Draft Finance Act 2003, Part 3 (Amendment) Order 2018
(6 years, 8 months ago)
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The Financial Secretary to the Treasury (Mel Stride)
I beg to move,
That the Committee has considered the draft Finance Act 2003, Part 3 (Amendment) Order 2018.
May I say what a pleasure it is to serve under your capable chairmanship, Mr Davies? The order provides for a technical amendment to part 3 of the Finance Act 2003, which makes provision for civil financial penalties where there has been a failure to comply with a duty, obligation, requirement or condition in specified tax legislation.
One such piece of tax legislation is the Community customs code: the body of European legislation that lays down the rules and procedures applicable to goods brought into or taken out of the customs territory. In May 2016, it was replaced by the Union customs code, more commonly known as the UCC. As a result, the Finance Act 2003 is out of date and its references to “Community customs code” need to be changed to “Union customs code”.
The order ensures that UK domestic law cross-refers to the most recent version of EU legislation with which it was intended to operate. It does not seek to alter materially the scope of the power to impose penalties; the underlying substantial legislation will remain the same.
The order is particularly important because it continues to preserve the capability of our customs officers to issue a civil financial penalty when there has been a breach of a duty obligation, requirement or condition of the Union customs code, which is an important part of HM Revenue and Customs’ overall compliance strategy. I therefore commend the order to the Committee.
Anneliese Dodds (Oxford East) (Lab/Co-op)
It is a pleasure to serve with you in the Chair, Mr Davies. It is also a pleasure, as always, to sit across from the Minister, to whom I am grateful for his explanation of the measure.
Before this sitting, I attempted to access the tax information and impact note for this measure—the TIIN system is very good—and the most likely candidate appeared to be that entitled “Finance Act 2003: updates to Part 3”, published on 22 February. However, that refers to the draft statutory instrument being laid before the House of Commons on 5 March. It is not clear whether that is the right one. Perhaps this is more a point for the civil servants than the Minister, but could they not direct those interested to the exact URL for the TIIN concerned in the links of different tax-related SIs rather than to the generic TIIN webpage? Surely that would help all of us who want to look very closely at all the measures we cover in SI Committees and access the relevant information.
The measure at hand is an uncomplicated one, effectively substituting references to the Union customs code for mentions of the previous Community customs code. I do, however, have a couple of brief questions. First, as I understand it, and as the Minister has mentioned, the UCC came into action during spring 2016, so it is unclear why the changes to the Act were not made until now. That seems like a rather large time gap. Perhaps he can enlighten us and reassure us that all civil administrative financial penalties applied between spring 2016 and the current day will not be subject to any challenge as a result.
Secondly, I have found it difficult to access accurate information about how many civil administrative financial penalties have been levied over time. That is surely relevant, given that any effective customs regime needs to include the potential for fines to be levied when behaviour has not been in line with the law. However, the capacity of HMRC to do that currently—let alone in the future—does not appear to have been adequately thought through by the Government, let alone put into place.
The Minister probably recalls that during debate in the Taxation (Cross-border Trade) Bill Committee I indicated the rather extreme challenges facing HMRC—a number of colleagues and industry representatives also did so—especially if in the future it will be required to deliver a new approach to customs, including a potentially unique -in-the-world, highly experimental customs partnership. That would be coming on stream very soon after the implementation of the new customs declaration service system, and all at a time when HMRC’s headcount has been cut substantially compared with 2010.
As I put it in the Bill Committee, the customs function in the UK is arguably already overstretched. The Government have maintained that comparative analysis of its capacity is not possible, but perhaps they have not looked at the World Customs Organisation’s annual reports. The latest one suggests that the UK has about 5,000 customs officers. The Government—in fact, the Minister said this to me in Committee—have committed to providing, potentially, another 5,000, so doubling the number of customs officers. However, even with the existing load of customs declarations to process, each of the customs officers currently in HMRC has to process more than 15,000 customs declarations per annum. That is the number averaged across the workforce, and it is about 10 times as many as every US and Canadian customs officer, 15 times as many as their German counterparts and more than 30 times as many as their Australian counterparts. As I noted in Committee, although there may be issues with comparability, they would have to be enormous if that large gap could be accounted for simply through different reporting conventions.
All this is highly relevant to the statutory instrument, because we need to know that it can feasibly be implemented by an already overstretched HMRC. To finish, I ask the Minister what his assessment is of the ability of HMRC currently to detect activity that ignores, bends or breaks the customs rules and to ensure that that activity is effectively sanctioned through the use of civil administrative penalties.
Mel Stride
I thank the shadow Minister, as always, for her participation on these occasions. I had thought that this might be a very short Committee, given that this is a highly technical change. As always, however, the hon. Lady raised important points, which I will go through.
First, the hon. Lady raised the TIIN and its accessibility—whether the URL was correct. I will have to get back to her on that, but I will certainly look into it because I recognise the importance of those assessments to her. I point out that there is no change in the scope or the penalties involved in this particular case or, indeed, in the manner of operation of this particular regime. However, it is right that that information should be properly accessible.
The hon. Lady asked why it had taken so long—since 2016, in fact—to bring in this measure. The answer is that until recently the legal advice, such as it was, was that there was not actually a requirement to make this change as the cross-reference was fairly obvious. However, more recent advice has suggested that we should make the change.
The hon. Lady asked about the number of penalties issued under this regime. Between March 2015 and 2016 a total of 466 penalties were issued, with a total value of £577,712; since the UCC was introduced, in 2016-17, 345 penalties have been issued.
