Monday 21 November 2022
Biocidal Products (Health and Safety) (Amendment) Regulations 2022
Considered in Grand Committee
My Lords, this draft statutory instrument was laid before Parliament on 18 October. It makes a technical change only and there are no policy changes. It relates to biocidal products, which are used to control harmful organisms and include disinfectants, insecticides and rodenticides. These products have important roles in protecting human health and critical infrastructure and it is therefore essential to society that legal supply of these products is not disrupted.
Although biocidal products are critical to society, they can pose risks to human health, animal health and the environment if used incorrectly. Therefore, to allow a biocidal product on to the GB market, a two-step authorisation process is in place. First, the active substances used in biocidal products must be approved. Approval involves a rigorous scientific evaluation to ensure safety and efficacy—a process which takes one to two years and costs approximately £180,000. If an active substance is approved, applications can be made to authorise biocidal products containing that substance.
This evaluation looks at the safety and efficacy of the formulation, a process which takes about a year and costs approximately £25,000. As noble Lords will understand, the applications are large dossiers of scientific data and require complex evaluation and assessment by a range of specialist scientific disciplines to ensure that there is no danger to human health, animal health or the environment.
The HSE operates a cost-recovery model so applicants bear the full cost of processing applications. Biocidal products are regulated under the Great Britain biocidal products regulation, which was retained following EU exit. The authorisation process in Great Britain is similar to that in the EU, except where references to the EU arrangements were replaced by domestic arrangements.
Also retained in the legislation are the legal deadlines by which applications should be processed. These legal deadlines were in place to ensure consistency across the EU over how long was given to process applications and to provide transparency to applicants. While the UK was still in the EU, a steady stream of applications was processed across EU member states although, even at that time, deadlines were often missed.
In preparation to meet our ambition for the HSE to become a world-class standalone chemicals regulator following the UK’s departure from the EU, significant investment has been made to increase the HSE’s capacity and capability and to embed new processes and procedures. Through a major transformation programme, the HSE’s headcount for its chemicals regulation division has increased by around 40%, with continued ongoing significant investment in people and IT.
As part of the EU exit preparations, transitional arrangements were put in place to ensure a smooth transition for business to the new domestic systems. These arrangements required businesses which had applications in process at the end of the implementation period to resubmit them to the HSE by deadlines in 2021 if they wanted to retain access to the GB market. Under these arrangements, biocidal products already on the GB market could continue to be made available until their application was processed. It was unknown at the time how many resubmissions would be made by applicants to access the GB market until the deadlines had passed.
However, I am pleased to report that over 70% of biocides applications seeking access to the UK market under the previous EU system have been resubmitted to GB. This clearly shows that industry has faith in the GB market and the HSE as the regulator but generates a greater workload than was originally anticipated. As a result, it is not possible to process the large one-off influx of biocidal product authorisation applications within the legal deadlines in place.
This issue has been compounded by the HSE’s loss of access to EU databases holding historical reports which contain scientific information relevant to processing these applications. A resolution should be in place by the time this information is required to process the applications. The HSE will also consider what future digital solutions may be required once a resolution has been implemented; however, the issue has caused some further delays in processing applications. Because these issues have arisen directly from the EU exit, the legal deadlines in the Great Britain biocidal products regulation amount to deficiencies in retained EU law. Therefore, the appropriate course of action available to the HSE is to make amendments through the statutory instrument under the powers to remedy deficiencies in the European Union (Withdrawal) Act 2018. The changes proposed by this statutory instrument are straightforward: the legal deadlines in place to process biocidal product authorisation applications will be temporarily extended by an additional five years. The period of five years has been derived from resource modelling from the transformation programme I referred to earlier. It represents the amount of time that the HSE forecasts it will take to address the backlog and to return to a position where applications can be processed within the original legal deadlines. I trust that it is understood that processing applications is not a rubber-stamping exercise and that it requires highly trained staff who simply cannot be brought in in large numbers at short notice.
The amendment to these legal deadlines should have no impact on businesses, and an extension of the deadlines themselves does not provide any additional cost to the applicant. Instead, this statutory instrument provides legal certainty that where biocidal products are on the GB market awaiting the outcome of their application they can remain there, which may not otherwise be the case had the legal deadlines been missed. This, in turn, also ensures that there is no disruption to the legal supply of essential biocidal products while the backlog of applications is cleared. A small number of new biocidal products authorisation applications will also be affected by this instrument. However, these applications will be prioritised to ensure that where businesses are waiting for authorisations before they can supply their products, they will not experience any delays.
Finally, this statutory instrument also adds an additional transitional measure which was an oversight in the previous EU exit statutory instruments. This allows a type of biocidal product authorisation application called “same product applications” to transition to GB and be treated in the same way as other applications. This also does not have any impact on businesses and is a technical correction to ensure that the biocide regime is now fully functioning as intended. I can confirm that consent to make this statutory instrument has been obtained from Ministers in the Scottish and Welsh Governments, in line with normal conventions. The regulation of biocides in Northern Ireland follows separate arrangements under the Northern Ireland protocol and is not affected by this instrument.
I hope that colleagues of all parties will join me in supporting the draft regulations, which I commend to the Committee.
My Lords, I thank the Minister and civil servants for the details in the Explanatory Memorandum. I also put on record from these Benches that we too are pleased that arrangements have been made with devolved states; there have been two or three incidents recently where trying to box and cox between those in time to get things out has been problematic, but if that has been able to happen, that is fine.
I should say from these Benches that we do not have a problem with the content of the SI; that is absolutely fine. I just say that, helpfully, the Secondary Legislation Scrutiny Committee, in its 16th report for this parliamentary year, noted in paragraph 4 that
“the Explanatory Memorandum does not indicate what progress the HSE has made in the last three years in reducing the backlog, or whether HSE is building up its own database to prevent”
the problems. I therefore want to ask two questions arising from that. The Minister referred to improvements and understanding that there were pressures so, first, it would be helpful to know whether there is a specific figure available for that backlog and how it is has been reduced. Or is it in fact worsening—which I suspect may be the case—or is it static, having worsened before it came down? On the issue of the Government not being able to access the EU databases now, is there a timescale for the alternative arrangements? That will obviously also help to speed things up.
In reading the Explanatory Memorandum, I have to offer an award to the author in that it is beautifully written and one has to look quite hard to see the problem underlying why we are asked to make this technical SI arrangement. It would be fair to say that the sentence in paragraph 3.1:
“This instrument is formally prospective but will have some retrospective effect”—
in other words—
“this temporary future change will have some effect on past arrangements”,
is glorious and worthy of “Yes Minister”. But I understand the problem. Civil servants are helpfully trying to cover Ministers’ embarrassments, which I will come on to in a minute.
I note that there is a temporary extension for a period of five years to legal deadlines. I particularly turn to paragraph 7.8 in the Explanatory Memorandum, which refers to the “temporary backlog of applications”, and paragraph 7.9, which says that the Health and Safety Executive
“will not be able to meet the legal deadlines”.
The Minister said that the Government intend for us to have a world-class chemicals industry, with world-class safety arrangements. However, the arrangements that were put in place as a result of Brexit and the transitional period mean that a very large number of organisations have had to resubmit applications. I thought it was interesting in the context of Prime Minister Truss—one Prime Minister ago—vowing to scrap remaining EU laws by the end of 2023, that many people said would risk a bonfire of rights. However, it has also created, and will create, an enormous backlog of work for the Civil Service and government agencies. The scale and complexity of the task ahead will be difficult in the context of Civil Service cuts. Can the Minister say how her department and the agencies that report to her—in this instance, I obviously refer specifically to the Health and Safety Executive—will be protected from the proposed Civil Service cuts in order to deliver the extended timescale that is now listed in this particular SI?
