Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Barker) (LD)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Parliamentary Works Sponsor Body (Abolition) Regulations 2022
(2 years ago)
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The Lord Privy Seal (Lord True) (Con)
My Lords, these regulations were laid before the House on 22 November and, if agreed, will give legal effect to the decision of both Houses, taken in July of this year, to pass Motions endorsing the House commissions’ report for a revised mandate for the restoration and renewal programme.
Since the sponsor body was established by the Parliamentary Buildings (Restoration and Renewal) Act 2019, concerns have been raised about the conclusions reached in the initial assessment of the emerging costs and timescales. The House of Lords Commission, alongside the House of Commons Commission, expressed concern about the costs and timescales presented by the sponsor body, and I shared some of these concerns. That is why the Government, with the commissions in both Houses, have supported the development of a revised mandate. I am grateful for the collaborative way in which Speaker’s Counsel in the House of Commons has worked with officials in both Houses, including the deputy counsel to the Chairman of Committees, to draft these regulations and for the ongoing advice we have received from the R&R directors.
The new approach to the parliamentary building works will continue to ensure that, as provided for in the Parliamentary Buildings (Restoration and Renewal) Act 2019, Members of both Houses will be consulted. Peers and all those who work in this place will have a chance to express their views on the works. When making critical strategic choices relating to restoration and renewal, the R&R client board will keep in mind the principles agreed by both Houses to deliver a new value-for-money approach that prioritises safety.
The commissions, in a March 2022 meeting, agreed a new approach to the restoration and renewal programme, guided by the principles of prioritising health and safety, ensuring maximum value for money and integration with other critical works on the estate. It is important that all members of the parliamentary community feel that they are engaged on the parliamentary building works, and I am confident that these new arrangements will deliver the required step change in engagement.
In 2018, both Houses agreed that major works to the Palace of Westminster would be essential in order to ensure that this historic and iconic building remains for generations to come. It was decided that the project should be undertaken by a delivery authority and overseen by a sponsor body. The Parliamentary Building Works (Restoration and Renewal) Act 2019 set out the governance arrangements for the project by creating these bodies and conferring particular functions on them. However, earlier this year, the two House commissions recommended a new approach to the programme whereby a new two-tier in-house governance structure would be established.
These regulations, which are made under Section 10 of the Parliamentary Buildings (Restoration and Renewal) Act 2019, will abolish the sponsor body, which will be replaced with an in-house governance structure. The statutory responsibilities and other functions of the sponsor body will transfer to the corporate officers of the House of Commons and the House of Lords—in other words, the clerks of each House.
The Leader of the House of Commons and I have consulted the corporate officers and the commissions of both Houses, in accordance with Section 10(8)(a) of the Act, and both corporate officers have consented to the transfers to them effected by this instrument, in accordance with Section 10(3) of the Act. Ultimately, both corporate officers will have joint responsibility for the parliamentary building works and will, at least once a year, prepare and lay a report before Parliament about the carrying out of the parliamentary building works and the progress that has been made towards completion of those works.
I am aware that Peers have previously raised concerns that without the sponsor body in place, the project may not have sufficient expertise. First, the Houses will not lose the expertise gained by the sponsor body, and the team of staff with that expertise will be brought in-house, as a joint department, and be accountable to the corporate officers. I also emphasise that the delivery authority will not be affected by the regulations; its role is unchanged, although it will now be closer to the Houses. This ensures that the programme retains its valuable experience and expertise. These regulations will allow for greater co-ordination and engagement between the Houses and the delivery authority, which could in turn allow for the delivery of restoration works much sooner. Similarly, the regulations will not alter the role of the Parliamentary Works Estimates Commission; it will remain in place and will scrutinise the delivery authority’s estimates.
This statutory instrument is vital to ensuring that this historic building is restored, while making sure that we deliver for the British taxpayer. Our commitment to ensuring good value for money is reflected in Section 2(5) of the restoration and renewal Act, and it is an approach that I will prioritise.
I would like to reassure colleagues that the House’s important role in this project is not diminished by the regulations. Under Section 7 of the 2019 Act, no restoration works, other than preparatory works, can be carried out until Parliament has approved the delivery authority proposals for those works. In addition, further approval is required for any proposals that would significantly affect the design, timing or duration of the parliamentary building works. Bringing this project in-house is an opportunity, as an in-house governance structure should improve accountability and engagement with Parliament by allowing a close interaction with and accountability to the commissions of the two Houses. I beg to move.
Lord Best (CB)
My Lords, I thank the Lord Privy Seal for his opening remarks. Alongside the noble Lords, Lord Carter and Lord Deighton, and the noble Baroness, Lady Doocey, I am a member of the board of the restoration and renewal sponsor body, which is now to be abolished under the terms of this statutory instrument. We were charged with implementing the Parliamentary Buildings (Restoration and Renewal) Act 2019, and I have been acting as the spokesperson responsible for reporting to your Lordships’ House on behalf of the board.
Before we go, the board has bequeathed to its successors a synopsis of the lessons we have learned from our experience over the last two and a half years. Our letter to the chairs of the new client board and new programme board will be publicly available on Monday. Perhaps I can draw out that letter’s three interconnected conclusions. First, the governance structure devised by the R&R Act was flawed. The theory was that creating an autonomous arm’s-length sponsor body would mean freedom from political interference and would expedite swift progress after years of delay. This was naive. The reality was that the relevant parliamentarians retained a controlling role. The work of the sponsor body was constantly held back and confused by the views of parliamentarians, particularly those on the House of Commons Commission who were not committed to the large-scale R&R programme envisaged by the 2019 Act.
In particular, there was antipathy towards a full decant of the Palace. We believed this to be necessary if the essential works, most notably to sort out the horrendous underground labyrinth of pipes and cables in the basement, were to be carried out expeditiously and safely. Indeed, a decant was part of the legislative framework we were obliged to follow. Lack of agreement on this fundamental part of the R&R process high- lighted the inherent conflict built into the governance arrangements for a supposedly independent sponsor body.
Under the new arrangements, the work of the sponsor body, with its oversight of the delivery authority, is to be taken in-house, with its functions transferred to the corporate officers: the clerks of the two Houses. Hopefully, this means that an in-built source of disagreement and crossed wires will now be removed. Our successors will be able to act as a single, united client speaking with one voice in championing the programme and progressing the works—I hope.
However, this leads to a second conclusion. There has never been clarity on the budget, timescale or scope of the R&R exercise. That clarity is now needed if our successors are to avoid endless delays and a waste of public funds, with the delivery authority instructed to undertake unnecessary work. If there are maximum or minimum levels, for example of accessibility in the Palace or of its energy efficiency and sustainability, these need to be stipulated. If Parliament is never going to accept a total cost for the whole project of more than X pounds or a decant period of more than Y years, that needs to be crystal clear up front and as soon as possible.
Thirdly, and finally, the outgoing board accepts with the wisdom of hindsight that we should have recognised that the sudden changes to the country’s fortunes meant a course correction was inevitable. It is obvious in retrospect that when the Covid pandemic struck, followed by turmoil in the economy, a retreat from the measures envisaged by the 2019 Act was going to be called for. Our successors and our colleagues in the delivery authority need to be ready for changes of direction and be prepared for fresh thinking as external circumstances alter.