The hon. Lady asked about the capacity of HMRC to handle the penalties and this particular regime. I point her to the fact that HMRC, as she knows, has an outstanding record on avoidance, evasion and non-compliance: £175 billion has been brought in or protected since 2010, and we have one of the lowest tax gaps, at 6%, in the world. I am confident that it is well resourced for this. She asked specifically about the number of HMRC staff who will be available. As she mentioned, there will be up to 5,000 additional staff, given the Brexit changes and the customs changes that are to follow. That is not a figure that the Treasury has brought forward; it is a figure that the head of HMRC has come forward with. We and my right hon. Friend the Chancellor of the Exchequer have made it clear that we will ensure that sufficient funding and resources are available for HMRC to carry out the important work that it will have, going forward. That is why last year about £45 million was made available to HMRC for Brexit-related matters and, in the recent spring statement, the Chancellor made it clear that a further £260 million will be made available for the next year.
The hon. Lady referred to the number of cases being handled by customs officers in the United States and Canada. Of course, those are different regimes, with different elements to them, but perhaps it is just indicative of the efficiency of HMRC and customs that they cover such a large amount of work with an efficient number of personnel. On that note, I hope that we can agree the order.
Question put and agreed to.
Draft Regulatory Reform (Fire Safety) (Custodial Premises) Subordinate Provisions Order 2018
(6 years, 8 months ago)
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The Minister for Policing and the Fire Service (Mr Nick Hurd)
I beg to move,
That the Committee has considered the draft Regulatory Reform (Fire Safety) (Custodial Premises) Subordinate Provisions Order 2018.
It is a great pleasure to serve under your chairmanship again, Sir Christopher.
The Government are introducing this draft statutory instrument to restore the long-established principle that responsibility for enforcing fire safety regulations across the whole of the Crown’s custodial and detention estate should lie with those who have been appointed or authorised as Crown inspectors by Ministers in England and in Wales. At present, Crown inspectors in England and in Wales are not the enforcing authorities for fire safety in the small number—about 7%—of custodial and detention premises where the Government have contracted out the provision of services to private providers.
That that was a significant issue became apparent in 2016 when responsibility for Crown inspectors in England transferred to the Home Office. Crown inspectors, the Home Office and the Ministry of Justice instigated an investigation into the contractual arrangements in place for the provision of custodial or detention operations. As a result of that detailed review of contracts and ownership arrangements, it became clear that a number of contractual arrangements had been put in place for the operation of such premises that resulted in the relevant Departments no longer being treated as owner or occupier for the purposes of the fire safety order.
Where that has happened, the responsibility for enforcing compliance with fire safety regulation has similarly been transferred away from our dedicated teams of Crown inspectors and instead to the individual local fire and rescue authorities in which the relevant premises are located. That is not what was intended when the fire safety order was enacted back in October 2006. At the time, the then Government were clear that, irrespective of any contractual arrangements with the private sector for the provision of services, they wanted Crown inspectors to be the sole enforcing authorities in those type of premises. Indeed, they went so far as to spell that out in the guidance on enforcement that they published and to which all those with enforcement responsibilities under the fire safety order are required to have regard.
Now that we are aware that the policy intent no longer aligns with the law, we want to rectify that position to ensure that the original policy of Crown inspectors inspecting, and where necessary enforcing, fire safety regulation across the whole of the Government’s custodial estate is re-established. There must be absolute clarity now and in the future about the scope of the enforcement responsibilities of fire and rescue authorities, and of Crown inspectors.
The draft order therefore amends article 25 of the fire safety order to set out in specific and legal definitions the full range of custodial premises for which Crown inspectors are to be responsible. Those will be established beyond doubt and will not, as is currently the case, be contingent on the often complex contractual leasing or ownership arrangements that may be in place.
In essence, the draft order delivers through legislation the clarity that was intended by the 2007 policy guidance on enforcement. It will ensure that our dedicated team of experienced Crown inspectors are clear that they have the powers to ensure that appropriate fire safety standards are in place to protect the lives of all those living in, working in or visiting the Government custodial or detention estate.
Louise Haigh (Sheffield, Heeley) (Lab)
This is the second time in less than a week that we have been in this room debating tidying-up regulations, which are important but only about correcting things that we thought were already in place. Given that I have made it clear to the Minister on several occasions that the Labour party would support the Government on legislation on a range of issues—even in my narrow Home Office brief—including tackling acid and knife crime, protecting police engaged in pursuit and response, giving the forensic regulators statutory powers, or dealing with the cost of policing football matches, I again place it on the record that the Opposition would like to see parliamentary time also made available to tackle those important issues.
We support the draft order, however. The Minister said that it was prompted when the Crown inspectors transferred to the Home Office in 2016. Was that the only issue to prompt the investigation of contract and leasing arrangements? Will he also confirm how those arrangements have been made over the past few years?
The impact assessment refers to rack-rent. Is it the case that the Government were not receiving rack-rent for the leases for those institutions that no longer fall under the Crown inspectorate? Have all those contracts been awarded recently, under this Government or the coalition, and how far back to do they date? How many institutions are affected? The impact assessment states 5% and, separately, 7% of the Ministry of Justice and Home Office estate. I would be grateful if the Minister could provide a list of institutions and contracts that the order refers to. I understand if he cannot list them now, so he may wish to write to me and the Committee.
Finally, will the Minister confirm whether he is concerned that any of the institutions were not properly inspected while the loophole was in place and before the draft order was brought before us? As I said, however, the Opposition are happy to support the order and do not wish to delay the Committee any further.
Mr Hurd
I thank the hon. Lady again for her constructive approach to such tidying up of anomalies. She referred to the review of the contractual arrangements, which it was entirely appropriate for the Home Office to do when responsibility was transferred. The review helped to unearth clear evidence of a problem that is rooted in relatively complex property law. In essence, through the process of the contractual arrangements, the leases were in effect transferred to the private sector, obviously on a peppercorn rent, which meant that the Government were not able to receive rack-rent and therefore, technically, could no longer be considered the owner-occupier, which for the purposes of the fire safety order meant that responsibility for enforcing compliance with fire safety regulation was also transferred. That was clearly unsatisfactory and not what the original legislation intended, which is why we are correcting it today.