This is not just the past Premier’s ambition: about 10 days ago, the Daily Express had a headline
“Brexit bonfire of EU laws set to go ahead with no delay as PM confirms date for axing”
the EU legislation. Can the Minister help to explain how not just this one statutory instrument, but the many thousands of statutory instruments can be in a bonfire by the end of 2023 when we are here today talking about the practical effects on one government agency—the Health and Safety Executive—to make it workable to catch up on the backlog? That is before this Government have even redefined the datasets they were using with the EU to make this job possible.
During the Brexit referendum, there were many debates in public where those of us on the other side of the argument warned that there would be a very particular problem with SIs and laws. In fact, one of my colleagues in the House of Lords, who I will not name, said to me after the Brexit referendum, “Well, that’ll see us out”—we’re both about the same age—“we’ll be doing changes to EU directives in SIs for the rest of our working days in your Lordships’ House.” We are beginning to see the practical consequence of that. Can the Minister set out what the Government plan is to achieve the current Prime Minister’s ambition to remove all EU law in 13 months’ time versus the practical effect that government departments and agencies are currently facing?
My Lords, I thank the Minister for her introduction to these regulations, the noble Baroness, Lady Brinton, for her very interesting contribution, and officials for supplying some useful information.
As we have heard, these regulations are needed because the post-Brexit arrangements made for authorising biocidal products in Great Britain are not, shall we say, working quite as smoothly as one might have hoped at an early stage of the process. After Brexit, the process of authorising the “active substances” in biocidal products was transferred from the EU to the Health and Safety Executive. There was a three-year transition period during which products whose active substances had previously been authorised could continue to be sold in GB using the certification. These regulations propose that those products can carry on being sold in Great Britain until the end of 2027, whether or not the HSE has processed their application for authorisation—I hope I have that right; I read them several times but I would not swear to it. However, the Minister can correct me in her response if I have not.
The noble Baroness, Lady Brinton, mentioned the comments by the Secondary Legislation Scrutiny Committee, which helped us to understand that the big problem is in fact a huge backlog primarily caused by the fact that the HSE no longer has access to much of the data stored in EU databases on which previous assessments have been made. Therefore, we need this instrument to give legal certainty that at least until the end of 2027 biocidal products can continue to be sold and used legally while the HSE works its way through the backlog of applications for authorisation.
I too have some questions. First, when did the HSE know that it would not have access to the data in the relevant databases that was needed to make these assessments? Presumably, it was part of the negotiations for Brexit; did it know in plenty of time? If so, why were alternative arrangements not put in place for some time? Nobody could suggest that the Brexit process passed swiftly—I feel that it has been happening for most of my adult life, but even if it was not that long, it was not a speedy process. Was there not time to get ahead of the curve?
I would be interested in the response to the questions raised by the noble Baroness, Lady Brinton, about what the agency is doing to build up its own database and what progress it is making on reducing the backlog.
What assessment has been made of the possible risks of the HSE not having access to the data it needs to make timely and expert assessments of biocidal products? I understand that the EU was doing a rolling review of active biocidal substances, so presumably there are products awaiting authorisation that have not been reached. So their active substances had not yet been reviewed by the EU, yet, at the moment, these regs provide for them to be legally marketed until the end of 2027 without any HSE authorisation. Can the Minister therefore tell us what is the longest period a product could be on the market since either its active substances were approved either by the EU or the HSE?
What happens if evidence emerges that an active substance is not as safe as it had perhaps been thought or indeed as it was known to be when it was approved by the EU? I presume that the HSE or other bodies have powers to act if someone brings evidence to them saying, “Evidence has emerged that this product is not as safe as we thought it was.” However, since there will not be any guaranteed systematic review of the evidence for quite a long time, what if that evidence emerges elsewhere and is not drawn to the attention of the agency? Has a plan been put in place to consider the impact of that? If a product were to contain, say, two active substances which had been approved separately by the EU, how would we know if they would interact and whether the product is safe if the product is not being authorised by the HSE for, potentially, a number of years?
Finally, to follow on from the question from the noble Baroness, Lady Brinton, the HSE now has an enormous job to do. The Minister mentioned an increased head count. What I am interested in is whether she can assure the Grand Committee that her department has taken the view that the HSE has access to the numbers of people and the expertise that it needs to keep British people safe in this area. I look forward to her reply.
I thank the noble Baronesses, Lady Brinton and Lady Sherlock, for their contributions. I shall try to answer those questions. If there are some that I cannot answer, I shall write and clarify at a later point.
First, the noble Baroness, Lady Brinton, asked about the backlog in the past three years. It is important to clarify that the HSE has been working on the backlog of biocidal product applications for only around a year. Three years is a misleading timeframe, because it fails to account for the EU exit implementation period and, after that, the time given to industry applicants to resubmit their applications to the HSE. In this year, the HSE has added the details of all resubmitted applications and associated data into their systems and initiated work on around 20% of these. This is in line with plans to clear the backlog of applications. The HSE’s operational planning assumptions are that it will commence 50 applications per year over the coming years, which means that, by the end of the five-year period, it anticipates having completed the roughly 200 applications received after the transition period or be on track to complete them with the normal timeframes in the legislation. After that, the HSE will return to operating within the existing deadlines so that the deadline extension can lapse.
The noble Baroness, Lady Brinton, also asked a question about having lost access to the EU databases. The EU databases contain certain historical information from the EU regime, which it would be too costly to recreate in Great Britain. Therefore, at the same time, the HSE is exploring options for how it can best operate the GB regime, on the assumption that this information will remain unavailable. Working on this is at an advanced stage, and appropriate solutions will be implemented as soon as they are fully developed and tested. I do not know how we would plan to communicate that once it is done, but I shall write to noble Lords.
I am very grateful for the Minister’s response, but can I decode it as saying that the HSE is having to start again from scratch? It is not quite clear; I understand the part about not being able to use the EU databases, but do I understand that what is happening in the background is that we have had to start again completely from scratch with a completely blank sheet of paper?
My understanding is that, with the information that the HSE has, it has to start from a very low point, but it will not be without anything—as I understand it. I am told that biocide evaluations are complex regulatory assessments involving a number of scientific specialisms, so developing solutions is inevitably taking some time. I am not sure that that answers the question that the noble Baroness has challenged us with—whether we are starting from scratch, or whether we have information with which we can start it off. In fact, I can now say that we are not starting from scratch, but I think that I owe both noble Lords a bit more on that, and I shall place a copy of a letter in the Library. They can be comforted that we are not starting from scratch, but I am not sure where we are starting from—but there we are.
The noble Baroness, Lady Brinton, asked about retained EU law. The Department for Work and Pensions and the Health and Safety Executive will continue to assess REUL to identify potential impacts. We are committed to ensuring that health and safety legislation continues to be fit for purpose and that our regulatory frameworks operate effectively following the sunset of the REUL—forgive me for not reading the term out in full.
The noble Baroness, Lady Sherlock, asked about mixing two authorised products into one—a chemistry set comes to mind when answering this question. The new product will require its own authorisation. It will not be allowed on the market until it has gone through its own risk assessment, biocidal product assessment and authorisation
The noble Baroness also asked when the Government found out that we had lost access to the EU databases. The EU withdrawal agreement provided that the UK would no longer have access to the relevant EU databases from the end of the implementation period. Since then, as I said, the HSE has been assessing a number of options to manage biocidal product authorisations, taking into account the loss of access to historical information in EU databases, such as use of publicly available information. I am sorry that it is not possible to give a timeline, but work is at an advanced stage and appropriate solutions will be implemented as soon as they are fully developed and tested.
The noble Baroness raised the issue of resources, which is important. The total budget for the HSE’s chemical regulation division has grown by 39%, from £22.4 million to £31.2 million between 2018-19 and 2022-23, reflecting the HSE’s need for increased resources for its post-EU exit responsibilities. The HSE’s current focus is on building out from our initial day one operating capacity and laying the foundations for its long-term future operation. The funding the HSE has received to date is sufficient to support that work, and I am not aware of any attempts to reduce it in the current climate.