At the end of this frustrating experience, I remain of the view that, although it will cost a fortune and will need everyone to move out of the building for a prolonged period sooner or later, none the less, the restoration and renewal of Parliament is an incredibly worthwhile initiative. Research shows that the wider public hope for and expect a full refurbishment of this much-loved building. Investment in this great endeavour will support skills, crafts and businesses throughout the UK. A proper R&R programme would not only render the building safe from fire, asbestos, the breakdown of services, falling masonry and the rest but actually save money, and possibly save lives, over the years ahead.
However, I recognise the constraints for elected Members of Parliament. I do not face constituents who may well say, “While we’re struggling through a cost of living crisis, Parliament is spending billions on its own comfort”. Also, the dark cloud of moving out for several years to a less amenable base elsewhere colours everybody’s judgment. Nevertheless, although the process may have lost two or three years, I hope that our successors will have the courage and determination to see it through.
What has been achieved will provide a solid basis for the next stages. Most of the excellent staff in the sponsor body and the development authority will carry on, and their work to date, despite operating throughout the Covid pandemic and through times of political and economic turmoil, has produced a vast quantity of data and physical survey work that will now make possible a clear plan. This plan may mean a succession of more modest mini-programmes stretching into the indefinite future, rather than the single major programme that we pursued, but, if the big issue of the basement renewal can be sorted, all is not lost.
In concluding our work today, we all wish our successors well. We hope that, despite the failure of the 2019 Act, progress will now be made in restoring this internationally recognised and iconic Palace for which the nation is right to feel huge pride and affection.
Lord Forsyth of Drumlean (Con)
My Lords, this is not an area that I have looked at very carefully but, when I looked at these regulations, I was rather puzzled by what we hope to achieve by them. The Lord Privy Seal, in his opening remarks, told us that we would not lose the existing expertise and that the delivery authority would be unchanged. So it is not clear to me why transferring responsibility to a corporate body, which is undefined but I assume is the two clerks of the respective Houses, will alter the proposal that was going to cost £13 billion or £14 billion—whichever it was—which, as the noble Lord, Lord Best, just pointed out, is pretty unaffordable in the current climate. Whether you need to be elected or not, spending that kind of money is simply not possible in the current climate. The money is not there. I am worried by exactly what the benefit of this will be, because it looks like the same people are confronted with the same problem, which they have to take forward.
The noble Lord, Lord Best, talked about the belief, which he described as “naive”, that it would be possible to do this without political interference. The reason I want to speak on these regulations is to express frustration at the way projects are carried out in this place, without proper consultation with the Members. In the other place, Members are responsible for voting the means of supply. In this place, to some degree, we are responsible for explaining why these sums of money are being spent.
I can give a more recent example. The decision to alter the security arrangements at Carriage Gates results in traffic going in a one-way system along what is called Chorus Avenue at the front of the House of Lords. That will cost £70 million and, in the process, will put pedestrians at considerable risk. A number of colleagues have argued that there should be a perimeter fence around the House and that that area should be closed to pedestrians. It is very dangerous, and one person lost their life crossing the road. When colleagues make these remarks and talk to the authorities—the corporate body, as it exists—they are ignored.
There is huge opposition to the creation of a new front door to this House. The cost was £2.5 million and it is now £3 million—for a front door. One worries about value for money. The argument put forward is security but, at the end of the day, it is up to Members to discuss these ideas instead of them being imposed on us. We are told that the changes to Carriage Gates and their effect on us are going to happen, that we have no say in the matter and that considerable sums are being spent.
I want to ask my noble friend the Lord Privy Seal a number of questions. First, how much have we already spent on deciding what to do? I understand it runs to hundreds of millions of pounds. Secondly, why is it going to be any different and where is the accountability? The only thing I can see in these regulations is that there is going to be an annual report:
“At least once in every calendar year, the Corporate Officers must prepare and lay before Parliament a report about the carrying out of the Parliamentary building works and the progress that has been made towards completion of those works.”
There is nothing about the expense, estimates or accountability. I find it difficult to accept the idea that an annual report will provide accountability to Members of this House or the other place.
In short, I look at these regulations and it seems to me that nothing is actually going to change and that the fundamental, systemic, strategic problem remains. The noble Lord, Lord Best, said he thought that we might end up doing a series of small projects, perhaps concentrating on the problems in the basement, if indeed that is practical. I may be a Peer, but I do not have a stately home. However, if I imagine for a moment that I have a huge stately home on the scale of this place and I have to be involved in restoration and renewal, if a bunch of consultants came to me and said, “The cheapest way to do this is for you to move out and for the whole thing to be done in one go”, if I were spending my own money I would almost certainly say, “Not on your life.” I would say, “Why don’t we do it a bit at a time over the next 30 years, because that way I might be able to afford it?” To try to do everything in one go is unaffordable. Of course it is always possible to argue that the costs will be less if you do it all in one go, although the experience of building this place in the 1850s was that it did not quite work out that like.
I say to my noble friend that I worry about these regulations. I understand what they do, but I am not sure that they will deliver for the taxpayer what the taxpayer might expect or what the Members of this place might expect in carrying out their duties.
Baroness Doocey (LD)
My Lords, this building is like a patient held together with bandages and sticking plasters when only serious surgery can restore it to health. Advice from a range of experts makes it clear that the best way forward is for Members to move to temporary accommodation while the intrusive and very disruptive work is carried out.
It was precisely because making this happen would be so difficult and controversial that Parliament put into statute a sponsor body for the project to act independently and supposedly free from political interference. However, ever since the ink was dry on the Act of Parliament, the sponsor body’s work has been sabotaged by powerful Members of the Commons who want the Palace to be restored and made safe only so long as it causes no inconvenience to them personally and they can remain in the Palace while the work is carried out. Meanwhile, the functions of the delivery authority, which needed to undertake extensive surveys, have also persistently been held back by restrictions on access. So short-term expediency and convenience have won, while the longer-term interests of this Parliament have lost.
So what now? We now have to examine the new arrangements and ensure that they are fit for purpose. If we are no longer to have an independent sponsor body and the project is to become the province of Parliament, it follows that the new arrangements should at the very least be more accountable, but I worry that the new structure will not live up to that ambition. There is to be a programme board with day-to-day responsibility for the project. It is to be
“as small, as senior and as stable as possible to support its effectiveness, but as large as necessary to reflect the range of key stakeholders that need to be represented.”
Meanwhile, the client, in theory replacing the sponsor body and instructing the programme board, will be the two commissions of the Commons and the Lords sitting together. Having been a member of the commission in this House for four years, I say with great respect to its individual members that I am not confident that those arrangements will result in accountability either. Each commission is a large, opaque body and is noted for neither its transparency nor its swift decision-making. So I worry that this structure loses the independence the sponsor body set up but gains us nothing in accountability.
This is important, because Parliament’s in-house record of managing very large- scale projects on time and on budget is dismal. Every very large project, from Westminster Hall to the Elizabeth Tower, has run vastly over budget and miles behind the original timescale. Unless there is very careful oversight, there is no reason to believe that the limited restoration and renewal now on offer will not suffer the same fate.