About 42 institutions are affected by this. I am happy to send the hon. Member for Sheffield, Heeley a list. I reassure her that once what we view as the inadequacy of the arrangements became clear, proper arrangements were put in place between the inspectors and the relevant fire authorities so that the institutions were inspected regularly. When enforcement action was required, as it was on at least half a dozen occasions, it took place through the fire authorities. She will know, as I do, the importance of fire safety in such institutions, not least given the volume of fires there.
This is an important matter to get right, to ensure that we have—from the point of view of the Government’s responsibility—a single, coherent national body looking at the fire inspection regime. It was entirely right for us to correct the position through the draft order and I thank the hon. Lady for her constructive support.
Question put and agreed to.
Draft Scottish Rates of Income Tax (Consequential Amendments) Order 2018
(6 years, 8 months ago)
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The Financial Secretary to the Treasury (Mel Stride)
I beg to move,
That the Committee has considered the draft Scottish Rates of Income Tax (Consequential Amendments) Order 2018.
May I say what a pleasure it is to serve under your chairmanship, Sir David? The order updates legislation to reflect structural income tax changes announced by the Scottish Government and includes a number of consequential amendments to tax reliefs, which remain reserved. The changes will ensure certainty and consistency for taxpayers across the United Kingdom, no matter where they are based.
The Government have transferred extensive income tax powers to the Scottish Government, ensuring that they are more accountable to Scottish taxpayers. Since April 2017, the Scottish Government have been able to vary the income tax rates and thresholds, except for the personal allowance for non-savings, non-dividends income.
Ian Murray (Edinburgh South) (Lab)
I thank the Financial Secretary for giving way so early in his contribution. Does he agree this statutory instrument means that the vow made during the independence referendum to devolve as much as possible under agreement to the Scottish Parliament has been approved?
Mel Stride
I would say that it is entirely in line with the vows we made at that time, and indeed the Scottish Government have exercised their right under the Scotland Act 2016 to vary Scottish tax rates—both the thresholds and the marginal rates. The Scottish Government used those powers at their recent budget to make a number of changes, including the introduction of a new starter rate of 19%.
Stephen Kerr (Stirling) (Con)
I am grateful to the Government for stepping in to sort out the mess that the Scottish National party Government have created in Scotland. Are not the facts that the SNP did not consult anyone in the Treasury at Westminster about the changes it was about to make and the impact they would have on marriage allowance and on pensions?
Mel Stride
I thank my hon. Friend for that intervention. In the spirit of moving forward positively, I shall leave it for his remarks to be placed on the record as he has seen fit.
As I was saying, the changes included the introduction of a new starter rate of 19%, an intermediate rate of 21%, and increases in the higher rate to 41% and in the top rate to 46%. The Scotland Act passed the powers to make consequential amendments to primary legislation via a statutory instrument, where required to respond to changes made by the Scottish Government.
The order makes changes to reflect the new income tax rates so that certain tax reliefs continue to work as intended when the changes take effect in April. It will ensure that those in the new Scottish starter and intermediate rate bands continue to receive marriage allowance at the current rate of 20%. It will also ensure that Scottish taxpayers continue to get the right amount of relief on charitable donations and claim the right amount of pensions tax relief under the relief at source mechanism, and that those who have deferred their state pension continue to pay tax at their marginal rate on a lump sum.
The order also makes minor changes to the Income Tax Act 2007, the Taxes Management Act 1970, the Income Tax (Trading and Other Income) Act 2005, the Finance (No. 2) Act 2005, the Finance Act 2016 and the Scottish Rate of Income Tax (Consequential Amendments) Order 2015, to reflect the new taxes.
The changes will ensure that the tax system remains fair and consistent and that there are no complex tax relief rules depending on where in the United Kingdom a taxpayer is resident. They will ensure that those reliefs and wider tax legislation continue to work as intended and demonstrate our continuing commitment to making the Scotland Act and devolution work. I commend the order to the Committee.
Anneliese Dodds (Oxford East) (Lab/Co-op)
These measures address problems relating to the married couples’ allowance and other issues raised earlier in the year, following the publication of the Scottish Government’s income tax plans for 2018-19. The Financial Secretary has gone through the other areas that needed change, such as gift aid and pensions tax treatment.
Of course, Labour supported the devolution process in Scotland, and that includes decision making over income tax. I therefore do not want to comment extensively on the proposals, beyond putting on the record Scottish Labour’s concerns that the plans do not go far enough to make our tax system more progressive.
Kirsty Blackman (Aberdeen North) (SNP)
I appreciate that the UK Government are introducing enabling legislation to ensure that the Scottish rate of income tax can apply and that Scotland will therefore be the fairest tax part of the United Kingdom.
Mel Stride
I hope that the Committee will agree to the order.
Question put and agreed to.
Drinking Water Directive
(6 years, 8 months ago)
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The Chair
Before we begin, I will briefly outline the procedure in European Committees. First, a member of the European Scrutiny Committee may make a statement, for no more than five minutes, on that Committee’s decision to refer the document for debate. The Minister will then make a statement for up to 10 minutes. Members of the Committee may not make interventions during either statement. Questions to the Minister will follow. The total time for the Minister’s statement and the subsequent question and answer session is up to one hour. The Minister will then move the motion and debate will take place. We must conclude our proceedings by 7 pm.
Does a member of the European Scrutiny Committee wish to make a statement?
Michael Tomlinson (Mid Dorset and North Poole) (Con)
It is a pleasure to serve under your chairmanship, Mr Wilson. This debate arises because the European Scrutiny Committee, on which I serve, recommended that the House should issue a reasoned opinion against a Commission proposal for a directive that, among other objectives, requires member states to improve access to safe drinking water for all. More specifically, it requires the provision of water fountains in both internal and external public spaces. A reasoned opinion signifies that the House does not consider that a proposal complies with the principle of subsidiarity. Put simply, we believe that this matter should be left to member states, which are best placed to tackle it, and that EU action will not produce a better result. Should this Committee agree, the House will be asked formally to approve the sending of a reasoned opinion by the deadline of 3 April.