The noble Baroness, Lady Sherlock, asked about the risks of leaving products on the market. There is a multi-regulator approach to the regulation of biocides not yet authorised under BPR using a jigsaw of legislation, including product safety law and earlier pesticides legislation. This provides proportionate powers for the appropriate authorities to take the regulatory action if products are identified that pose risk to people, animals or the environment.
The instrument will provide the necessary extension to the legal deadlines—
On that last point, the question I was trying to ask—I probably phrased it very poorly—was that I realise that if information comes to the Government’s attention, by some tool or agency, a means will be found to do something about it. But it is quite possible that, for a product that has been on the market without review for a long time and is used around the world, evidence may have appeared elsewhere which has not been brought to the Government’s attention. The point about systematic reviews is that one presumably goes out looking at the evidence. Is there any concern that, the longer products are on the market, the greater the risk that some previously unclocked problem may arise?
I will write to the noble Baroness about that. I would assume—correctly or incorrectly—that the Health and Safety Executive is keeping up with developments by other countries’ health and safety agencies, but let me write to the noble Baroness to clarify that point. If, when she gets the letter, she is still worried, she may come back to me and I will do further work on it.
To conclude, the instrument will provide the necessary extension to the legal deadlines to enable HSE to process effective biocidal product authorisation applications. This will provide legal certainty to businesses that biocidal products on the market awaiting their application to be processed can remain there. In turn, biocidal products essential to the functioning of society can continue to be made available and used. I commend the instrument.
Cessation of EU Law Relating to Prohibitions on Grounds of Nationality and Free Movement of Persons Regulations 2022
Considered in Grand Committee
My Lords, this instrument was laid before the House on 20 October. It disapplies retained EU equal-treatment provisions relating to nationality and freedom of movement so that they cease to be recognised and available in domestic law in relation to access to social security, statutory payments, social assistance, housing assistance, education, training, apprenticeships and childcare-related matters.
These retained EU provisions have been redundant since the end of the transition period. The withdrawal agreement provides the necessary protections for those EU citizens who were resident in the UK before the end of the transition period and their family members. By disapplying the redundant provisions, this instrument furthers the Government’s aim of ensuring that all UK law is right for the UK. Correcting this deficiency in retained EU law will bring greater clarity to the UK statute book. I am satisfied that these regulations are compatible with the European Convention on Human Rights.
Prior to the UK’s exit from the EU, these equal-treatment provisions granted EEA and Swiss citizens rights to access benefits, services and educational entitlements on the same basis as UK nationals, if their presence in the UK was based in the exercise of specific freedom of movement rights. The UK voted to leave the EU and, as a result, freedom of movement between the UK and EEA countries came to an end on 31 December 2020. Equal-treatment provisions based in freedom of movement arrangements therefore became redundant.
Disapplying these redundant equal-treatment provisions clarifies the situation that is already in effect for EEA and Swiss nationals coming into the UK. In line with the Government’s manifesto commitment, EEA nationals are now treated on an equal basis with other non-UK nationals arriving in the UK after the end of the transition period, with the exception of those EEA or Swiss nationals granted status under the EU settlement scheme.
While the instrument does not effect a policy change for any group of EEA or Swiss nationals in the UK, I particularly emphasise that it in no way alters the rights of EEA or Swiss nationals that are protected under the EU-UK withdrawal agreement, the EEA European Free Trade Association separation agreement and the Swiss citizens’ rights agreement. They will continue to be able to access benefits and services on broadly the same basis as they did before the end of the transition period, and their rights to do so are protected by the European Union (Withdrawal Agreement) Act 2020. Additionally, we already have domestic law that protects individuals from discrimination. Retained EU provisions based on freedom of movement are therefore not only redundant but unnecessary.
In summary, this instrument is a technical correction of the statute book that will address a deficiency arising from retained EU law. I therefore commend the regulations to the Committee.
No other takers—I am shocked, given that it is such an exciting instrument. I thank the Minister for her introduction to these regulations, in which I am interested. I was going to say, “and all noble Lords who have spoken”, but it is just me. I am also grateful for the briefing on the regulations from the Minister’s officials. I confess that, despite reading everything I could, I am struggling to work out what these regulations actually change, if anything.
I read a summary of this instrument done by the House of Commons Library for a colleague at the other end. It noted that Parliament has already legislated to end the underlying right of free movement for EU citizens moving to the UK. The Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020 repealed the main provisions of retained EU law relating to free movement and disapplied the equal treatment obligations supporting free movement, in so far as they were inconsistent with the UK’s immigration laws. However, the note went on to say that
“these equal treatment rights ‘would continue to apply in non-immigration contexts unless disapplied’. The draft measure now disapplies those equal treatment rights in the specific areas set out in the schedule, including social security payments and housing.”
The Minister said that these rights “became redundant” as a result of the 2020 Act having ended the underlying right to free movement. I am still not clear as to exactly what rights may still exist that this instrument is disapplying. Can the Minister clarify that? I can see that the aim is to make it clear that EEA nationals who are not subject to the settlement arrangements should have the same rights as anyone else subject to the points-based immigration system going forward. I am just not clear what, if any, rights they have now that they will not have once this instrument becomes law. If the answer is none, I ask the Minister to say that categorically for the record. It may be about legal clarity; I would just like to be really clear.
I want to make two other points. Regulation 4 makes changes to Regulation (EU) No. 492/2011. I looked this up; it turns out that it amends Article 7—it prohibits different treatment of EU nationals in respect of employment, social and tax advantages—to say that this will not apply in relation to the matters in the Schedule to this draft instrument, namely: social security, social assistance, housing, education and training, and childcare. Do Article 7 rights continue to apply to any other areas?
Finally, the instrument also removes Articles 9 and 10, which provide for the rights of EU nationals in relation to social housing and to state education for their children. Are there any other rights that EU or EEA nationals still enjoy that have not been repealed? If the answer is that any such rights that exist will be swept away by the sunset provisions of the advancing retained EU law Bill, why not wait for that rather than using Section 8 powers? I look forward to the Minister’s reply.
I thank the noble Baroness, Lady Sherlock, for her contribution and questions and congratulate her on her stamina in these matters. I will try to answer all the points raised.
The noble Baroness asked how the EU provisions to be disapplied became deficient or redundant. Prior to the end of the transition period, through the EU freedom of movement of persons rights, EEA and Swiss citizens had access to certain benefits, services and education entitlements. When the freedom of movement of EEA citizens ceased at the end of the transition period, the application of these rights became redundant, as the rights granted by these provisions have been redundant since the close of the transition period. They represent the deficiency arising from retained EU law. The regulations clarify the situation already in effect.
The noble Baroness asked what rights the provisions to be disapplied still grant. First, let me clarify that these regulations should not be understood as implying that these provisions continue to grant rights outside of the relevant matters as per Regulation 1(4). The department involved in these regulations examined the provisions as they relate to the benefits and services covered in the relevant matters and is confident that these rights are redundant as they relate to the relevant matters. We are disapplying them to clarify the position that is already in effect.
The noble Baroness, Lady Sherlock, asked what would happen if these provisions were allowed to remain on the statute book. These redundant provisions are not in line with domestic legislation on immigration and access to benefits and services. They therefore create confusion in the statute book. Not disapplying them would leave this deficiency in UK law unaddressed. It could also mean that EEA nationals who are not eligible for benefits or services could bring legal challenges against the Government to try to bypass domestic legislation by instead relying on those retained EU freedom of movement provisions. This would set back progress on implementing the public’s decision to leave the EU and end freedom of movement.
