northern Ireland. Having listened to his speech and looked at the debate that took place in the other place, I would like to ask him a few questions.

However, I would like to start by reaffirming the Opposition’s support for the Windsor agreement. We welcomed it when it was signed, and we know that it was welcomed by businesses, civic leaders and our international allies. I am proud of the work the Labour party has done over the past 25 years to bring peace to Northern Ireland and of the small role played over a longer period by the Barrow Cadbury Trust, which I chaired, to build and support dialogue across the community divide in Ireland. That was the precursor to peace in Northern Ireland.

The change before us will require some UK businesses to add an additional UK(NI) marker to products that could be used in businesses with certain safety risks, such as petrol stations and fertiliser producers. Although it applies only to Northern Ireland, it will impact businesses based in Britain that export these products to Northern Ireland.

I note that the Government did not run an impact assessment of this change, and nor did they conduct a consultation. I understand from comments made by Lord Johnson in the other place that there is no impact assessment because this change fell under the Windsor agreement and because it is “limited”. However, the Government have said that they have had discussions with 4,000 businesses about the impact of this change. That number suggests quite a wide scope.

That brings me to my second point. The Department estimates that around 5,500 businesses—I think that that figure is right—are impacted by the ATEX regulations. In the words of Lord Johnson,

“some businesses may incur costs associated with…the new requirements and the labelling”

under this SI. The Government state that the estimated cost to businesses is around £2.5 million. If they did not carry out an impact assessment or a formal consultation, how did they reach that cost figure? Is it an annual cost, a recurring cost or a one-off cost? Do the Government know the breakdown by nation or region? Do they know whether very small microbusinesses or small and medium-sized enterprises will be hit by this cost, and, if so, roughly how many?

I ask those questions to ensure that the Government have considered and understood in full the impact on businesses, and that businesses are supported through this change. Now, the Minister may well offer the immortal words that he will write to me with answers to these questions, but they are important, and they should be addressed, preferably today. I know that the Government will be taking steps to inform businesses about the regulations and the changes, through webinars and so on, but I hope they will ensure that businesses of all sizes get the information they need when they need it.

As the Minister said, these are largely technical changes relating to our change in EU membership and the new Windsor framework. I look forward to the Minister’s response, and I hope he can address some of these issues in the time I have given him.

I can see no one indicating they want to speak, so I call the Minister to respond.

I am grateful to the shadow Minister for her important points, and I thank the Committee for its consideration.

On the costs to businesses, the majority of businesses likely to be impacted are SMEs, with micro and small totalling 91% and medium being 8%. Prior UK CA changes were applicable to all businesses, so no business is likely to be impacted more than another.

On the impact assessment, according to the OPSS business population estimates in 2022, 5,445 businesses in the UK were subject to ATEX regulations. As that is an estimate, we provide a 10% upper and lower band, resulting in a high estimate of 5,900 businesses and a low estimate of 4,900. Firms would incur a familiarisation cost in the first year they were made aware of the changes. The cost is around £13,000.

On the points the hon. Lady raised about consultation, where there have been previous, similar instruments in this area, informal consultation did take place with a good cross-section of stakeholders, including trade associations and other industry representative bodies across the product areas covered by the instrument. Stakeholders were supportive of the need to maintain a functioning product safety and metrology regime on EU exit that mirrored the framework in operation the day before EU exit as closely as possible. As the hon. Lady rightly pointed out, an impact assessment has not been prepared for this SI, because measures resulting from the Windsor framework are out of scope of assessment.

To conclude, it is vital for the reasons I am about to summarise that this instrument comes into force in Northern Ireland. It is needed to properly implement the Windsor framework with respect to ATEX products. It achieves its main purpose by amending the Northern Ireland ATEX regulations to reflect the fact that the UK is no longer part of the EU and by introducing provisions on the UK(NI) marking, which will enable UK conformity assessment bodies to assess ATEX products for the Northern Ireland market and ensure conformity. The impact of the changes is likely to be very low for businesses and to be associated with familiarisation with the new UK(NI) marking requirements and the labelling itself. I am happy to commend this instrument to the Committee.

Question put and agreed to.