We do not dispute the importance of access to safe drinking water, including the provision of water fountains in public spaces. The Government’s response to the Environmental Audit Committee’s valuable report on plastic bottles demonstrates that action in that regard is already under way in the UK. As such, the impact of the proposal, should it need to be implemented in the UK, is likely to be limited. As a matter of law, however, we consider it important that EU legislation respects the principles laid down in the EU treaties, including subsidiarity. While the UK remains a member of the EU, we should look to uphold those principles. Despite some initial uncertainty, we warmly welcome the Minister’s support for the reasoned opinion.
Why do we think that this proposal, and specifically the access to water provisions in article 13 of the proposed directive, breaches subsidiarity? Ultimately, we do not see any reason why the EU is better placed than member states to tackle the issue. In what way would the decision of one member state to improve universal access to drinking water and promote its use have a deleterious effect on neighbouring member states or on the EU’s internal market? We note in our reasoned opinion:
“The Commission fails to provide any explanation in its proposal…as to the necessity of action at EU level to improve access to drinking water or the greater benefit of acting at EU level.”
The Commission justifies its proposal by pointing to the European citizens’ initiative on the right to water, which urged EU institutions and member states to ensure that all citizens enjoy the right to water and sanitation, and urged the EU to achieve universal access to water and sanitation. The Commission also points to resource efficiency and compliance with the UN sustainable development goals. Of course the EU should listen to its citizens and seek to achieve resource efficiency, including by reducing single-use plastics—that is important, as of course is compliance with the SDGs—but is an EU requirement for water fountains in all public spaces really necessary and the best way of achieving those objectives?
The Commission and the UK Government both argue that the proposal allows member states a margin of discretion. The European Scrutiny Committee does not agree that there is sufficient discretion. We are also concerned that the Commission has not complied with the requirement in the subsidiarity protocol to provide a detailed assessment of subsidiarity, which should be substantiated by quantitative and qualitative indicators, ideally including a full cost-benefit analysis.
Finally, I understand that reasoned opinions have been or are likely to be adopted by three other Parliaments or Chambers. Although the threshold for a yellow card may not be reached on this occasion, it is welcome to see continued national parliamentary engagement in EU matters.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Dr Thérèse Coffey)
It is a pleasure to serve under your chairmanship, Mr Wilson. I thank my hon. Friend the Member for Mid Dorset and North Poole for explaining the reason for this debate on the Commission proposal on the drinking water directive recast. The Commission proposed the recast in order to take account of existing and emerging pressures on drinking water, the EU commitment to the UN sustainable development goals and the European citizens’ initiative, Right2Water.
The UK has a very high level of water quality. In 2016 the Drinking Water Inspectorate chief inspector’s report for England reported compliance rates of 99.96% for water supplied by water companies and 95.8% for private water supplies, such as boreholes and natural springs. Most member states achieve between 99% and 100% compliance rates, with the UK achieving overall one of the highest at 99.9%. Some non-compliance is due to domestic systems, for example tap hygiene or plumbing metals; therefore, 100% is very difficult to achieve.
The Drinking Water Inspectorate was established in 1990 to provide independent assurance that the water industry delivers safe and clean drinking water to consumers, and it does a great job. Since privatisation, £140 billion has been invested in infrastructure, with benefits for the customer and the environment. Leakage levels are down by around a third and two thirds of our beaches are classed as excellent, up from one third pre-privatisation. The percentage of samples failing drinking water quality standards has fallen from between 1.5% and 2% in the early 1990s to below 0.2% in the last few years. The Government expect continuing significant investment by water companies to uphold that quality.
The Government are highly supportive of having the cleanest drinking water possible. That is consistent with our 25-year environment plan and our ambition to leave the environment in a better state than we inherited it. However, the Commission’s proposal is complex, and for that reason the Government are still considering it, which includes discussion with the devolved Administrations.
One example of complexity is the Commission’s approach to water quality parameters. The World Health Organisation has challenged the effectiveness of some of the parameters currently used, yet the Commission chooses to maintain them or to apply an even stricter approach than the World Health Organisation recommended. We want to understand why that is deemed necessary. For instance, perfluorinated compounds, a by-product of fire-fighting foam, currently are monitored only where they might pose a risk to health. That is because contamination is usually localised to very specific areas. The proposal imposes a requirement to analyse all water supplies for their presence. Analysis of these compounds is expensive and specialised, and not all laboratories have the capability. That could lead to an increase in customer bills or we may need to require a new formulation for fire-fighting products.
Article 13 on access to water, which is the specific article of concern to the European Scrutiny Committee, urges all EU institutions and member states to ensure that all inhabitants enjoy the right to water and sanitation. The Government agree with that objective. The Government have also taken steps to support the increased availability of water freely available to the public. Water companies are working to create a network of water refill points across England for refillable water bottles. Many retailers will offer to refill water bottles, and we are working across Government to encourage transport hubs and retailers to extend their provision of free water and to publicise that to members of the public.
Just last week, I launched Network’s Rail’s first free drinking water fountain at London Charing Cross station, with its chief executive Mark Carne. I expect that will be the first of many, and I am pleased that many other transport hubs already offer them or have indicated that they will start to do so. That said, the Government share the Committee’s concern that some of the revisions in the article are too prescriptive, that the means of meeting the general objective would be better left to member states to decide, and that the final directive must be unequivocal in its compliance with the principle of subsidiarity.