We have to ask whether the commissions as client of the programme board will really devote the necessary time and be sufficiently independent to scrutinise this project. Of course, the Public Accounts Committee in the Commons will do its best to keep an eye on progress, but it already has an incredible workload. The National Audit Office will likewise continue to conduct its in-depth analysis of whether what has been spent provides value for money for the taxpayer, but both bodies have the whole gamut of public spending to look at, and their accountability mechanisms rely entirely on very busy Members of the Commons. Meanwhile, they both act retrospectively, blowing the whistle after vast sums of money have been spent rather than identifying problems coming down the track and raising the alarm.
I wish the commissions, the programme board and the delivery authority well, but I have very serious reservations about whether today’s SI really leads us to a better, more robust and more accountable means to achieve restoration and renewal. Regrettably, I fear that we are setting up overlapping echo chambers that, despite the best of intentions, will result in less transparency, less accountability and ultimately less chance of delivering a successful project. I very much hope that events will prove me wrong, but I am not holding my breath.
Lord Newby (LD)
My Lords, the very fact that we have to contemplate a new structure for undertaking this work shows what a dismal period we have been through, lasting many years, with huge amounts of work, vast expenditure and virtually no output. Although everybody agrees that major works are indeed essential, we just cannot carry on as if things will carry on.
The three issues that this proposal attempts to deal with have been aired by a number of speakers. Until the structures are set up and operating, the jury will necessarily be out as to whether they will be successful.
The first issue, which the noble Lord, Lord Forsyth, raised, is: what is the prospect of this body being any better than its predecessor in actually taking any decisions? The answer is that the previous structure was prey to the whims of one or two powerful people in the Commons. The decision-making structure here, being vested as it is in both commissions sitting jointly, at least means that we will not be subject to whimsical decision-making. That might be a modest expectation and aim, but frankly, given the history of this project, if we can avoid that it will be a major step forward.
The second issue relates to the cost and scope of the project. As the noble Lord, Lord Best, said, there has been a lack of clarity on budget, scope and timescale. In asking for a prospectus that is crystal clear on all those fronts, he is slightly crying for the moon, because, as anyone who has ever done anything in an old building knows, once you start you find that there are problems that you did not know existed. Saying, “We know this is going to cost £X billion and that’s the cash limit”, would be a rather unsatisfactory way of proceeding. We need to know what we want to achieve and the process for getting there, because everything else flows from that. That is what the current process seeks to achieve.
On cost, I completely agree that the original approach is unsustainable in the current climate. The original approach, which we saw in most detail in the plans for decanting your Lordships’ House, was almost on the basis that money was no object. It was terrific: in some of the options we would have had a roof terrace and all these wonderful things, and offices for everybody—far more than there are now. That was unaffordable then in reality, but it is doubly unaffordable now.
Lord Collins of Highbury (Lab)
I agree with all the comments so far, but I repeat the words of my noble friend Lady Smith when we debated the report the SI has come out of, to end the previous structure. She emphasised that this
“is not our building. It belongs to the nation as the home of Parliament, and we have a responsibility as custodians of this building for future generations.”—[Official Report, 13/7/22; col. 1542.]
It is not about what we want but about protecting something that has been the symbol of democracy for hundreds of years. That is my starting point.
Whenever I hear the phrase “we want to avoid political interference”, I know that it will lead to political interference, as opposed to what this project needs more than anything: political buy-in. How do we ensure that when decisions are made, those with the responsibility for funding will support it? There is no point having grand plans if, at the end of it, people say that it is not affordable. We must have political buy-in—
Lord Forsyth of Drumlean (Con)
The noble Lord said that it is not our building. Who, then, is the client? Who is responsible for deciding what happens if it is not the Members of this House and the other place? Who is the client?
Lord Collins of Highbury (Lab)
We clearly are. I am not saying that we are not. I was hoping to make the case that our responsibility is not limited simply to what we want for now. Our responsibility is to look to future generations as custodians of this place and not simply managers. Even more importantly, we talk about accountability, but I want to keep using the words “political buy-in”, because at every stage of this project we have to ensure that there is consensus and political buy-in. When we start making party-political points, we will fail.
When the noble Baroness, Lady Doocey, was Chair of the Finance Committee and I was a member of it, we had regular discussions about this. There is perhaps a wider assumption in the world outside that this building needs restoration and that we are planning a restoration programme, but this building is like the Forth Road Bridge: we have not stopped restoring it. We have spent hundreds of millions of pounds a year to restore the fabric of this building. The problem, as we all know, is that when this building was built by the Victorians it was full of shortcuts and making do. Since then, we too have been making shortcuts and making do, which has added to the problem. A lot of the difficulties we face are from periods when we have made this innovation here and developed something else there. The mechanical and engineering problems we face downstairs did not start with the Victorians; they have been going on since the place was built. How do we address that?
I agree that we can all be frustrated by decisions being made without proper consultation. When I was on the Finance Committee, what I found most frustrating was trying to pin down the people making the decisions and make them responsible for those decisions. We do not make them accountable by taking responsibility away from them; we have to do the opposite. Making them responsible and accountable means that we, as the custodians, should set clear objectives and policies, so that when they are managing the programme, we can ask whether they have met those objectives and whether they have been successful. Those objectives may be cost objectives or other objectives.
The Clerk of the Parliaments has heard me say many times that I want to ensure that he can measure his activity against the clear policies we set. The arguments against decanting are about the big costs and that, in decanting, we are being too extravagant. Actually, one can make the case that decanting could save money. The QEII Centre was built some time ago and its own mechanics and electrics are in desperate need of renewal. That has been postponed, because we may move in and help it to do the work, so the process that we immediately think could cost a lot of money could save the public and the taxpayer a substantial amount of money. The issue is how we define those objectives and look at what we are doing as a whole.
One other thing that the noble Lord, Lord Forsyth, said was absolutely right. When we look at R&R, we must integrate properly what we are doing now in restoring this building. When I was on the Finance Committee, I thought, “Do we delay that to fit it in with R&R? Do we move forward on it? Is it taken into account in R&R?” All these issues have not been properly addressed.
We all have a responsibility—in particular, for the new governance structure, which I support. I should declare an interest, because I am going to be a member of the programme board; hopefully, I will be able to keep expressing the opinions I am expressing today. I will not be saying, “Tell me to make this decision”. I will be saying, “I want you to make the decision, but based on the clear policy objectives set by both the programme board and the two commissions”. That is what I hope to see but I am not fixed, by the way. If someone can persuade me that not decanting fully could work, I will go with it, but I like the idea that setting clear objectives, budgeting properly for them and having proper buy-in is a better way of doing this.
I support the regulations. We have made the decision anyway; we have already had a debate. I think that we will make this project more transparent with more accountability. I support that.
Lord True (Con)
My Lords, I am grateful to all those who have spoken in this debate. I must say, as a fairly recent tenant of the office of Leader of the House of Lords—it is a tenancy—I am finding it interesting trying to find out why and where things happen. Having experienced the horror of a powerful earthquake, as I have in my life, I sometimes feel like the little boy trying to find the butterfly that flapped its wings to cause all these things to happen in the first place.