Committee rose.

Draft Industrial Training Levy (Engineering Construction Industry Training Board) Order 2023

The Committee consisted of the following Members:

Chair: Mr Virendra Sharma

† Drax, Richard (South Dorset) (Con)

† Fabricant, Michael (Lichfield) (Con)

† Fell, Simon (Barrow and Furness) (Con)

† Glindon, Mary (North Tyneside) (Lab)

† Halfon, Robert (Minister for Skills, Apprenticeships and Higher Education)

† Henry, Darren (Broxtowe) (Con)

† Hollern, Kate (Blackburn) (Lab)

† Johnson, Kim (Liverpool, Riverside) (Lab)

Lavery, Ian (Wansbeck) (Lab)

Lewis, Sir Brandon (Great Yarmouth) (Con)

McDonnell, John (Hayes and Harlington) (Lab)

† Morrissey, Joy (Beaconsfield) (Con)

Osamor, Kate (Edmonton) (Lab/Co-op)

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

† Timpson, Edward (Eddisbury) (Con)

† Webb, Suzanne (Stourbridge) (Con)

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

Susie Smith, Committee Clerk

† attended the Committee

Fifth Delegated Legislation Committee

Wednesday 12 July 2023

[Mr Virendra Sharma in the Chair]

Draft Industrial Training Levy (Engineering Construction Industry Training Board) Order 2023

I beg to move,

That the Committee has considered the draft Industrial Training Levy (Engineering Construction Industry Training Board) Order 2023.

It is an honour to serve under you, Mr Sharma. The draft levy Order we are here to discuss is for the Engineering Construction Industry Training Board, the skills, standards and qualifications body for the engineering construction workforce of Great Britain. That is not to be confused with the Construction Industry Training Board, otherwise known as the CITB, which is a different industrial training board that is not under discussion today.

The engineering construction industry consists of contracting companies and their supply chain that collectively are responsible for designing, building, maintaining, repairing and decommissioning some of the UK’s most critical national infrastructure, such as conventional and renewable power generation and oil and gas, as well as sectors such as water treatment, pharmaceuticals, food processing, steel and cement. The industry is core to building the infrastructure needed to power the economy and grow our energy independence.

When I spoke at last month’s The Times Education Summit, I set out how I frame the links between education and life outcomes in the field of work through a “ladder of opportunity”. A critical rung on that ladder focuses on technical education and training to meet the needs of employers. That is not just for young people at the start of their career history, but about improving attainment in adult skills across the country and reversing declining participation in adult learning and the workforce. We must strive to ensure that such a ladder is metaphorically available to all, not drawn up, and the drawbridge to life-changing education is not closed due to background or age. Everyone must be able to access the education and skills opportunities that lead to good job outcomes.

The Government are clear that engineering construction is integral to achieving the objectives set out in the “Powering Up Britain” strategy announced in March. However, the industry will need to continue to increase the volume of skilled workers coming into the industry in order to deliver on the key projects needed to achieve our objectives. That includes, but is not limited to, the retrofitting of industrial sites with carbon capture and hydrogen production technologies; the further expansion of offshore wind; and increasing our plans for the deployment of civil nuclear to provide up to 25% of our projected electricity demand by 2050, as envisaged in last year’s “British Energy Security Strategy”. That is where the work of the ECITB is critical. Over the 2023 to 2025 strategy period, the ECITB has committed to allocate up to 48% of its grant funding on new entrants, while the remaining 52% will support the upskilling of existing workers. That is vital to boosting the number of workers entering the industry and gaining the requisite skills required by employers.

In principle, I welcome the motion that my right hon. Friend is putting forward, as we need to improve skills in all sorts of areas. However, I note that the levy will now raise about £30 million a year. Is my right hon. Friend sure that that amount will not damage the very industries it is meant to help?

I thank my hon. Friend for his question. Far from damaging the industry, it will actually help the industry, because that £30 million ensures grants, scholarships, training opportunities and skills for all these key industries in engineering construction. I would actually say that that money is a good thing. Do not forget, by the way, that 87% of the members of the Engineering Construction Industry Training Board voted in favour. No one is imposing this on anyone; they voted in favour of the levy.