The Government also share the Committee’s view that the Commission has not provided a detailed assessment of the subsidiarity that is substantiated by quantitative and qualitative indicators. However, the Government note that it produced a substantial impact assessment of each of the major changes proposed, and that the costs and benefits of article 15 make up a relatively small part of the overall estimated total impacts of the proposals. For the UK, in particular, the costs of providing additional access are put at zero because of the very high level of connection to a water supply and access to drinking water that we already have, and because of existing or imminent national policies and practices that the Government have developed.
The proposal contains an access to justice provision drawn from the requirement in the Aarhus convention. The UK is a member of the convention in its own right and already complies with its requirements. We therefore do not see the need for that to be in the directive.
The current legal basis for the proposal is article 192(1) of the treaty on the functioning of the European Union. That article is designed for measures that implement EU environmental policy, including those with the objective of protecting public health. The Government consider that legal basis to be appropriate, as the main purpose of the Commission’s proposal is to implement EU environmental policy on clean drinking water and it includes a provision for water to be monitored and tested for certain parameters to ensure that it is fit for human consumption.
The European Union (Withdrawal) Bill provides for all EU law to be rolled into UK law on our departure, if it is not already present in UK law. The Government have made it clear that our environmental standards will not be diluted upon our exit, and I remind the Committee that we already have very high performance. The Government will continue to analyse the substance of the Commission’s proposal with respect to several factors, including, if the motion is passed, Parliament’s specific concerns about the Commission’s approach to subsidiarity.
Holly Lynch (Halifax) (Lab)
It is a pleasure to serve under your chairmanship, Mr Wilson. I thank the Minister for her statement, and the hon. Member for Mid Dorset and North Poole for his opening statement on behalf of the European Scrutiny Committee. I understand that it is not appropriate for Opposition Front Benchers to make lengthy speeches or statements at this point, and I am more than happy to oblige, but I will put a couple of questions to the Minister.
Although we are largely supportive of the content of the drinking water directive, we are sympathetic to the European Scrutiny Committee’s reservation that the directive does not entirely meet the principle of subsidiarity, so we do not object to the reasoned opinion. However, will the Minister say more about the Government’s domestic ambitions for the roll-out of water fountains? We will have missed an opportunity if the UK’s aspirations fall short of those in the directive.
Further to the comments by the hon. Member for Mid Dorset and North Poole, I understand that a number of other member states—the Czech Republic, Austria and the Republic of Ireland—have also raised concerns about the directive. I wonder whether the Minister has engaged in dialogue with them, or with the Commission, about their specific reservations, and whether we might share best practice or work together to deliver on the aspirations of the directive while raising our reservations about subsidiarity.
Dr Coffey
I thank the hon. Lady for those questions. On the Government’s domestic ambitions, she may be aware that Water UK, which organises all the water companies, has committed to ensuring that each water company has a plan—by October, I think—showing how they intend to roll out water fountains in and around their areas. I am sure that she has already downloaded Refill, which is a wonderful app that I believe started in Bristol, the city represented by the Opposition Whip, the hon. Member for Bristol West. That is a way of ensuring that people know where water is offered. I think that most coffee retailers, although they may not yet advertise it—I am still encouraging them to do so—will refill a water bottle if asked.
I have also worked with Ministers in the Department for Transport to write to airports, railway stations and Transport for London—I think we also wrote to the Mayor. I have just realised that we have not yet written to National Express; we must rectify that. I am pleased that Network Rail launched its first water fountain last week, and that a number of airports have already started offering refills. It is certainly possible to fill a water bottle in Heathrow terminal 5, and a number of airports offer water fountains of the kind many of us used at school, where it is necessary to lean down, although that is not quite as straightforward as filling a bottle. I understand that more and more airports are coming through with such proposals, and I have certainly taken advantage of those facilities myself.
I am aware specifically of Austria’s reasoned opinion, but we look forward to working with other member states that have good domestic plans to see how we can share best practice. I have not specifically engaged with them, or indeed with the Commission, on the different opinions that have been expressed. I believe that the deadline for us to return our initial views to the Commission is within the next week, which is part of the reason we are having the debate today: to make sure that we can reflect the will of Parliament, as expressed by the reasoned opinion.
Mr Robert Goodwill (Scarborough and Whitby) (Con)
Having served on the European Parliament’s environment Committee, I am well aware that the European Commission often misinterprets—deliberately, I suspect—the principle of subsidiarity and uses it as a power grab. Does the Minister agree that if we were to take the principle of subsidiarity to its sensible conclusion, decisions such as the provision of water fountains should be made by local authorities, not central Government?
Dr Coffey
I would certainly like to see more local authorities undertake to provide access to water. Perhaps it was a century ago when water fountains were very much part of public health provision. Fortunately, we have somewhat moved on from there; the water that we get from our tap is very safe and readily available. I agree that if we can do more to work with local councils to take that forward—to some extent, water companies will be able to do that with their plans—that would be an appropriate way to ensure that water is readily available.
John Mc Nally (Falkirk) (SNP)
It is a pleasure to serve under your chairmanship, Mr Wilson. We all know that water should be available to everyone. There are good strides being made by a variety of organisations and Government bodies to supply water fountains across the country, particularly at locations where the public gather. That is probably the most important point, because if water fountains are not available, the public are more or less forced into buying plastic bottles, and we know where they usually end up.
The Minister will not be aware that the Scottish Government are developing sites with Scottish Water to make water available to the public, particularly in railway stations.
The Chair
Order. This is a question and answer session. Could the hon. Gentleman ask a question?
John Mc Nally
Will the Minister confirm that she will keep water matters devolved to the Scottish Government?
Dr Coffey
Absolutely. I respect entirely the hon. Gentleman’s opinion and how he represents the Scottish National party’s interest in this matter. The quality of drinking water is formally a devolved matter and we have worked together closely with the devolved Administrations. I assure him that they have been involved in our deliberations so far.