However, we are where we are. As all those who have spoken in the debate have said, this is an extraordinarily important building. It is a palace of the people. As Leader of your Lordships’ House, I submit that its most fundamental importance is that it provides a place, and should provide an environment, in which Members of Parliament can carry out their fundamental democratic duties to hold Governments to account, consider legislation and discuss both between themselves and across the two Houses how things should be accomplished in the best place and in the best way. However we take this project forward—having listened to this debate, I know that an enormous amount of expertise and thought has been and will be given to this, and I pay tribute to the members of the sponsor body—we must never forget that this is a House of Parliament, and one that cannot simply say, “We can send these people away”.
I note what was said by the noble Lord, Lord Best, whose work on this and contribution to our House have been outstanding. We cannot avoid interference in a House of Parliament, as it was put by parliamentarians. That is why we are here: to make judgments and choose priorities. It may well be true that talk of a decant—the noble Lord was right in what he said on this—did cause some people to be troubled by what was proposed. But I assure your Lordships that the commissions have asked for a wider range of options to decant as we go forward, with Members and staff from areas of the building affected by the works being considered. The House will have future opportunities to take decisions, and it will be informed by full analysis and wide consultation and engagement. As someone said—perhaps it was my noble friend Lord Forsyth—it is important that Members feel engaged and informed as we go forward. The word “transparency” was also used by the noble Baroness, Lady Doocey.
Baroness Doocey (LD)
I am very pleased that the Minister said that there will be more transparency. That is very welcome. I wonder whether he would consider how the figures could be more transparent, because the whole of the spending on both the delivery authority and the sponsor body has been shrouded in secrecy—not for those of us on those bodies, but for everyone else. It would be much better if there was a process—I am not suggesting what it should be—whereby vast expenses are much more open and transparent, so that we can see what the money is being spent on before it is spent.
Lord True (Con)
My Lords, that is an important challenge. On the local authority that I once had the honour to lead, one of the first things I did was ensure that items of spending over a certain level were put on the web immediately, which was not then current practice. I am sympathetic to the aspiration. I am only Leader of the House of Lords; I am not commanding this process. As Leader of the House of Lords I will try to ensure that matters are as clear as they should be.
Lord Forsyth of Drumlean (Con)
On the point about my noble friend not commanding the process—in many ways, I wish he was—there is a real problem, to pick up on what he said about the most recent project. It is a cultural thing. It is a culture of, “We are here to be done unto by people who know what’s best”, and consultation consists of telling us, “This is what is going to be done.” When you say that it is not such a good idea, the response is that it is all decided. If my noble friend can change that culture, it would make it so much easier to make progress.
Lord True (Con)
My Lords, I fear that I have trodden too widely. This is not a debate about me personally—God forbid. Nor is it about the wider culture that my noble friend asserts exists. I have heard that said by others and I am conscious of it, and as a relatively new Leader of your Lordships’ House, as I said, I am extremely concerned that every Member of this House feels involved and engaged with all that is happening. To repeat my opening remarks, which were personal rather than from my draft, this before all else is a place where democratic work has to be done. Therefore, the role of Peers and Members should be pre-eminent in that.
On accountability, the process is being directed not by me but by the new in-house client team, in which I will have a part as a member of the commission on the client board, and it will be required to hold the delivery authority to account for the costs it presents. As I have said, the new head of the team is aware of the need to increase capability. The costs will be presented to the programme board in the way I have described. There will be extra expertise on it. All costs will be presented to the client board composed of the two commissions. I have described the process and will not go over it again. I am conscious of the noble Baroness’s challenge, and I am sure that those who read the debate will be too.
At this point, and with these regulations, we are simply seeking to wind up the sponsor body and launch the new ship, which I hope, despite the scepticism of noble Lord, Lord Best, who also expressed hope, will take us forward in an effective way, allowing Peers and Members to feel involved when considering options that will be presented next summer and which will come before both Houses for decision at the end of the year. We are just starting this process. I submit that we should allow and support it going forward. For all the proper scepticism that some noble Lords have expressed, I think the noble Lord, Lord Newby, is right to say that, ultimately, we have to do our duty to make sure that this building is fit for purpose and for future generations. That is the challenge.
It is clear that most who have spoken and others I have spoken to are committed to ensuring that this remarkable building, which we can proudly call our place of work, is protected for future generations. I hope that noble Lords will join me in supporting these regulations, which will come into force on 1 January 2023, as well as in supporting the delivery authority and those involved in programme going forward. All parties are represented on the boards involved, and I agree with the noble Lord, Lord Best, that there should not be politicisation of the process. It is important that those from all parts of both Houses should come together to ask challenging questions and to put themselves in a position to make decisions next year.
Motion agreed.
Public Contracts (Amendment) Regulations 2022
Baroness Bloomfield of Hinton Waldrist
That the Grand Committee do consider the Public Contracts (Amendment) Regulations 2022.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, these regulations, which were laid before the House on 8 November, have two functions. First, they amend the domestic public procurement regulations to ensure that changes in calculation of VAT in the valuation of contracts do not place undue burdens on contracting authorities. Secondly, they will ensure that NHS trusts and NHS foundation trusts are treated consistently for the purpose of applying certain obligations which promote transparency.
Public procurement in the UK above certain financial thresholds is currently regulated by the procedures laid down in the Public Contracts Regulations 2015, known as the PCRs. These financial thresholds are set down in the World Trade Organization’s Agreement on Government Procurement, known as the GPA, and are revised at international level every two years to take account of currency fluctuations. Those revisions are subsequently implemented domestically, by amendment of the PCRs, to ensure that the UK complies with its obligations under the GPA. These thresholds for regulated public procurement are not altered by this SI.
The PCRs also outline specific, less prescriptive procedures for public procurement carried out below these thresholds in order to facilitate access to public procurement for SMEs. This takes place by requiring opportunities to be advertised on a portal called Contracts Finder and by prohibiting assessments of suitability where they are used to narrow the field, rather than as part of the assessment of bids. Below-threshold regulation also improves transparency by requiring the publication of details of the contract published. The thresholds are currently £10,000 for central government bodies, known as central government authorities, and £25,000 for wider public sector bodies, known as subcentral authorities.
This SI will implement changes only to the lower-value thresholds in the PCRs and therefore only impact on the regulation of lower-value contracts. The amendments are necessary in order to address the impact of the new requirement to include VAT in the assessment of contract value. The change to how VAT is considered in estimating the value of a contract is a result of the UK joining the GPA as an independent member following EU exit. When the UK was a member state of the EU, it was obliged to adopt the EU’s methodology for calculating the estimated value of contracts. The EU’s thresholds included a 13% unilateral VAT reduction agreed upon in 1987 as a solution to a dispute with the United States. As such, contract values were to be calculated exclusive of VAT. This was, and remains, an internal EU measure which it is no longer appropriate to apply in the UK now we are an independent member of the GPA. Last year, we therefore amended the 2015 regulations, such that contracting authorities are now required to include VAT in the estimation of contract values for the purposes of establishing whether a contract is above or below the threshold.
To ensure a consistent approach, this change was applied to all thresholds in domestic procurement regulations, including the lower thresholds. While the upper thresholds were increased to make allowance for this, the lower thresholds were not, which in effect has resulted in a reduction to those thresholds. This instrument will rectify this discrepancy by raising the lower thresholds for central government authorities from £10,000 to £12,000 and for subcentral authorities from £25,000 to £30,000. This will ensure the thresholds effectively remain the same once contract values are calculated inclusive of VAT, thus avoiding bringing additional low-value contracts within scope of the below- threshold regime.