The noble Baroness asked me to clarify whether that was a change in policy. The answer is categorically no. These regulations do not effect any policy change; they are a technical rectification of the statute book to clarify the position already in effect after the end of the transition period. She asked why the regulations were being laid now. Why not let these retained provisions be sunsetted by a reform and revocation Bill? Work on the regulations was initiated independently of the Retained EU Law (Revocation and Reform) Bill under Section 8 powers from the European Union (Withdrawal) Act 2018. Those powers allow Ministers to address deficiencies in retained law. Section 8 powers expire on 31 December 2022, thereby creating a need to lay these regulations.
The noble Baroness also asked whether any rights still applied. Rights and entitlement for EEA citizens set out in the withdrawal agreement and domestic legislation still apply.
These regulations are a technical rectification to ensure that UK law functions with legal clarity. The retained EU provisions that they disapply are redundant, and that deficiency should be corrected. This instrument will not change the policy in place regarding any rights currently enjoyed by EEA nationals in the UK. However, it will bring greater clarity to the UK statute book. I therefore commend the regulations to the Committee.
Football Spectators (Seating) Order 2022
Motion to Take Note
My Lords, I express gratitude to the usual channels for giving us the opportunity to debate the order. I tabled a take-note Motion because I felt that the reintroduction of standing at our main football grounds was a sufficiently major change to the licensing regime enforced by the Sports Grounds Safety Authority to justify a short debate.
The all-seater requirement for the top two divisions of English football was a direct consequence of the reports by Lord Justice Taylor into the Hillsborough stadium disaster in April 1989. It was his report that caused the abandonment of the central provision of the Football Spectators Act that would have made it compulsory for everyone attending a match at a designated ground to be part of a national membership scheme.
It is often forgotten that the Act was introduced as an anti-hooliganism measure, particularly as a result of appalling disorder at a cup tie between Luton Town and Millwall, which caused huge offence to Prime Minister Margaret Thatcher. That led to a breakdown in the relationship between the Government and the Football Association, whose secretary rather unwisely suggested to her face at a meeting I attended in Downing Street that Mrs Thatcher should get her hooligans out of football.
Lord Justice Taylor was scathing about a compulsory membership scheme and said that it would have made the Hillsborough disaster worse. I believe that I am the only Member of your Lordships’ House to have been at that match and to have witnessed the horror of that afternoon. I certainly agreed with what he said about a compulsory membership scheme. Instead, the Football Spectators Act was pressed into service as the means to enforce the all-seater rules, which I always supported, although there was some opposition from some of the fan groups.
Until December 2018, successive Governments were content to leave those rules in place and were able to point to general improvements in football crowd behaviour as one of the benefits of that, even though many fans at a number of clubs took no notice of the no-standing rules, particularly behind the goals, and stood up in their seats. This caused considerable disquiet among a number of supporters, who were concerned by the consequences for family areas where young children were present and for disabled fans. I declare an interest as vice-president of the Level Playing Field charity, about which I will say more in a moment.
The Sports Grounds Safety Authority published a report on the Safe Management of Persistent Standing in Seated Areas, in which many of the dangers were described. It also pointed out that operating licensed standing areas had the additional benefit of removing
“the need for safety teams to make spectators sit down, thus reducing potential conflict between staff and spectators.”
Perhaps the Minister can comment on what seems to be a rather unusual aspect of this debate. It is clear that one of the reasons for abandoning all-seater stadiums is the acknowledgment that the rules could not be enforced and that lawbreakers should, in effect, be rewarded by getting the law changed. Does he feel that this establishes an undesirable precedent for other aspects of public policy?
The Conservative manifesto for the 2019 election contained a commitment to
“work with fans and clubs towards introducing safe standing.”
This was followed by what was called the early adopter programme, launched by DCMS and the Sports Grounds Safety Authority, which provided for licensed standing in seated areas at five football clubs—Cardiff City, Chelsea, Manchester City, Manchester United and Tottenham Hotspur—from the start of the 2022-23 season. This was followed, on 4 July this year, by the laying of the statutory instrument we are debating today. This provides for all football clubs to allow for standing in areas of their grounds where the seating accommodation has been adapted.
I referred earlier to my involvement with Level Playing Field, and I have some questions that I hope the Minister will be able to answer. I should make clear that Level Playing Field has always maintained an entirely neutral stance in the safe standing debate. But that stance would change if the introduction of standing compromised safety or reduced the matchday experience of disabled supporters in respect of things such as sight-lines, discrimination or abuse, misuse of facilities, or displacement. Disabled supporters should be able to choose whether they are in the safe standing section or not. Choice is important and there must be facilities for them, including accessible toilets and dropped counters at refreshment kiosks. It is vital that if parts of a ground are to become designated standing areas, all spectators—particularly disabled ones—are safe from crowd surges and crowd collapse.
It is good that recommendations and guidance relating to disabled supporters were included in the SGSA’s document SG01, Safe Standing in Seated Areas, published in July this year. But there are concerns as to how the impact on disabled spectators and the inclusion of disabled spectators will be mitigated, implemented or enforced.
I have a few questions for the Minister. Will observance of the guidance become a part of the safety advisory group’s duties and responsibilities? How will the facilities for disabled spectators be monitored to ensure that they have been included in the safe standing areas, with spaces for wheelchair users and easy-access and amenity seats? What measures will be in place to ensure that disabled spectators choosing not to purchase tickets in the safe standing area are not adversely affected? How will persistent standing be dealt with in non-standing areas? How will the potential displacement of disabled spectators be managed? What steps are being taken to ensure effective stewarding in the safe standing areas? Lastly, how will consultation with disabled supporters be conducted and monitored? I have given the Minister notice of these questions and hope that he will be able to answer them today or, if not, in writing later.
To conclude, I repeat my support for the adoption of safe standing areas but urge that it be carefully and continuously monitored. The very last thing we need is any return to the incidents of disorder that did so much damage to the reputation of English football in the past—a reputation that I hope will be enhanced by the performance of the England team at the current World Cup, particularly after that sensational start in the first game this afternoon.
My Lords, I very much congratulate the noble Lord, Lord Faulkner of Worcester, on getting this opportunity to make a little bit of history. There has been a long campaign by many supporters over many years to get government authorities, the Premier League, football authorities and safety groups all to recognise that safe standing—done properly, properly monitored and with the use of the right technology—can work and be safe. It will make very many football supporters throughout the country happy that this has finally happened.
I find it rather ironic, because 22 years ago this week, as Sport Minister, I did an interview for a programme called “Watchdog”—the noble Lord, Lord Faulkner, will probably remember this—and dared to say that I was going to send the Football Licensing Authority over to Germany to visit the Schalke stadium and to see what the Bundesliga was doing with its new technology and the way it was able to adapt its stadiums. I think it was the great sports writer at that time, Robert Hardman, who said that the reaction to what I had said was as if the Minister for Sport had invited Myra Hindley to the cup final. There was an enormous outburst. How could I dare to call for terraces to be brought back? Of course, I was not calling for that at all; I was calling for precisely what we now have.
I congratulate all those supporters who tried so hard over the years to get this to happen—for example, Phil Gatenby, Adam Brown, Standing Areas for Eastlands and a number of other groups that persevered with a very difficult argument. The Premier League was absolutely opposed to it at that time and for a very long time. We were not helped by the Football Licensing Authority. Its chief executive, John de Quidt, told me at one time, “There’s more chance of Martians landing than the safe standing campaign achieving its goals.” We have not had Martians but we have safe standing.
I thank the Government for recognising that this needed to be looked at, could be done and was perfectly safe. I accept what the noble Lord, Lord Faulkner, said. It is important that it is monitored and that we look at things that can make it better, but this is definitely a great step forward and a day to be celebrated by all football supporters.
My Lords, this is one where I find myself slightly conflicted. I did not like the idea of bringing back safe standing, probably because I lived very close to Carrow Road and the violence that was endemic in football for decades occasionally spilled out into the roads close to me. I remember that all-seater stadiums were brought in to stop that organised violence. They were largely successful as part of the packages that went through, but it is well that we remember that.