Mr Goodwill
The Environmental Audit Committee is carrying out an investigation into nitrates in water. I am sure that the Minister is conversant with annex 1, part B, which lists the chemical parameters in water and maintains the 50 mg per litre measure, which has always been used and goes back a long way, and which many would suggest was just an arbitrary figure. Will the Minister consider whether it would be appropriate to set different levels for ground and surface water on the one hand and drinking water on the other hand, given the evidence that is emerging about the effects of nitrates on human health, as opposed to the well established information on eutrophication and the way that phosphates and nitrates in water can result in environmental problems?
Dr Coffey
My hon. Friend is enjoying his time on the Back Benches; not only is he embracing the Select Committees that he has joined, but he is taking the opportunity to demonstrate his vast experience in the European Parliament.
On the different levels to which he refers, I will have to look at that in a bit more detail, but I am reliably informed that we want our standards to be as good as, if not better than, what has been prescribed. I will ensure that we consider that in more detail when the time comes to respond to the Environmental Audit Committee’s proposal on nitrates.
Thinking of another member of this Committee, I am aware that there are some challenges in Poole harbour about eutrophication, involving different kinds of activities that need to be dealt with. Certainly, the water company is concerned about the run-off of nitrates from agricultural land, which is why we need constantly to make sure that our natural environment and water are of sufficiently good quality, not only for the benefit of the drinking water that we all enjoy; he will be aware of the wider responsibility that we hold dear.
Michael Tomlinson
I have said it before, and I will say it again: there is so much positive news coming from this Department and this Minister. I very much welcome her statement. It does not mean that we do not want to have the same standards or better standards than we already have, or that we do not care about access to drinking water, but we already have in place risk assessments from source to tap that this directive would put in place. Can the Minister confirm those points?
Dr Coffey
I can confirm that. That is why it has been assessed so far that the additional cost to the United Kingdom of implementing this directive would be zero, recognising the already extraordinary high quality that we have, backed up by our independent regulator, the Drinking Water Inspectorate.
Resolved,
That the Committee takes note of European Union Document No. 5846/18 and Addenda 1 to 5, Proposal for a Directive of the European Parliament and of the Council on the quality of water intended for human consumption (recast); considers that the proposal does not comply with the principle of subsidiarity for the reasons set out in the annex to the Eighteenth Report of Session 2017-19 of the European Scrutiny Committee (HC 301-xviii); and, in accordance with Article 6 of Protocol No. 2 annexed to EU Treaties on the application of the principles of subsidiarity and proportionality, instructs the Clerk of the House to forward this reasoned opinion to the Presidents of the European Institutions.—(Dr Thérèse Coffey.)
Draft Data Protection (Charges and Information) Regulations 2018
(6 years, 8 months ago)
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The Committee divided: - Ayes: 9 / Noes: 7 - Question accordingly agreed to.
The Minister of State, Department for Digital, Culture, Media and Sport (Margot James)
I beg to move,
That the Committee has considered the draft Data Protection (Charges and Information) Regulations 2018.
It is a pleasure to serve under your chairmanship, Mr Bone. The work of the Information Commissioner and her office is of fundamental importance and relevance, as can be seen with the Facebook and Cambridge Analytica incidents in the media last week. Data is a pivotal element of the digital revolution enabling a multitude of technological innovations that support growth and benefit society.
However, for those innovations to be successful, the Government and the general public must be confident that our data is not being misused. For that reason, we are modernising our data protection laws, through the Data Protection Bill, and providing new powers for the Information Commissioner.
An effective data protection regulatory framework is critical to retaining the right balance between innovation and privacy. That is particularly the case now, when data is at the forefront of the political agenda, both domestically, with the Data Protection Bill currently before Parliament, and internationally. That was highlighted in the Prime Minister’s recent Mansion House speech, which mentioned the UK’s high standards of data protection as one of the foundations that will underpin our post-Brexit trading relationship with the EU.
This changing data protection landscape has increased the responsibility of the Information Commissioner and the challenges she faces. With that increased responsibility comes an increased cost of delivery, so it is crucial that we ensure that the Information Commissioner and her office are adequately funded to fulfil their responsibilities, that the Government meet our responsibility under the general data protection regulation—GDPR—and that the ICO is funded for the effective performance of its tasks.
As with other similar organisations, it is only right and appropriate that this funding comes from charges levied on relevant stakeholders—in this case, data controllers. Currently, data controllers pay two tiers of charge: tier 1, for organisations with fewer than 250 staff or turnover of less than £25.9 million, is £35 per annum, and tier 2, for the remaining larger data controllers, is £500 per annum. Those charges have not increased at all since their introduction in 2001 and 2009 respectively.
The draft regulations will implement a new charging structure in order to fund the Information Commissioner’s data protection activities, which will come into force on May 25 this year, when the new Data Protection Act and the GDPR standards are due to take effect. The new structure is made up of three categories of charge: micro-organisations, including individuals, who will pay a charge of £40; small and medium organisations, which will pay £60; and large organisations, which will pay £2,900. The structure is designed to be closely aligned with the standard Government categorisation of businesses and organisations.
Furthermore, a £5 discount applies to all organisations that pay by direct debit. In effect, that will mean that micro-organisations that pay by direct debit will pay the same charge that they have paid since 2001. Similar to the current approach under the Data Protection Act 1998, public authorities will be categorised based only on their number of staff. In addition, charities and small occupational pension schemes will continue to automatically pay the lowest charge.
The new funding model for the Information Commissioner has three main policy objectives. It will ensure an adequate and stable level of funding for the ICO, build regulatory risk into the charge level and, finally, raise awareness of data protection obligations in organisations, thereby increasing their compliance. I will expand on what each will mean in practice.
First, in designing this new charging structure, the Government, in conjunction with the ICO, have given detailed consideration to the income requirements of the ICO now and in the future. The new charge levels recognise the increased funding required by the ICO under the new data protection regime and spread the funding provision appropriately across each of the three tier groups.