Turning to the second function, this instrument also provides that NHS foundation trusts are to be treated consistently with NHS trusts and be regarded as subcentral authorities. By way of background, for the purpose of the below-threshold regime, subcentral contracting authorities, such as local authorities, are subject to the higher of the two contract value limits for the purposes of publishing notices on Contracts Finder. NHS trusts are considered central government authorities, being listed on Schedule 1 to the PCRs; however, following consultation it was agreed that NHS trusts would sit alongside subcentral authorities in applying the higher value limit to below-threshold procurement and this is reflected in these regulations. At the time, the term “NHS trusts” was taken to mean all NHS trusts, including foundation trusts.
NHS foundation trusts were added to Schedule 1 to the PCRs last year as a category distinct from other NHS trusts. The unintended consequence was that NHS foundation trusts must now follow the lower contract value limit of £10,000 in respect of publishing notices on Contracts Finder.
This has caused confusion within the NHS, particularly because NHS foundation trusts, being semi-autonomous organisational units within the NHS, were established to have more financial and managerial freedom than classic NHS trusts. It is therefore seen as inappropriate that they should be held to the central government threshold for publication when NHS trusts are not. This amendment will rectify that by applying the same threshold to NHS foundation trusts as is currently observed by NHS trusts.
There is no impact on the Procurement Bill; having just seen that Bill through its Third Reading, I am pleased to be able to say that. This SI simply amends the existing legislation. The regulation of below-threshold procurement in the Procurement Bill is intended to continue the position that will be reached by this SI and will set the lower value limits at £12,000 and £30,000 respectively.
I commend these regulations to the Committee and beg to move.
Baroness McIntosh of Pickering (Con)
My Lords, I welcome this opportunity to raise an issue that arose during the passage of the Procurement Bill through the House. I congratulate my noble friend the Minister on introducing the regulations before us, which I support.
All I seek is an assurance and confirmation from my noble friend that, with these limits being lower than the limit to which we are subscribed under our independent membership of the GPA, produce from local growers, farmers and agricultural producers will be accepted in preference to those coming from the EU or other countries. Basically, it is about trying to support home-grown food and our farmers as they embark on a more sustainable way of farming.
I understand that, because the Procurement Bill is very specific, we are signed up in the same way as we were to the EU’s thresholds when we were part of it and cannot bid for such contracts over $136,000. Can my noble friend commit to the fact that we will be able to encourage our farmers to supply local hospitals, as in this case, but also military defence establishments, schools, prisons and all other public procurement contracts to ensure that we source more of our food for these establishments locally than has previously been the case?
Lord Scriven (LD)
My Lords, I thank the Minister for presenting this set of regulations in such a clear, concise and understandable way to try to make sense of the existing situation post the situation that she talked about.
These Benches support the thrust of and details in the statutory instrument but I want to ask a couple of questions. First, I am somebody who is not an expert in statutory instruments, but the dates on which the SI is to be made and come into force have three asterisks next to them. Is that normal? When is this statutory instrument intended to come into force?
The second issue is to do with the thresholds and the use of VAT. Some goods are exempt from VAT while some have a VAT level of 5%. The effect of putting in the statutory instrument the figures of £12,000 and £30,000 will be that some contracts, for example in printing, will by default have a slightly different total value than those with a 20% rate of VAT because they are exempt from VAT. Would it not be more sensible to use the figures of £10,000 and £25,000 and include a provision that the threshold for the contract will be at the rate of VAT for the goods and services being procured, rather than having a blanket rule when some goods and services do not have a VAT rate of 20%?
With those questions, as I say, these Benches support the thrust of and reasoning for this statutory instrument.
Baroness Chapman of Darlington (Lab)
This is really just about making a change in order to keep things the same. We certainly agree with the decision about NHS trusts and foundation trusts but I have a question about services or goods that are VAT-exempt and the Government’s thinking on them. There also seems to be a delay in this issue coming about and it being rectified. I wonder whether that may has disadvantaged some businesses, particularly small businesses, over that period.
I notice that, when consideration of this instrument was raised in another place, my colleague, Flo Eshalomi, asked specifically why it has taken the Government nearly a year between introducing the new regulatory scheme on 1 January 2021 and attempting to fix this inconsistency. When the Minister responded, he did not answer that at all. I am concerned, as it is troubling that something so straightforward and uncontentious was allowed to drift for so long. What does the Minister make of that? Does she have an assessment of what the impact of that might have been?
Baroness Bloomfield of Hinton Waldrist (Con)
I am grateful to all noble Lords who spoke in this short debate. I will answer the noble Baroness, Lady Chapman, first. I do not have a satisfactory response to her question about why this instrument was not laid sooner. We simply laid it as soon as parliamentary time allowed. I recognise that, as that was almost a year, this is not entirely satisfactory.
My noble friend Lady McIntosh asked about farmers. I applaud her commitment to the farming community. I assure her that the principles of non-discrimination still apply to below-threshold contracts. This does not have a bearing on procurement from the farming community, as such. She raised those issues very effectively during the debates on the Procurement Bill; I am sure that they will continue to be discussed as that Bill goes through the other place.
The noble Lord, Lord Scriven, asked about exemptions from VAT and about asterisks. I am told that asterisks are typical and that the SI will come into force in line with the articles in it—basically, as soon as it has been signed.
On the question about VAT from both the noble Baroness, Lady Chapman, and the noble Lord, Lord Scriven, there are two reasons why we use 20% as standard. It aligns the methodology for estimating contract values for the purpose of applying thresholds with GPA parties, such as Japan and the USA, which are not part of the EU and therefore do not have the EU 13% VAT reduction that was agreed in 1987. Also, when contracting authorities are estimating their contract values, the £10,000 threshold will no longer be reduced to £8,333.33, assuming a 20% VAT rate is applied. That is why we are raising the thresholds to £12,000 and £30,000 respectively: it maintains the lower threshold at £10,000 before 20% VAT is added, taking the value to £12,000; and similarly £25,000, before 20% VAT is added, taking the value to £30,000. We are aware that VAT is not always set at £20,000 but it will not be less than this figure, hence why we assume this rate.
In short, as I have said, the instrument makes two brief but important corrections to the regulations governing the below-threshold regime. It will adjust the lower-value procurement thresholds upwards to reduce the burden on contracting authorities and ensure that NHS foundation trusts are placed on an equal footing with NHS trusts in respect of the application of these thresholds. The changes to the lower thresholds will be made under the affirmative procedure using the powers in Section 39 of the Small Business, Enterprise and Employment Act. This regulation-making power permits the Minister for the Cabinet Office or the Secretary of State to
“impose on a contracting authority duties in respect of the exercise of its functions relating to procurement.”
I am grateful for noble Lords’ support for this statutory instrument; I commend it to the Committee.
South Yorkshire Passenger Transport Executive (Transfer of Functions) Order 2023
(2 years ago)
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Baroness Vere of Norbiton
That the Grand Committee do consider the South Yorkshire Passenger Transport Executive (Transfer of Functions) Order 2023.