The draft order will enable the ECITB to raise and collect a levy on employers, as I just described, in the engineering construction industry. It uses the levy to provide targeted training grants to employers to drive up skill levels and incentivise training that would otherwise not take place. The strategy has a clear focus on tackling the shortfall in the number of skilled workers essential to the construction of planned infrastructure projects, including supporting apprenticeships and building on alternative entry programmes such as the ECITB’s scholarship programme and skills bootcamps, as well as upskilling and reskilling programmes for existing workers and those in the allied industries.

The levy will support strategic initiatives to help maintain and develop vital skills in the industry and create a pipeline of skilled workers. Indeed, the ECITB’s strategy has already identified key drivers for change facing the engineering construction industry over the coming decade. Among them is the need to attract more new entrants to replace an ageing workforce and meet demand growth. As part of National Apprenticeship Week in 2017, I took a tour of Hinkley Point C and saw at first hand the work being undertaken to produce a skilled workforce. The ECITB is continuing that work to develop a programme in partnership with EDF to take up to 2,000 unskilled learners through training. Individuals start at a general operative level, with the potential to progress to more skilled roles—for example, in electrical disciplines—with further training. The partnership with industry on skills will give people from all backgrounds a chance to succeed while contributing to the longer-term energy security of the nation.

Before I turn to the details of the draft order, I will highlight that the Department for Education has launched a review of both industry training boards. The review is part of a wider programme across Government to ensure that arm’s length bodies remain effective. Mark Farmer, the CEO and founding director of Cast consultancy, has been appointed to lead the review, which will run until late 2023.

I will turn to the details of the draft order to outline how it will raise the levy. This order is being made to give effect to the levy proposals submitted by the ECITB. Legislation requires the order to set a minimum threshold so as to exempt employers with a small number of employees from the levy. That threshold is set by reference to the annual wage bill of employers. The order is subject to the affirmative procedure and must therefore actively be approved by both Houses before it becomes law. The previous Order, the Industrial Training Levy (Engineering Construction Industry Training Board) Order 2020, introduced a phased increase to levy rates payable by off-site employees while maintaining the same levy rates for on-site employees across its three levy periods. This three-year levy order seeks to maintain the levy rates prescribed for the third phase of the 2020 order currently in place for each of the next three levy periods and for both off-site and on-site employees. Those rates are 0.33% of the earnings paid by employers to off-site employees and 1.2% of the earnings paid by employers to on-site employees for businesses liable to pay the levy.

The ECITB recognises the budgetary pressures on small businesses, which is why this order seeks to retain the current exemption thresholds. Engineering construction employers with an annual wage bill of less than £1 million for off-site employees will not pay any levy. Employers with an average wage bill of less than £275,000 for on-site employees will also be exempted from paying the levy. It is important to note that these exemptions do not stop employers from accessing the same ECITB support available to levy-paying employers. It is projected that approximately 18% of all employers in scope of the levy will be exempt from paying it.

The ECITB has consulted industry on the levy proposals via the consensus process required under the Industrial Training Act 1982. Consensus is achieved by satisfying two requirements: both the majority of employers likely to pay the levy and those employers who together are likely to pay more than half of the aggregate levy raised must agree that the levy proposals are necessary to encourage adequate training. Both requirements were overwhelmingly satisfied, with 85% of employers in scope of paying the levy and who between them are likely to pay 97% of the aggregate levy being supportive of the proposals of the ECITB. I am delighted to say that that is a significant increase from 2019, achieving a 10% increase for both requirements. The draft order has significant industry support, and it will enable the ECITB to carry out its vital training responsibilities. I commend the draft order to the Committee.

It is a pleasure to serve under your chairmanship, Mr Sharma.

As Members will be aware, the engineering and construction industry is central to delivering our net zero ambitions and crucial to addressing the slow growth that has held back our economy these past 13 years. Companies within the engineering construction industry design, engineer, construct and decommission some of the biggest infrastructure projects both in this country and overseas. I was delighted to get the opportunity—I would certainly recommend it—to visit the interconnector site up in Blyth in Northumberland, where National Grid, which is headquartered in my constituency, has undersea cables come ashore, delivering up to 3% of UK electricity.