The charge levels have primarily been increased from the current level of fees to reflect the increased responsibilities of the ICO under the GDPR and the new Bill. For example, the GDPR will expand the Information Commissioner’s responsibilities in relation to mandatory breach notification and data protection impact assessments, as well as increasing the scope and scale of her existing activities.
In 2016 the Department for Digital, Culture, Media and Sport estimated that the ICO’s income requirements for its data protection functions will increase from approximately £19 million in 2016-17 to approximately £33 million in 2020-21. A financial forecast for the first year of operation under the GDPR—that is, 2018-19—sets the income requirement for the ICO at approximately £30 million. It is imperative for the ongoing success of the UK’s data protection regulatory framework that the ICO has the income it needs to continue fulfilling its vital functions to a standard.
Secondly, large organisations, including public authorities—local and national—often hold the most complex and sensitive datasets and, as such, represent a higher level of information risk. They will generally draw more heavily on the ICO’s resources than small organisations that process small amounts of personal data.
The charging structure has been designed to ensure that overall income from each group of data controllers—micro, small and medium, and large—adequately reflects the proportionate information risk accruing to each group, and to recognise that it would not be appropriate for large businesses and public authorities in effect to be subsidised by small and micro businesses, which make up the majority of the data controllers.
Thirdly and finally, in making the regulations, we are highlighting the importance of compliance with the UK’s data protection regulatory framework to data controllers, and are thereby increasing their awareness of the ICO as regulator and their own obligations.
The new draft regulations substantially replicate the current exemptions from paying notification fees, with some exceptions. The regulations will remove the exemption for some data controllers who are only undertaking processing for the purposes of safeguarding national security, and introduce clarification to the wording of the existing personal and household purposes exemption, to make it clear that homeowners using CCTV for such purposes are no longer required to pay a charge under the new scheme.
I appreciate that there is appetite from stakeholders to review the exemptions in general, and Government have committed to undertake a public consultation on the exemptions later this year. Members may be interested to hear that we are minded to consider an exemption for all elected representatives and Members of the House of Lords.
The Committee will all be aware that the ICO has been at the forefront of the news recently, and I assure Members that the new funding regime was designed to enable the commissioner to meet the challenges of large and complex investigations in the future. In conclusion, the work of the Information Commissioner and her office is fundamental to the success of our digital economy, which can only flourish with a strong data protection regime in place. It is therefore of vital importance that we provide the ICO with the level of income it requires to continue to deliver as a world-class data protection regulator.
Mr Kevan Jones (North Durham) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bone.
The Minister referred to the exemption for Members of Parliament, including the House of Lords. This is really about saving taxpayers’ money. At present, I understand, we would be classed in the micro group, and the £35 a year that we will have to pay we would then reclaim from IPSA under the office costs allowance. If we do not pay by direct debit the cost will be £40—the £35 is paid if by direct debit. On top of that, there will clearly be the cost of IPSA’s processing. I do not need to tell colleagues the level to which that goes and the costs that it incurs.
The Minister says she will consult on this, but would it not be a good use of taxpayers’ money to either exempt us, or to have some system whereby IPSA could pay the £35 directly to the Information Commissioner? That would cut out a lot of the unnecessary administration that IPSA is famous for and would avoid, for example, a new Member who is perhaps not used to administration failing to do it for some reason.
I take on board that the Minister says she will consult, but I would try to get this done sooner rather than later. As outlined, it will cost the taxpayer twice, and it is after all taxpayers’ money that funds IPSA and our expenses. The fact that the Government are basically paying money back to themselves, obviously with the slice off the top for the costs of the administration of IPSA, is quite an inefficient way of administering this.
More broadly, I understand and accept what the Minister says about the need for finance for this area—the Information Commissioner faces a growing area—but what scrutiny and justification has the Information Commissioner given to the Government for this increase? A lot of small and medium-sized businesses will see this as an additional payment that they will have to make. If we are to ensure the robustness of the arguments, we need to ensure that the Information Commissioner is diligent and operating efficiently and that individuals can be assured that taxpayers’ money, whether raised this way or in other ways, is properly accounted for and justifiably used.
Adam Afriyie (Windsor) (Con)
I very much welcome the draft regulations. As chair of the all-party parliamentary group on financial technology, I am conscious that huge demands will be placed on the ICO, which has always struck me as being pretty under-resourced, as has probably been evidenced by the Cambridge Analytica situation. I wonder if the ICO actually has the resources to go ahead and conduct a full investigation into that, so I very much welcome the increasing budget.
Given the new data protection laws, given that Brexit—if we are trying to stay at the forefront of financial technology and alternative finance—may require further work by the ICO and given that the Open Banking Implementation Entity has now come out with new standards for data portability, an enormous amount will be required of the ICO over the next two to three years, particularly as it adjusts. This uplift is necessary to fulfil its obligations.
My hon. Friend the Minister presented the draft regulations very well indeed, but I have a couple of quick questions. Will she enlighten us on how the £30 million figure has been calculated as the amount necessary for the ICO to fulfil its obligations? I emphasise that it seems particularly low, given the demands and potential demands on the ICO over the next 24 months.
I welcome the three-tier system; it is quite right that single users or very small companies pay a lower figure. I hope that, at some point in the future, we will look at the third tier, because that again seems quite low. If we consider the impact of one investigation with one of these larger firms, I can pretty much see the entire ICO budget going on one large organisation. Again, I would like to see that addressed in the future.
I very much welcome the exemptions. When it comes to the IPSA money, we have all had pain and scars. It is rather a circular motion, but I agree with the hon. Member for North Durham that, if the bill for Members or peers is £40, with IPSA it will probably end up being £80, given the bureaucratic costs involved. That may be worth looking at. Overall, I very much welcome the changes, but I would like a little more insight into where the £30 million figure comes from.