The Parliamentary Under-Secretary of State, Department for Transport (Baroness Vere of Norbiton) (Con)
My Lords, this draft order was laid before Parliament on 8 November. It is solely concerned with the South Yorkshire Passenger Transport Executive and the South Yorkshire Mayoral Combined Authority, and has been laid at the original request of the former Mayor of South Yorkshire, Dan Jarvis MP, with the full support of the current Mayor of South Yorkshire, Oliver Coppard.
The order is being made under Section 85 of the Transport Act 1985, which allows the Secretary of State for Transport to make provisions for the dissolution of PTEs and the transfer of their functions, property, rights and liabilities to the relevant integrated transport area. This order will dissolve the South Yorkshire PTE and transfer its functions, property, rights and liabilities to the South Yorkshire MCA.
PTEs are delivery bodies responsible for implementing the strategic transport plans in their area. They are responsible for securing the provision of local public transport across their area as they consider appropriate, including commissioning socially necessary bus services and administering travel concession schemes. PTEs have existed in many of our largest city regions for many years, predating combined authorities, which are now responsible for transport planning in their areas.
The South Yorkshire PTE was established by the South Yorkshire Passenger Transport Area (Establishment of Executive) Order 1973 and was variously accountable to the metropolitan county council, the passenger transport authority and the integrated transport authority in South Yorkshire until the South Yorkshire integrated transport authority was dissolved and its functions transferred to the South Yorkshire Mayoral Combined Authority by the Barnsley, Doncaster, Rotherham and Sheffield Combined Authority Order 2014. As well as its responsibilities in relation to buses, the South Yorkshire PTE also owns Supertram in Sheffield and is responsible for the arrangements for its operation.
The South Yorkshire MCA’s 2019 review of bus services in its area, chaired by Clive Betts MP, recommended among other things that the PTE cease to exist as a separate organisation and instead become part of the combined authority. The review concluded that a separate arm’s-length transport authority was no longer the right model and that a single entity responsible for bus transport strategy and delivery in South Yorkshire would provide a clearer focus on passenger needs and user-centred transport design and delivery.
As the review notes, this is already the case in other city regions—for example, the West Midlands and West Yorkshire—while other city regions, including Greater Manchester and the Liverpool City region, have chosen to retain their PTEs as executive bodies of their combined authorities. The Government recognise that a single entity may support the alignment of transport priorities with economic growth and decarbonisation objectives. However, providing that there are clear lines of accountability and sound governance in place, it is right that combined authorities determine which arrangements are best for their area. In this case, South Yorkshire has also identified scope for efficiency savings that could be reinvested in the local bus network.
Following the bus review, the then Mayor of South Yorkshire asked the Department for Transport to take the necessary steps to transfer the functions of the PTE to the combined authority. The Secretary of State agreed to do so and my officials have worked closely with the mayor’s team to bring forward this order. The order will make the MCA responsible for planning, delivering and managing local public transport services, bringing these functions under a single roof.
This order will make a straightforward and sensible amendment to the administration of local transport services in South Yorkshire at the request of the mayor. It is important that the Government deliver on devolution, supporting local authorities in providing services more efficiently for the people in their area. I beg to move.
Lord Scriven (LD)
My Lords, I declare an interest as a long-suffering passenger in South Yorkshire. I live in Sheffield, and I am well aware of the area and of the request of the former mayor and the current mayor, Oliver Coppard, for this change. However, in South Yorkshire we are bit perplexed, not because we are not bright people but because since August, as the Minister said, the functions of South Yorkshire Passenger Transport Executive have moved to the mayoral combined authority.
South Yorkshire Passenger Transport Executive’s website still exists. Its last post was on 31 August. It states:
“To better reflect who we are, the communities we serve and the way we work we changed our name on 17 September 2021 from ‘South Yorkshire Passenger Transport Executive’ (SYPTE) to ‘South Yorkshire Mayoral Combined Authority’ (SYMCA).
SYPTE will continue to exist and retain the responsibilities of the local transport authority until the legal integration of SYPTE and SYMCA is complete”.
which is what this statutory instrument does. However, there is no reference on the mayoral combined authority’s website to its function separate from the mayoral authority. There is no way that a member of the public can work out what is happening and there does not seem to be any oversight of the functions of the passenger transport executive. It seems from a lay person’s perspective—and from my perspective, and I used to lead a city in South Yorkshire—that by default this has just happened and there is no dividing line. What assurance does the department have that there has been separation until this order goes through and that it is still there? How has the department checked that separation and that the passenger transport executive is independent?
More important for those of us living in South Yorkshire is whether this is an administrative change. We want to see an impact on our buses and trains, not just the deckchairs on the “Titanic” being shuffled as our public transport sinks. Will the Minister say exactly what difference the order will make, and what powers that do not currently exist in South Yorkshire will be brought to bear that will mean that our bus services will be better—or is it just that the existing powers are being shifted to somebody else and therefore the mayor is unable to get anything extra that the passenger transport executive could not get? That is the key issue. Administration is good, but administration for a purpose is the most important thing. Will the Minister explain to the people of South Yorkshire and to the Committee why this administrative change will have an effect on the bus and train services in South Yorkshire?
For example, 103 TransPennine Express trains were cancelled yesterday—a record for the north of England, many affecting people in South Yorkshire. Will these changes have any effect on the mayor’s ability to hold TransPennine Express to account? Will this new statutory instrument mean that the mayor will be able to do things that the passenger transport executive was not able to do to help with our buses and trains in South Yorkshire?
The reason why I ask this is really important. Mayor Coppard has a very good way of blaming others for the poor state of buses and trains. To some degree he has a point, but if he asks for these powers, what is it that he will be able to do that people in South Yorkshire—either democratically elected councillors who are on the passenger transport executive or the leaders of the council who make up the South Yorkshire Mayoral Combined Authority with the mayor—are unable to do at present? I look forward to answers from the Minister, because an administrative change is welcome if there is an effect on our buses and trains but not if it is just a shuffling of administrative posts back in South Yorkshire.
Lord Tunnicliffe (Lab)
My Lords, I welcome this order to merge the South Yorkshire Passenger Transport Executive into the South Yorkshire Mayoral Combined Authority. This step should lead to more effective and more accountable decision-making, but it is disappointing that it has taken this long for the order to be implemented. I begin by asking the Minister to confirm that the department is engaging with the South Yorkshire Mayoral Combined Authority and its constituent local authorities to ensure there are no further delays.
Powers and reform must be matched with investment, and it is clear that the Government lack ambition for the future of South Yorkshire’s transport network. Today, Ministers still spend three times per head more in London than in Yorkshire and the Humber. If the South Yorkshire Mayoral Combined Authority is to deliver a truly trans- formative agenda, then the Government must provide real support. I hope the Minister will commit to that.
Baroness Vere of Norbiton (Con)
My Lords, I am grateful to both noble Lords for their contributions to this short debate. I hope I was able to warn the noble Lord, Lord Scriven, in my opening remarks that this is an administrative change: it is nothing more exciting than that, but it makes sure that the accountability, responsibilities and governance are clear. It also saves the MCA having both the PTE and the MCA structure, so there will be some small savings. We were asked for this, and it is not something that we would necessarily have required of all MCAs, because MCAs should be able to choose how they administrate their local transport powers. There are no changes to the powers that the mayor will have, although colleagues in DLUHC are looking at taking forward further devolution for places in due course.