UK100 estimates that, by 2050, four of five jobs will be supporting the transition to net zero. It is estimated that there is the potential for 1.18 million new jobs by 2050 in low carbon and renewable energy industries. Apprenticeships will be central to ensuring that workers in the sector have the breadth of skills and knowledge required to take up those roles. The sector will need to attract talent from a variety of pools if it is to match the growth in demand. Therefore, it seems fitting that only last week my right hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) set out how the next Labour Government, if elected, would reform the apprenticeship levy to ensure the next generation of workers in the sector.

Our proposal is to transform the apprenticeship levy into a growth and skills levy, giving employers the flexibility that they need and, indeed, want. The Minister will no doubt have seen the article earlier this year by the chief executive of Balfour Beatty, who believes that the apprenticeship levy in its current form has “failed” and that a more flexible skills levy would respond better to employer needs. That is exactly what our growth and skills levy would do, alongside ensuring that every penny of the apprenticeship levy is spent on skills and training, which currently does not happen.

Employers will be able to use up to 50% of the growth and skills levy for flexible, high-quality courses for their workforce, together with the 50% they allocate to apprenticeships. In a speech last year replying to a similar SI, my hon. Friend the Member for Chesterfield (Mr Perkins) questioned whether unpaid traineeships in a sector that is already understaffed were the best way to attract new talent. One advantage of the growth and skills levy is that funds can be utilised to offer paid traineeships or similar initiatives as a pipeline into an apprenticeship, thereby diversifying and increasing the pool of skilled talent.

Looking more closely at this draft order, I understand the need for the changes to the ECITB levy being introduced today and we are supportive of them. This year, the ECITB launched its three-year strategy to ensure growth in the engineering construction industry, backed with £87 million to support workforce training alongside tackling labour shortages and skills gaps. The strategy has been designed to prepare for a boom in project activity for engineering construction employers.

Citing National Grid again, I am aware of the plans, as referenced by the Minister, for electrifying the UK economy and how that infrastructure has to be delivered at pace. But these projects span a range of sectors, including nuclear build and decommissioning, renewables, water treatment, and carbon capture projects linked to the UK’s net zero plans. Given that any future Labour Government have pledged to invest heavily in home insulation, double our onshore wind capacity, increase offshore wind capacity, triple solar power by 2030, and invest in tidal power, we welcome all such ambitions.

As the Minister will already know, there is some resentment among larger employers at having to pay both the ECITB and apprenticeship levies, and it is vital that the ECITB levy adds value to businesses and the sector more widely. The Minister will be aware that, under the Industrial Training Act 1982, the maximum levy is set at 1% of an employer’s total emoluments, unless the Minister thinks a higher levy would be appropriate in the circumstances.

I understand that the ECITB has recommended the 1.2%, broadly supported by its members, as the Minister was saying, and I listened to his response to the hon. Member for Lichfield about what the sector might feel when it is under pressure due to the potential cancellation of contracts and a contraction in the UK economy. Perhaps the Minister could elaborate a little bit more on his assessment of the affordability of the 1.2%, given the other cost pressures facing the sector.

My only other point is about the wider skills agenda, which I think is linked to this. The Government’s change in position over BTECs is welcome, and I wondered whether the Minister has analysed how scrapping well-respected BTECs will impact the engineering construction industry. Given that the Under-Secretary of State for Work and Pensions, the hon. Member for Mid Sussex (Mims Davies), admitted earlier this year that the take-up of the new T-level qualification for construction still falls way behind BTECs, surely this is a matter of utmost urgency.

In conclusion, Labour does not oppose the draft order in its current form, and we support the Government in the hope that this SI has the desired results.

I am grateful to the shadow Minister for his response. I will start by saying that I fundamentally disagree, as he would expect, with Labour’s proposals to dilute the apprenticeship levy. It would halve the number of apprenticeships because businesses would be using the levy for skills rather than apprenticeships, and the apprenticeship levy does what it says on the tin. It is trying to build an apprenticeship nation. He talked about the budget, but he will know that 99.6% of the apprenticeship budget, which includes the levy that is set by the Treasury, was used over the past year.[Official Report, 20 July 2023, Vol. 736, c. 14MC.]