Liam Byrne (Birmingham, Hodge Hill) (Lab)
It is a privilege to serve under your chairmanship for the first time, I think, Mr Bone. I want to develop the points rehearsed by my hon. Friend the Member for North Durham and the hon. Member for Windsor. The Minister needs to rethink the consultation and these regulations for three reasons. First, as the hon. Member for Windsor rightly said, they are based on a budget of about £30 million for the Information Commissioner, which is an increase of about one third. The budget was set before the events of the past couple of weeks, when the implementation of GDPR was in mind. We did not foresee that the Information Commissioner would have to struggle for literally a week to get a search warrant to get into the offices of Cambridge Analytica. The idea that the Information Commissioner can investigate companies such as Facebook with a budget of £30 million is, frankly, fanciful.
We had a debate last week about the need to empower the Information Commissioner. When the Secretary of State intervened in the House a couple of weeks ago, he gave many of us the impression that that would happen under the Data Protection Bill, but the Minister walked back from that commitment in the Bill Committee last week. If we do not equip the Information Commissioner with the powers she needs to do her job and investigate some of the biggest companies on Earth, we need to look again at the budget and resources she has to do that job.
The second issue, as my hon. Friend the Member for North Durham rightly said, is that Government have declared that there will be a series of exemptions to the regulations sometime in the future. The Minister is inviting the Committee to agree the regulations this afternoon, and yet the exemptions will be organised and implemented sometime down the track. I do not think that is the right way round. The Minister should have organised a consultation on the exemptions before the regulations came to the Committee, and the exemptions should have been hard-wired into the regulations before the Committee was asked to agree to them.
The most significant problem that I want to flag up for the Minister is the appalling lack of consultation with local authorities. Something like 40,000 different data controllers were invited to respond to the consultation that led to the regulations, and 2,000 data controllers responded, but some affected parties, including minor stakeholders such as the Local Government Association, were not invited to contribute their views. That is a serious problem, because local authorities are some of the most important data controllers in the country, and they face a 480% increase in their charges.
It is not clear to me that the consultation was well organised. Events have moved on—I have some sympathy with the Minister about the fast-moving nature of her brief. I am afraid that the basics of the consultation should have been done differently, which is why I object to these regulations.
Margot James
I thank hon. Members for their constructive and useful comments and questions. In response to the hon. Member for North Durham, we propose to consult on whether MPs and other elected officials, including parish councillors and local councillors, should be exempt. We should proceed with that consultation, and he is absolutely within his rights to contribute his thoughts about whether, if we go ahead with the exemption, it should just apply to local councillors and parish councillors. He can have his views on that.
Mr Kevan Jones
It might have been a good idea to have consulted Members of Parliament, as my right hon. Friend the Member for Birmingham, Hodge Hill said. I am not calling for an exemption. The way it has been constructed is a waste of taxpayers’ money, because in addition to the cost of IPSA administering it, if people do not pay by direct debit, there is an extra £5 that can be claimed. That will add to the costs, which is silly.
Margot James
I shall take the hon. Gentleman’s views back. At the moment, there is a proposal to consult. If hon. Members feel we should just pay it through IPSA, that is a perfectly valid view.
The hon. Gentleman also asked about the Information Commissioner’s accountability for the budget. The majority of micro-payers—very small businesses and organisations—are exempt for various reasons, chief among them that they do not process very much personal data in their day-to-day duties. In my Department, we keep the ICO budget under review on an annual basis, to ensure that the budget is adequate for the Information Commissioner’s requirements, but not overly generous.
I think the Committee is more worried about whether the ICO will have sufficient resources. That was the concern expressed by my hon. Friend the Member for Windsor and the right hon. Member for Birmingham, Hodge Hill.
Mr Jones
I have no doubt that the Minister’s Department keeps the budget under review to see whether the Information Commissioner has enough resources, but what about how the money is spent in practice? As with many such quangos, the question is who is ensuring that the money is spent properly.
Margot James
The Information Commissioner’s Office has a financial controller, a board, and a chief executive. It is held to account not just by my officials, but by the Secretary of State and me. I meet with the Information Commissioner regularly, and we assess through various means whether adequate financial controls are in place. To date, the ICO has proved that they are. Obviously, a significant uplift of at least a third in revenue, and all the additional headcount that that implies, will be a moment of transition, where the sort of problems that we have seen in other organisations may emerge. We will keep a very close eye on that, to ensure that they do not.
My hon. Friend the Member for Windsor was concerned that there were not enough resources, and that £30 million was too low. We will keep that figure under review. Certainly, the events of the past few weeks have shone a torch on just how much could be demanded of the ICO. As well as increasing the budget, and enabling the Information Commissioner to increase the number of staff that she has at her disposal, we have increased her powers. The right hon. Member for Birmingham, Hodge Hill said that in Committee I walked back from the commitments that the Secretary of State gave to reviewing the powers that we have given the Information Commissioner in the Bill. We have strengthened her powers, and we have discussed with her her desire for greater powers. We debated that in Committee, and I confirmed that we would review her powers before Report. The Secretary of State and I are honouring that commitment.
Jo Stevens (Cardiff Central) (Lab)
The Minister mentioned that she speaks regularly to the Information Commissioner. Has she had a discussion with her about why it took more than four days for a warrant to be issued for ICO staff to go into Cambridge Analytica’s offices?
The Chair
Order. The instrument is very tightly drawn, and we are not going to talk about the wider aspects of data protection and Cambridge Analytica.
Margot James
Thank you, Mr Bone, but I am happy to answer the question, as it was asked. I spoke to the Information Commissioner on the telephone at the beginning of last week, before it became apparent that that had taken so long. That indeed is one of the areas of powers that we are looking at, to reassure the hon. Lady.
I hope that I have dealt with the comments and questions to the Committee’s satisfaction and that the draft instrument will be agreed.
Question put.