It was not just the crush. Seating, and the barriers brought in here, may well stop that incredibly dangerous surge forward on an open terrace. I remember people saying that the movement of the crowd was wonderful; look at old film of the movement of a crowd. I am astounded that people were not more frequently hurt—one person going down, taking three or four with them, trapped underneath the motion. It is bad enough when it happens on a rugby pitch, which is, generally speaking, soft, and only three or four people are landing. The wind is knocked out of you, then two more people land and you cannot get your breath back. There is usually a referee pulling you to your feet then. It was potentially incredibly dangerous, and the fact that only a few people were involved in crowd disorder is probably why there were so few disasters. There is also the intrinsic danger in areas as such as stairwells. Floods of people going through them led to tragedy in the past. Please let us not think that these measures were brought in for no reason: there was a need. It was not the only action, but there was a need.
I ask the Minister a couple of questions on the “stay standing” procedure here—the barrier in front to stop people coming forward. What weight of people pushing forward has been tested against the barriers giving way? What is the level of people flow coming forward? Can we have a little idea of the testing that has taken place? If they are sturdy enough to resist that, most of the danger will be removed.
The noble Lord, Lord Faulkner, has done a very good job on disabled access here, but the grounds in the Premiership do not have an unblemished record. If they have just got to the level of providing access—I do not think they have—they have done so incredibly recently. Their unwillingness to take these steps has been obvious for a very long time. Nobody has fallen over themselves to make sure this happened fast. Will we make sure they are properly regulated and enforced to make sure that a disabled person who goes into the stands is safe? Remember that they may not all be wheelchair users; many people who are disabled are not. They may have to use them temporarily; they may be able to stand for parts of the game. Is a person who is slightly unstable on their feet safe? That is a good question to add. What can be done to make sure that they are safe?
When it comes to other crowd control techniques, can the Minister assure us that a person will be identified as in a ticketed area, and thus can be easily identified if they are committing anti-social, racist or other abhorrent behaviour? Has that been tested? Crowds allow bad behaviour or allow people to think they can get away with it. Football is just one area where it has happened historically.
If we can get those assurances, let us give the experiment a go. However, I should like to think that the Government are paying attention to it, remembering that there were pitch invasions at the end of last season and occasions when crowds have behaved badly. There are many fewer than there were, and it is now a news item worthy of note, which is definitely a step forward from the historical position, but are we making sure that we are able to punish people with better monitoring arrangements and the identification of the people there? We need that assurance, because it was not about the seating but the safety. The seating was just a vehicle to get there. If the Government can give us those assurances, I will wish this experiment well, because, let us face it, we did not bring the measure in because we were desperate to interfere with people’s lives but because we had to.
My Lords, a debt of gratitude is owed to my noble friend Lord Faulkner, who has been assiduous in following this issue over the years. I am grateful to him for ensuring that we had today’s debate. For our part, on the Labour Benches, we very much welcome the regulations and the pilot carried out by Cardiff City, Chelsea, Man City, Man United and Tottenham Hotspur which has provided the evidence base for the wider introduction of safe standing at Welsh and English football stadia.
I am old enough to have been a teenager when some of the worst ravages of football hooliganism took place in the late 1960s and 1970s. It was not a pleasant sight and, like many football fans of that period, I got caught in crushes and found that I started half way up a standing area and ended up somewhere near the front because of a crowd surge. It was not a very pleasant experience, but it was very common. The tragic events at a number of football grounds, including of course Heysel—and Sheffield Wednesday’s ground, where we had the terrible deaths in 1989, are etched strongly in our minds and memories collectively. They were awful things that should never have happened. The quality of football stadia back then left very much to be desired; it had not changed for decades and very little thought was ever given to the safety and security, even less the comfort, of football fans who watched the nation’s great game.
We have come a long way since then. Seated stadiums were introduced, as other colleagues including the noble Lord, Lord Addington, and the noble Baroness, Lady Hoey, have said, because there was a desire to make stadia better as an experience, to improve the quality of the spectators’ experience and to ensure that safety was paramount—and quite right too. There has always been some pressure to create the opportunity for safe standing, but it is really only in the last 10 years, I would guess, that the quality of our stadia has reached a point—particularly at Premier League and Championship level—where it is possible for safe standing to be introduced.
The noble Baroness, Lady Hoey, reminded me of the German experience. When I was a Minister in the Home Office and responsible for football hooligans—the Hooligans’ Minister—I, too, went to Germany and looked at the Munich stadium, which had a very good design that enabled safe standing behind the goal areas. I have been to Tottenham in recent seasons to watch my favourite team, Brighton, and stood in the safe standing area there. It is a delight. It is very pleasant and comfortable and you do not feel in any way threatened by the size or nature of the crowd.
Like my noble friend Lord Faulkner and others, I have some questions just to elucidate some of the points that have been made in this discussion. The first few follow the points made by the noble Lord, Lord Addington, I suppose. We have to be confident that the design is right, because design is critical in this. Are we satisfied that there are sufficiently strict design criteria for safe standing areas? Do we think that that case has been fully proven? Will the design be kept under very careful and strict review?
Has the department been able to satisfy the JCSI’s request for further information about the legal basis for only one spectator taking each space in a licensed standing area? If so, has that been made available in the Library or can the Minister tell us anything about that? It is important that there is a proper legal base for that because it has an impact on safety and security.
We very much welcome the inclusion of a review mechanism in the order, but can the Minister clarify why the date of 7 December 2026 has been chosen? Similarly, why have five-yearly reviews been deemed most appropriate? What happens if the arrangements prove unmanageable? None of us wants that to happen but, if that is the case, is there sufficient flexibility in the five-yearly review process? When the review is published, will it be laid before Parliament formally or simply made available digitally via GOV.UK? Will it be debateable? I certainly think that it should be, because we need to keep a careful eye on these issues.
The move to safe standing was part of several proposals from the DCMS, including the potential relaxation of the ban on consuming alcohol in view of the pitch. I must say, as a spectator this does sometimes seem rather arbitrary. I go to grounds where 15 minutes or half an hour before the game starts, the shutters are brought down in the VIP areas and you cannot even see on to the pitch; it seems slightly ridiculous but nevertheless I can understand some of the thinking that lies behind it. I appreciate that rugby and cricket have a long history of enabling alcohol to be consumed in view of the game when it is in progress; I wonder what lessons we can learn from the experience of event managers and management in those stadia and if there have been some thoughts turning to the relaxing of regulations surrounding football.
Those are my points and questions. It is good that I am in the company of people who are very thoughtful about this, because I think safety and security of football fans is a very high priority in the organisation of that sport. We cannot afford to relax our vigilance, because in the past we have had spectacularly awful things happen to football fans and it has taken many years for families and communities to have a sense that they have justice on their side, so we need to get this right. If we do, there is a prize: that the enthusiasm that fans enjoy for their team will have full expression and we can return to the time when, certainly behind the goals, fans commonly used to stand. I am grateful to colleagues for their comments, and I look forward to hearing what the Minister has to say in response.
I too am grateful to the noble Lord, Lord Faulkner of Worcester, for securing the opportunity for this debate. The order has returned licensed areas of standing spectator accommodation to the top tiers of domestic football. The statutory instrument in question has now come into force but, as the noble Baroness, Lady Hoey, said it is a historic moment of significant change, and I know that it is a field of great interest to many Members of your Lordships’ House.
Your Lordships’ House maintains a close interest in matters of sports ground safety, keeping a keen eye on the safety of our football stadia and on the work of the Sports Grounds Safety Authority, which regulates and advises us on this issue. It has done so since its inception as the Football Licensing Authority, at a time when, as noble Lords reminded us, we as a nation needed to apply some urgent focus to safety in our sports grounds—particularly to spectator safety at our football stadia following a number of very serious incidents which had raised many questions about the safety of the people enjoying a day at the match.