Lord Scriven (LD)
The Minister has a difficult job in defending this in terms of accountability. People understood the South Yorkshire Passenger Transport Executive, and councils were accountable at a local level for being on it. My point is that, since the transfer of the passenger transport executive to the mayoral authority, all that the South Yorkshire Passenger Transport Executive did has been lost in the myriad of what the mayoral authority does. The public are finding it harder than before to hold anyone to account for what is going on. All this does is formalise exactly the hybrid situation that has been in place since early 2021. As for accountability, if it continues as it has done since the partial incorporation, it does not make the accountability easier; it actually makes it harder.
Baroness Vere of Norbiton (Con)
I beg to differ with the noble Lord on this matter. The people of the constituent local authorities can of course take it up with Mayor Coppard, as the elected mayor. The local authorities that are the constituent parts of the combined authority can also take it up with that elected mayor. All this is doing is trying to take out some of what Mayor Coppard must believe to be unnecessary administration between him and his team and the operation of effective local transport systems. I literally have no further lines on that. If the noble Lord has a problem about establishing accountability, I reassure him that Mayor Coppard is accountable and he should of course raise those issues with him.
I hope the noble Lord knows—I am sure he does—that heavy rail services do not operate under these arrangements but, of course, we look to locally elected mayors to engage very robustly with train service operators in their area. It is the case that light rail services will fall under the remit of the local transport plans that Mayor Coppard will no doubt take forward for the benefit of local people.
On the questions raised by the noble Lord, Lord Tunnicliffe, I suppose one could say that there has been a short delay in putting this administrative order in place. We got to it as soon as we could, but there is pressure on parliamentary time at the moment. I believe that the delay was not excessive and throughout all that time we have had a strong relationship with the local mayor and his team. Indeed, from a transport perspective we have a good relationship with all the local mayors. When I covered that portfolio, I would frequently have conversations with them to hear their concerns and listen to what they wanted as investments.
It is worth touching on some of the investments that we have made and are making in South Yorkshire. South Yorkshire has received £570 million from the city region sustainable transport settlement, which is just part of the £5.7 billion that is going to eight mayoral combined authorities. The South Yorkshire amount includes just over £100 million for the renewal of the Supertram in Sheffield. Prior to that, the area received £150 million as part of the transforming cities fund. The MCA has been awarded £8.3 million in ZEBRA funding to fund zero-emission buses. In addition, from the local growth fund there was £42.3 million towards the Lower Don Valley scheme in Rotherham. There was also a successful bid in round 1 of the Restoring your Railway Fund.
We always look to the mayors of our large cities and city regions to put forward investment ideas, and are grateful that they have done so. The city region sustainable transport settlement schemes are now, I think, all finalised. It is now a question of getting them delivered, and I very much look forward to seeing some of those projects come to fruition to improve transport, not only in South Yorkshire but in all the mayoral combined authority areas that have been the beneficiaries of our investment.
Product Safety and Metrology (Amendment and Transitional Provisions) Regulations 2022
(2 years ago)
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Lord Callanan
That the Grand Committee do consider the Product Safety and Metrology (Amendment and Transitional Provisions) Regulations 2022.
Relevant document: 20th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, since 1 January 2021, the post-exit UK conformity assessment—UKCA—marking has been in use alongside recognition of the EU’s CE and reversed epsilon markings. For most product sectors, recognition of the CE marking in Great Britain is due to end at 11 pm on 31 December this year. The main objective of this instrument is to reduce immediate cost increases and burdens for businesses, given the current cost of living crisis and global supply issues, by providing businesses with additional time to transition to UKCA requirements. This means that businesses will continue to have flexibility in how they can legally place products on the market in Great Britain while maintaining high levels of product safety for British consumers. Without the measures implemented by this instrument, industry will have to meet UKCA requirements from 1 January 2023 at a time of economic hardship for many businesses.
By way of background, the UKCA marking was introduced in Great Britain to replace the EU’s CE marking. As a result of Brexit, we have the autonomy to set our own product regulations and ensure that they work for businesses and consumers in this country. To place products on the market in Great Britain, manufacturers must ensure that products meet the essential safety requirements of relevant product legislation. Compliance is achieved by following a conformity assessment procedure. For lower-risk products, manufacturers can self-declare compliance; for higher-risk products, manufacturers may need to go to a conformity assessment body—a CAB—for product testing.
We have of course engaged with businesses on the challenges that they face in transitioning to UKCA. The feedback that we received from industry informed the decision to announce a range of measures in June to make it easier for businesses to use the UKCA marking. However, given the current cost of living crisis and economic challenges that businesses are facing, we need to go further in our support. The SI will not only implement the measures announced in June but provide flexibility to allow businesses to use CE marking or UKCA marking for their goods for a further two years.
Over the past 12 months, officials have delivered an extensive programme of domestic and international engagement to support businesses transitioning to the UKCA regime. Officials have also engaged with UK conformity assessment bodies and worked closely with the UK Accreditation Service to ensure that organisations that wish to become UK CABs can do so.
Despite the work we have done to support industry to transition, industry engagement has indicated that the additional costs and burdens of fulfilling UKCA requirements may be impacting UKCA business uptake. Although we recognise that a further extension to the recognition of CE marking may raise questions about the future transition timescales to the mandatory UKCA regime, we believe that the benefits of reducing immediate burdens and costs for industry in the current economic climate outweigh the potential risk of business hesitancy to prepare.
The UKCA marking remains valid when placing goods on the market in Great Britain. We will continue to engage with industry closely to provide businesses with support and to understand how to take a pragmatic approach to improving regulation to the benefit of businesses and consumers.
I turn to the key elements of the instrument. First, this instrument extends the time for existing transitional provisions allowing certain products meeting EU requirements and markings to be placed on the market, or put into service, in Great Britain. This will give businesses the option to choose to use the CE marking for a further two years until 31 December 2024.
Secondly, this instrument provides that where a manufacturer has undertaken any steps under EU conformity assessment procedures in the period up to 31 December 2024 but those goods have not been placed on the Great Britian market, those steps will be taken to have been done under the equivalent UK conformity assessment procedures. This applies for only as long as any certificate issued is valid or until 31 December 2027, whichever is sooner.
Thirdly, this instrument extends time for existing labelling easements. This will allow businesses to affix the UKCA marking and to include importer information for products imported from EEA countries, and in some cases from Switzerland, on a label affixed to the product or an accompanying document, rather than on the product itself.
The SI does not cover all product areas that require UKCA marking, and there are different rules in place for medical devices, construction products, cableways, transportable pressure equipment, unmanned aircraft systems, rail products, and marine equipment.
Without the measures implemented by this instrument, most businesses will have to meet UKCA requirements from 1 January next year for product sectors covered by this instrument, at a time of cost of living increases and global supply chain challenges. From 1 January 2023, if businesses are unable to meet UKCA requirements, most businesses will not legally be able to place their products on the Great British market. This could cause short-term market and supply chain disruption across different sectors. In turn, reduced product availability could translate into higher costs for commercial supply chains and consumers.