The shadow Minister quoted one company that had questions about the levy, but if I had longer, I could give him a range of quotes from companies that are working brilliantly with the levy, such as Amazon, Google and Virgin Atlantic, which recently spoke at the skills conference about how beneficial the levy was to them.

It is worth noting that our engineering manufacturing apprenticeships were up by 24% over the past year. Construction apprenticeships were up 31% over the past year. He talks about paying a the ECITB levy and the apprenticeship levy, but they are very different. They have very different roles. The apprenticeship levy, as I said, is a Ronseal levy—it does what it says on the tin—while the ECITB levy is for used for all kinds of skills training for existing employees, for grants, and for scholarships.

On affordability, I just need to clarify what I said to my hon. Friend the Member for Lichfield—he is newly knighted, so many congratulations to him; it is much deserved.

I declare an interest in that I used to work for him as a junior researcher many, many moons ago in my younger days, so I am very proud of what my former boss has achieved.

Some 85% of employers in scope of paying the levy, that are likely to pay 97% of the aggregate levy between them, supported the proposal. They will know whether they can afford it, and they have voted for it in vast numbers. It is not for me to question the businesses that voted for the levy; it is up to them to decide whether they want to pay it. As I said, the ECITB levy is very different from the apprenticeship levy.

On BTECs, I discussed this with the hon. Member for Chesterfield (Mr Perkins), the other shadow skills spokesman, in the estimates debate last week. We are proud about our move towards T-levels, which are going to be world-beating qualifications. We have T-levels in engineering and in construction. As the hon. Member for Warwick and Leamington knows, we have had reviews of BTECs and alternative qualifications, and those reviews are continuing. We are getting rid of those alternative qualifications that either have very low uptake or poor outcomes—outcomes that we do not think are good enough or that significantly overlap with T-levels.

However, there is nothing to stop employers getting together to design new qualifications—all our new qualifications are employer-led—that are much more suited for the 21st century and, more importantly, more suited for people getting good outcomes. The whole purpose is to move to T-levels, and we are creating a T-level pipeline of engineering, construction, higher technical qualifications being taught in over 70 institutions up and down the country. That will be expanded.

We are spending £300 million on new institutes of technology—21 across the country. There is the state-of-the-art Rolls-Royce skills institutions in collaboration between FE and higher education, teaching HTQs and degree apprenticeships as well. Then separate to all that—this is again why Labour’s proposal for a skills levy to dilute the apprenticeship levy is wrong—we already are spending billions of pounds on skills, on bootcamps, on the Multiply maths programme, and on the higher technical qualifications that I that I mentioned, including 400 free level-3 courses that millions of people are doing across our country. We will have 60,000 people doing boot camps by 2025. We are doing a huge amount of work on skills and a huge amount of work on apprenticeships, ensuring quality standards, with over half of the 670 in science, technology, engineering and maths. We are doing everything possible to ensure that we are on the right path for skills

In conclusion, I thank the Committee for today’s debate. I reiterate that if the levy were to cease, there would likely be a serious deterioration in the quality of training, creating a deficiency in skill levels and capacity and, crucially, leaving the sector unable to deliver key projects vital to the UK’s economic growth. However, it is not solely up to the levy order to address these issues, our Government continues to be on the front foot, which is why we are building a skills system that is employer-focused, high-quality, fit for the future, and flexible enough to lead to more people completing high-quality courses that meet employers’ needs.

I should also mention the T-level transition year, which is preparing people for our state-of-the-art vocational technical qualifications. Our skills reforms will help to create more routes into skilled employment in sectors the economy needs, such as engineering, digital, clean energy, and manufacturing, so more people can secure well-paid jobs in their local areas. That includes supporting more people to complete an apprenticeship or HTQ, rolling out more T-levels, and establishing our network of 21 institutes of technology. We are also expanding our skills bootcamps and free courses for jobs programme. This enhanced offer for adults will complement apprenticeships.

Question put and agreed to.

Committee rose.