With the establishment of the Football Licensing Authority, the Secretary of State retained a power to issue directions regarding the nature of seated accommodation, and with that the all-seater policy was established—the requirement that clubs playing in the top two tiers of English football provide seated accommodation, and that they should remain all-seater at whatever tier of competition they find themselves playing in. The all-seater policy has played its part in the overall improvement of safety at football grounds, through which we have seen the game appeal to a broader range of people and, mercifully, reduced the occurrence of serious crowd safety issues. But in the intervening years a number of factors pressed the case for change. While the all-seater policy has been very successful, “persistent standing” represented a stewarding challenge in distinct areas of stadia which had simply not been designed for spectators to stand safely. The all-seater policy caught in its scope only clubs promoted to the Championship and has not permeated throughout the entirety of professional football. Clubs in the same league are constrained by different ticketing offers but must safely manage the expectations of visiting fans. Various stadium infrastructure options are now available to provide safe standing. While this will always remain a safety policy—noble Lords are right to accentuate the importance of safety again today—the calls from fan groups for choice in how they watch the game were notable. Supporter groups have campaigned on this issue for many years, and the Football Supporters’ Association in particular has been an important partner.
The order, laid earlier this year, is a significant milestone. It comes after several years of careful and evidence-driven policy development, which reflects the different forms of safe spectator accommodation that we are now assured may be delivered with comparable or, indeed, with improved levels of spectator safety.
The potential for licensed standing accommodation had been discussed over several Parliaments but, as the noble Lord reminded us, the Conservative manifesto of 2019 outlined a clear commitment
“to work with fans and clubs towards introducing safe standing”.
With sensible caution—we promised progress rather than necessarily completion of the process—we have been careful to balance moving quickly with the gathering of evidence, consulting the people involved and shaping a responsible policy response.
As noble Lords will know, the Government launched an early adopter programme for licensed standing in seated areas on 1 January this year. The programme was implemented to test the practicalities of safety in areas of standing spectators—whether areas struggling with persistent standing could be mitigated with the installation of appropriate infrastructure to support near-continually standing supporters, and stewarding strategies that permitted standing in these areas of the ground. This programme offered the opportunity to test the approach over the remainder of the 2021-22 football season in stadia already equipped with, or prepared to invest in, appropriate supporting rails in some limited test areas of their spectator accommodation.
The programme included five early adopter clubs: Cardiff City, Chelsea, Manchester City, Manchester United and Tottenham Hotspur. While their vested interests cannot be denied, it remains extremely welcome that an appropriate cohort of football clubs was prepared to engage in this programme with no guarantees as to the outcome. Their investment in and openness to the project was critical, and we would not have come to enacting a significant change in the legislation governing sports grounds safety without their enthusiastic involvement.
With a number of clubs enlisted, the Sports Grounds Safety Authority formally commissioned an independent evaluation of the early adopters programme, which included a full roster of on-site observations across all participating clubs. The evaluation built on areas of relevance highlighted in an earlier evidence review and on the wider hypotheses of crowd dynamics in different configurations of spectator safety.
The authority published an interim report from this study on 23 April this year, which confirmed that
“Installing barriers or rails in areas of persistent standing in seated accommodation continues to have a positive impact on spectator safety”,
particularly in mitigating the risk of a progressive crowd collapse, by limiting forwards and backwards movement. This confirmed the belief of some experts in relevant areas, but the opportunity to have this configuration observed in situ, in real match-day environments, offered a compelling platform from which to commit to an evolution of approach in the regulation of sports grounds safety regulation.
On 24 May, we laid a Written Ministerial Statement, which indicated that, on the basis of these findings, the Government were “minded to” change the existing policy to allow all clubs currently subject to the all-seater requirement to introduce licensed standing areas for the start of the 2022-23 football season, provided they met strict criteria set by the Sports Grounds Safety Authority. The Statement was clear that any change to the existing all-seater policy would remain contingent upon the final evaluation report confirming the findings of the interim report.
CFE research subsequently provided the SGSA and DCMS with the final evaluation report. This concluded that the trial of licensed standing areas had been a success in both home and away sections. Given the positive impact on the safety of fans and the lack of any evidence that it increased disorder or anti-social behaviour, the report recommended that all clubs, in consultation with the SGSA and safety advisory groups, be given the opportunity to implement licensed standing areas and that the necessary amendments to the legislation be made as soon as possible.
The report also highlighted a number of other positive impacts of installing barriers or rails, also consistent with the previous research findings of the SGSA itself. These include: celebrations being more orderly with no opportunity for forwards and backwards movement; the risk of injury and the danger posed to others from spectators standing on seats or on the backs of seats being significantly reduced; egress from stadia being more uniform; it being easier to identify pockets of overcrowding in these areas; barriers making it harder for spectators to move towards segregation lines; putting stewards in more locations without affecting sightlines; and barriers offering stability for people moving up and down aisles and gangways. The final report also noted that operating licensed standing areas has the additional benefit of removing
“the need for safety teams to make spectators sit down, thus reducing potential conflict between staff and spectators”,
while also enhancing the match-day experience of spectators.
On the basis of this carefully considered programme of work, the Government subsequently laid the statutory instrument which retained the all-seater policy by default. Within this, the SGSA has the leeway to set appropriate criteria for areas where stadia subject to the policy may permit standing accommodation. With that, we have met, and indeed, exceeded our manifesto commitment of 2019; subject to meeting exacting criteria, clubs may now apply to offer areas of licensed standing accommodation for spectators throughout the Football League.
The noble Lord, Lord Faulkner, raised a number of important specific questions on the management of these licensed standing spaces, and I am pleased to say that the criteria which the SGSA has set for licensed areas directly addresses many of the points which he has highlighted today. However, to cover those briefly: meaningful engagement with the safety advisory group must be demonstrated, as must a plan for continued engagement with it throughout the season; there must be no negative impact for other spectators, and specifically for spectators with disabilities—we are always happy to engage on feedback, but provision for all supporters is key to the criteria set out for standing areas; and appropriate stewarding must be in place. The detail of what this looks like and the resulting broader management of spectators will of course vary from ground to ground, but what will remain common is the careful oversight of grounds adopting safe standing areas.
Level Playing Field, with which the noble Lord is associated, and many others, have been important parties in helping us to develop this policy. These licensed standing areas are relatively few in number and their compliance to the criteria will be closely monitored. However, the continued input of Level Playing Field, supporters’ groups and other advocates for accessible stadia remains very welcome, whether that is with their club, the SGSA or directly with the Government.
The noble Lord highlighted the importance of accessibility for spectators, and we particularly welcome the continued efforts of Level Playing Field in convening spectators with accessibility needs and for advocating for them in football—and in other sporting areas. All-seater stadia have contributed a lot to the needs of many spectators, and we hope that standing areas will offer choice and reinforce the improved experience that all-seaters can offer those who wish to or need to sit. I should say that Ministers have met Level Playing Field as this change has been introduced, and we welcome its continued engagement in ensuring that it has no unintended consequences for any fans.
The noble Lord, Lord Faulkner, also reflected on the fact that it might be perceived that we have changed public policy in line with those spectators who are “persistent standers”. Our research has now demonstrated that alternative policies may deliver the same, or improved, aim of spectator safety. With appropriate licensed infrastructure in place, at the expense of the club, spectators who wish to stand may now legally purchase a ticket to do so, and we can permit this in the knowledge that they are doing so in a safe environment. Safety should remain the prime objective, as it does in this statutory instrument.
The noble Lord, Lord Addington, asked some questions on specific numbers and the density of crowds. I should reiterate that this is not a return to terracing. The criteria for standing areas have been carefully crafted following the existing evidence and new observations from the early adopter areas. Standing areas will maintain the same density of crowd; here we are talking about allocated places assigned to ticket holders, and feedback from the police on appropriately monitoring stewarding has been reflected in the criteria more generally.
My Lords, I was concerned with making sure that the barriers are sturdy enough to resist any crowd surge. That surge—the movement forward—is the danger. Can the noble Lord give us a little detail of when we will find out what that testing was so we can be absolutely sure of this? Also, if, as I understand it, there will be only one row, have there been tests to make sure that that will always be kept in place?
I am grateful to the noble Lord for the clarification. If it is helpful, I will write with some technical detail, as what he is asking is probably best covered in a letter setting out some of the technical specifications.
It is perhaps an interesting point to add that UEFA, which has consistently also maintained an all-seater policy for its competitions, is now conducting its own review into the feasibility of licensed standing areas. UEFA will engage with relevant parties in the UK and other UEFA nations that routinely have standing accommodation available in its domestic competitions.
The noble Lord, Lord Bassam, asked about the consumption of alcohol in view of pitches, an issue covered by the fan-led review. I know that he looks forward to a full response on that from the Government, which will be coming in due course. I shall check whether the document that he mentioned has been deposited in the Library, and, if not, I shall ensure that it is.
In conclusion, the statutory instrument does not change the overarching approach to sports ground safety. Safety remains the primary factor in whatever type of spectator accommodation is offered; the measure that we are debating today does not draw our interest in that to a close. We must not rest on our laurels with any aspect of stadium safety, but I am confident that in the Sports Grounds Safety Authority we have an expert body that will ensure that our approach evolves and remains world-leading for many years to come.
I am sorry to get to my feet again, but the Minister has not dealt with my points on the five-yearly review periods and the criteria for design, and so on, although I appreciate that the technical stuff may be better dealt with in correspondence. Could he reflect on those two points?
If I may, I shall add the response to the five-year review to the letter setting out the technical details on the criteria. As I say, I remain confident that in the SGSA we have a suitable authority. I know that noble Lords will remain vigilant on this important issue, as rightly they should.
My Lords, this has been an interesting debate, and I am grateful to all noble Lords who have spoken, particularly the Minister, who has done well to address the questions that I have put to him. As a bit of a veteran on these matters—I have explained some of my past back in the 1980s and 1990s, not as a hooligan but as somebody attempting to deal with hooliganism, particularly through the medium of sports ground safety—I am very heartened that the safety of spectators and everybody who uses stadiums is paramount in the Government’s thinking, as it is in the thinking of the other political parties.
I am particularly grateful for the contribution from the noble Baroness, Lady Hoey, who was Sports Minister quite a long time ago when I was deputy chair of the Football Task Force, which came up with a series of recommendations. Some of those recommendations are relevant to another debate, on which I shall engage with the Minister over the coming weeks, on football regulation. It was a matter of great regret that the football authorities on that occasion, particularly the Premier League and the Football League, resisted the wise recommendations of the taskforce on regulation. We will come back to that.
One of the central aspects of the policy discussed in this debate is the fact that the Sports Grounds Safety Authority is clearly the lead body in making sure that all our sports grounds are safe. I had the privilege of taking through a Private Member’s Bill—it was a government handout Bill in the Commons—through your Lordships’ House which converted the Football Licensing Authority into the SGSA. The things that it could do as a result of that were, first, to make its expertise available to other sports bodies, not just football; it has been involved with rugby, tennis, cricket and horseracing. It has also been able to sell its expertise to sports bodies overseas, if they require expert advice. I am sure that, if UEFA is looking at this matter, it would be well advised to draw on the expertise of the SGSA in drawing up its plans.
I appreciated what the Minister said about the involvement of Level Playing Field. I shall report back to it on this debate—and maybe I shall need to write to him, but he has given very good answers on that issue. We will hold our breath and hope that this new approach, or milestone as he has described it, in dealing with ground safety and spectator amenities, can work, and that people can stay safe.
We know that demand for the change is considerable, but it is important that the freedom that comes with it is not abused and that we do not go back to the sort of terrible problems at football grounds in the 1980s and 1990s that I remember so well. I am grateful to my noble friend Lord Bassam of Brighton, the noble Lord, Lord Addington, the noble Baroness, Lady Hoey, and the Minister.
Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022
Considered in Grand Committee
My Lords, these regulations were laid before the House on 20 October 2022. The Subsidy Control Act 2022 provides for a new, UK-wide subsidy control regime. The new regime will enable public authorities to give subsidies that are tailored to their local needs and that drive economic growth. It does this while minimising distortion to UK competition and investment.
Section 11 of the Act enables the Secretary of State to make secondary legislation to define subsidies and schemes of interest and of particular interest. For subsidies or schemes that meet the definition of a subsidy or scheme of interest or of particular interest, Part 4 of the Act establishes the mechanism for their referral to the Subsidy Advice Unit, the SAU, a new unit established in the CMA. Voluntary referral will apply to subsidies or schemes of interest. Subsidies or schemes of particular interest will be subject to mandatory referral.
Upon the referral of a subsidy or scheme, the SAU will evaluate the public authority’s assessment of compliance with the subsidy control requirements and a report will be published with its findings. This light-touch review constitutes an additional layer of scrutiny for subsidies and schemes that have greater potential to lead to undue distortion and negative effects on competition or investment in the UK, or on international trade or investment.
During the Bill stages, the Government committed to seek further feedback on the terms of these regulations before laying them. Between March and May 2022, the Government therefore ran a full public consultation setting out their intended approach to the criteria and definitions. Respondents to this consultation expressed broad support for the proposed approach. The Government’s response to the consultation was published in August 2022.
On the criteria of monetary thresholds, these regulations define subsidies and schemes of interest and of particular interest using a clear set of criteria. They are based, first, on simple and transparent monetary thresholds. Subsidies of above £10 million, or which cumulate with other related subsidies to above this threshold, are subsidies of particular interest. Subsidies between £5 million and £10 million are generally subsidies of interest. However, if they are awarded in a sensitive sector they are subsidies of particular interest.
Sensitive sectors are areas of economic activity in which there is a record of international trade policy disputes, evidence of global overcapacity within the sector or evidence that one or both of these features will apply to the sector in future. Subsidies in these sectors are subject to the lower monetary threshold of £5 million, to be defined as a subsidy of particular interest because they have a greater potential for substantial distortion, even at lower values. A list of these sensitive sectors is in the regulations.
The monetary thresholds are cumulative. As such, a subsidy of £4 million may be above the threshold for a subsidy of particular interest if the recipient has already received a related £7 million subsidy within the last three financial years. In addition, the regulations set out a minimum value for a referral of £1 million. This means that where related subsidies accumulate above the £10 million threshold for subsidies of particular interest, public authorities will have to refer the most recent subsidy only if that subsidy exceeds £1 million. This feature of the regime was included following consideration of consultation responses and will have the effect of avoiding referrals to the SAU of very small subsidies.
I now turn to the second element of the criteria: specific categories of subsidy. Subsidies designed to rescue an ailing or an insolvent enterprise are subsidies of interest, and restructuring subsidies are subsidies of particular interest. This reflects the fact that both rescue and restructuring subsidies have a greater potential to cause excessive levels of market distortion. Since rescue subsidies are time critical—given that the enterprise may require the subsidy urgently or else go out of business—the Government propose to define them as subsidies of interest and are thereby subject to only voluntary referral. Restructuring subsidies will generally not be subject to these time pressures and so it is appropriate for the SAU to review them before they are given. The final specific categories of subsidies are those that are explicitly conditional on relocation of the recipient within the UK. These subsidies are prohibited entirely unless they have a beneficial effect on economic or social disadvantage in the UK as a whole. Subsidies in this category are subsidies of interest if they are of £1 million or below and are subsidies of particular interest if they are above £1 million.
These regulations also apply to subsidy schemes. A subsidy scheme will set out parameters under which subsidies may be given under it. Under the terms of the Subsidy Control Act 2022, the assessment of compliance with the subsidy control requirements will be carried out for the whole scheme rather than for each subsidy subsequently given under that scheme. As such, if a subsidy of particular interest can be awarded under a scheme, that scheme is a scheme of particular interest and is subject to the referral procedures. The same principle applies to schemes of interest. Any referral will occur once at scheme level. Subsidies given under schemes will never be referred to the SAU.
In conclusion, these regulations set out in clear and easily understandable terms the definitions and criteria for the categories of subsidies and schemes that will have greater potential to lead to undue distortion and negative effects on competition or investment within the UK or on international trade or investment. To ensure the effective functioning of the UK’s new subsidy control regime, these subsidies and schemes will be subject to an additional layer of pragmatic scrutiny by means of voluntary and mandatory referral to the Subsidy Advice Unit. I commend these regulations to the House.
My Lords, I am very grateful to the Minister for her careful exposition: she must have mentioned the word “subsidy” several hundreds of times in that short explanation, and no doubt I will too.
The subsidy regime proposed by the Bill allows for quicker and easier subsidies to be granted to businesses which, of course, we on our side support, not least because we think it may well assist in the push for growth in the economy. What I would like to understand from the Minister is her responses to a number of questions. It is important that the additional steps in this instrument do not undermine the overall effect. Will those additional steps be reviewed from time to time?
While the Bill itself lacks transparency and accountability in key areas, we felt that the Lords amendments improved those issues, although significant issues remain. The new subsidy control regime will identify subsidies and schemes that have greater potential to lead to undue distortion and negative effects on competition and investment within the United Kingdom or on international trade and investment.
These subsidies and schemes should be subject to more in-depth assessment by the public authority before they are given and, in some cases, they will need to be referred to the new Subsidy Advice Unit within the CMA for additional scrutiny and review of the public authority’s assessment. How many referrals does the Minister expect to be made? Are the Government confident that the SAU will be adequately resourced to deal with them and will this be reviewed from time to time as well?
The Act provides for the following subsidies and schemes to be subject to additional scrutiny before they are given or made: subsidies or schemes of interest as defined in the regulations, which may be referred to the SAU by the public authority giving or making the subsidy or scheme and over which the SAU has discretion, over whether to accept the referral; and, of course, subsidies or schemes of particular interest as defined in the regulations, which must be referred to the SAU by the public authority giving or making the subsidy or scheme. In those circumstances, it seems that the SAU must accept all referrals of subsides or schemes of particular interest.
The SAU’s review will scrutinise the public authority’s assessment of the subsidy or scheme and publish a report, which may include non-binding recommendations of ways in which the assessment or the subsidy design itself may be improved. What criteria will the SAU be considering? Will it have particular and specific priorities? Upon acceptance of the referral, I understand that, under normal circumstances, the SAU will publish its report within 30 working days. Can the Minister explain what the process will be following publication of the report?
These regulations define which subsidies and schemes are
“subsidies and schemes of interest or particular interest”.
They set out general monetary thresholds which, as the Minister has explained, will determine whether a subsidy or scheme is of interest or of particular interest. Subsidies granted outside of sensitive sectors are of particular interest if they are over £10 million. All other subsidies of between £5 million and £10 million which do not meet the SoPI criteria are SoI. At what point does that kick in? Lower monetary thresholds seem to apply to subsidies granted in sensitive sectors. Will these sectors be subject to change or review at all? These will be subsidies of particular interest if they are over £5 million. Can these subsidies be assumed to be more likely to have a distortive effect than those of equivalent value granted outside of sensitive sectors?
The consultation received some 40 responses. Respondents seem to have included a broad range of stakeholders from across the UK, including charities, academics, members of the public, business representative organisations and trade industry groups, as well as local government and other public sector organisations, which is very welcome. A clear majority of respondents expressed broad and comprehensive support for the approach set out in the document and in the accompanying regulations. From my reading, some 73% of respondents agreed with most of the proposals set out by the Government.
In general terms, we have no problem with the approach, but I hope that the Minister will be able to answer the points that we and others have made during the consultation, and that I have made during my brief comments this afternoon.
I thank the noble Lord, Lord Bassam, for his valuable contribution to this very short debate. I shall aim to respond to as many of the points that he raised as possible.
I begin by reminding the Committee of the purpose of these regulations. They set out the clear definitions and criteria for the two categories of subsidies and schemes, which have been identified as having greater potential to lead to distortive effects. These are subsidies of interest or particular interest. As regards subsidies or schemes of interest, the public authorities giving or making these will have the option of referral to the Subsidy Advice Unit established within the CMA, while those public authorities giving or making the subsidies or schemes of particular interest must refer them to the Subsidy Advice Unit.
Upon the referral of the subsidy or scheme, the Subsidy Advice Unit will evaluate the public authority’s assessment of compliance with the subsidy control requirements, and a report containing the findings will be published. These regulations set out definitions and criteria based on the two elements, clear monetary thresholds and specific categories of subsidy. I am confident that they strike the correct balance between protection from undue distortive and negative effects on competition or investment within the UK, or on international trade or investment, while being administratively simple for public authorities to apply.
In response to the noble Lord, who asked about the periodic review of these regulations, the Subsidy Advice Unit in the CMA will publish its first monitoring report in 2026. We will consider any improvements that we can make to the regulations and guidance in response to that report, or whenever the evidence calls for it. That will include definitions of sensitive sectors. The SAU may then make recommendations on changes to the list to the Secretary of State.
On the number of likely referrals, earlier this year the Government published an analytical document that considered this question. Based on past experience, the thresholds would have captured 15 subsidies or schemes of particular interest, and 11 subsidies or schemes of interest. The definitions and criteria for subsidies and schemes of interest and of particular interest have been very narrowly drawn, so that they capture only a small proportion of subsidies and schemes that have a greater potential to lead to undue distortion and negative effects. For subsidies and schemes of interest that are subject to voluntary referral, the SAU has discretion over whether to accept that referral. It recently consulted on its guidance, which included the prioritisation principles that it will use to inform its decisions to ensure that it is focusing its resources most effectively.
On SAU resourcing, which the noble Lord asked about, the SAU has recruited colleagues to ensure that it can fulfil its role in the new subsidy control regime, ready for January 2023. It has established a framework for referral processes to ensure that it can meet the demands placed on it, and has published guidance to that effect. The CMA was allocated funding of £20.3 million at the spending review in 2020 to establish three new functions, the subsidy control function being one.
The noble Lord asked about sensitive sectors and how they would be evaluated. Sensitive sectors are areas of economic activity in which there is a record of international trade policy disputes, evidence of global overcapacity in the sector or evidence that one of those features could apply. Subsidies to those sectors have a greater potential for distortion, even at lower values; that is why they are subject to a lower monetary threshold. The Government define these sensitive sectors in the regulations, by reference to a list of activities identified in the standard industrial classification of economic activities published by the ONS. In brief, they include copper, aluminium and steel; the manufacture of motor vehicles, motorcycles, air and spacecraft; the building of ships and floating structures; and the production of electricity.
To conclude, these regulations are key to the effective functioning of the new UK subsidy control regime. They define the small proportion of subsidies in schemes that will have greater potential to lead to undue distortion and negative effects and should be subjected to additional scrutiny by the Subsidy Advice Unit.
Lastly, I did not answer the question about the length of the referral process. The Subsidy Advice Unit must produce its report within 30 working days after providing a notice that the referral has been correctly received. This will be followed by a cooling-off period of five working days at the end of the process, if the subsidy or scheme was subject to a mandatory referral. However, the reporting period may be extended by agreement between the SAU and the public authority or by the Secretary of State, further to a request from the SAU.
If there are any additional questions that I have not answered, I shall do so in writing to the noble Lord. In the meantime, I commend these draft regulations to the House.
Committee adjourned at 5.29 pm.