In conclusion, I hope noble Lords will recognise that, at a time of cost of living increases and global supply chain challenges facing UK businesses, it is vital that the UK Government continue to support businesses. Without this legislation in place, recognition of the CE marking in Great Britain would end at 11 pm on 31 December 2022 for most product sectors. The main objective of the instrument is to provide businesses with additional time to transition to the post-exit independent UK conformity assessment marking by providing flexibility to use either CE marking or the UKCA marking, while maintaining high levels of product safety for UK consumers. Therefore, I commend the regulations to the Committee.
Baroness McIntosh of Pickering (Con)
While my noble friend pauses for breath, I thank him for introducing the regulations. What will their status be in the context of the EU retained law Bill? Will this be one that the department seeks to keep or to dispense with?
Lord Lennie (Lab)
My Lords, I thank the Minister for his detailed introduction to this instrument, the main objective of which is to provide businesses with additional time to transition to the post-exit independent UK conformity assessment, the UKCA. As has been said, the UKCA is a conformity mark that indicates conformity with the applicable requirements for products sold within GB.
The purpose of the instrument, without compromising on safety or consumer and environmental protection, is to correct a deficiency arising from EU exit by preventing immediate cost increases and burdens on businesses, which the Minister set out. It will ensure that businesses continue to be provided with flexibility and choice on how they comply with product regulations. The instrument’s provisions will also prevent potential temporary and short-term market and supply chain disruption that may have occurred at the start of 2023 if the recognition of products meeting EU requirements and markings came to an end at the end of December 2022.
We support the instrument overall, but I have some questions in response to the provisions that the Minister set out. First, this is the second extension and it is significantly longer than the first one. What are the Government getting wrong? Is it entirely down to cost of living and supply chain challenges? How sure are they that this will be the last time? If they are not, what needs to change for there not to be another extension?
On the second set of provisions that the Minister set out, the instrument provides for where a manufacturer or other relevant persons has undertaken steps under EU conformity assessment procedures. This applies only as long as the certificate is valid or until 31 December 2027. This seems sensible and the benefits of reduced costs are self-evident, but does it come with any risk? If so, are the Government taking any steps to mitigate this risk? If not, why not just carry over everything? Why is that date specified?
Lord Callanan (Con)
I thank my noble friend Lady McIntosh and the noble Lord, Lord Lennie, for their forbearance and for being the only ones to turn up and talk about my regulations. They deserve special Christmas medals for that and for the valuable contributions they made to the debate.
The regulations under consideration today are essential to support businesses within the context of the rising cost of living and the many global supply chain challenges they face. As I said in my introduction, for most product sectors, recognition of the CE and reversed epsilon marking in Great Britain is due to end at 11 pm on 31 December. This legislation will therefore provide industry with additional time to transition to the UKCA regime, for most product sectors. It will give businesses continued flexibility in how they can legally place products on the market in Great Britain, by allowing them to use either the CE marking or the UKCA marking, until 31 December 2024.
If this legislation is not implemented, and businesses are therefore unable to comply with UKCA requirements by the end of this year, most businesses will not legally be able to place their products on the Great British market. Industry will also not be able to benefit from the transitional labelling and retesting measures provided by this instrument.
My noble friend Lady McIntosh asked how this instrument relates to the passage of the retained EU law Bill. I would remind my noble friend that the Bill is a separate piece of legislation, with its own aims. Sunsetting retained EU law will help to review and simplify our statute book, ensuring that we understand and utilise what is left and do away with any unnecessary legislation. The deadline is not about a cliff edge but about having a focused date to create the impetus for change, enabling the UK to make the most of its new-found freedom from the EU and build a domestic regime that works for the British people. We will use the additional time under this instrument to address challenges that businesses have raised regarding transition to UKCA, and consider whether we can reduce regulatory burdens in the longer term. The short answer to my noble friend’s question is that these regulations are unaffected by the REUL Bill.
The noble Lord, Lord Lennie, asked whether there would be a further extension and what needs to change to present a further extension. This instrument shows that the Government are committed to taking a pragmatic approach to implementing post-Brexit rules. We have engaged and listened to industries’ concerns, and have responded accordingly on our approach to implementing the UKCA markings. Over the next two years, we will continue to engage with businesses to understand whether there are any further actions that we need to take to minimise burdens on them.
The noble Lord also asked whether the measure on testing would come with any safety implications and whether this could not be done for the longer term. We are confident that extending recognition of the CE marking will not impact product safety or consumer protection. We have made this decision because we want to support industry as much as possible, while maintaining high levels of consumer protection. However, it is important that we introduce our own regulatory approach. An autonomous domestic product regulation regime allows us to set our own product regulations and make them better for UK businesses and consumers, while ensuring high levels of protection from unsafe goods.
The noble Lord also asked why these changes must be made when they are effectively de minimis. We know that lots of businesses are already ready; however, it is right that we provide additional support in the current economic context. In October, 89% of UK manufacturers subject to the UKCA market were either using or planning to use UKCA. However, the risks that we outlined remain, which is why we have acted.
Lastly, the noble Lord noted the Secondary Legislation Scrutiny Committee’s report, which highlighted concerns that businesses have already spent money to prepare for the UKCA regime and may have concerns about future changes. Ultimately, the UKCA marking remains valid when placing goods on the market in Great Britain and can still be used by businesses. We will continue to engage with industry closely, and to understand and manage any implications that are flagged up to us.
I underline once more that these regulations are essential to support industry in a time of economic hardship. They will provide businesses with the flexibility to use either the CE marking or the UKCA marking to avoid potential economic impacts, supply chain disruption and the likelihood of limited product availability. We will continue to engage closely with industry to provide support to businesses, and to understand how to take a pragmatic approach to improving regulations for the benefit of businesses and consumers, while maintaining our commitment to high levels of protection for UK consumers. I therefore commend these draft regulations to the Committee.
Conformity Assessment (Mutual Recognition Agreements) (Amendment) Regulations 2022
(2 years ago)
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Lord Callanan
That the Grand Committee do consider the Conformity Assessment (Mutual Recognition Agreements) (Amendment) Regulations 2022.
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, I beg to move that the draft Conformity Assessment (Mutual Recognition Agreements) (Amendment) Regulations 2022, which were laid before the House on 21 November 2022, be approved.
Switzerland is the UK’s 10th-largest trading partner, with bilateral trade between our two countries worth £38 billion in 2021. The UK and Switzerland have strong economic and historical ties, and both our countries have been clear about a shared commitment to maintain a strong trade and investment relationship.
In 2019, the UK and the Swiss Confederation agreed a trade agreement bringing together a number of different areas covered by the EU’s various agreements with Switzerland. Included as part of this were provisions to replicate the mutual recognition agreement between the EU and Switzerland for three sectors of UK-Swiss trade: motor vehicles, good laboratory practice and good manufacturing practice for medicinal products. It was possible to reach agreement in these sectors because many of the applicable rules were already aligned internationally. Between them, these three sectors covered 70% of the UK/Swiss trade covered by the old EU/Swiss mutual recognition agreement.
Although this covered a significant amount of trade, the UK and Switzerland committed through a memorandum of understanding to continue to work towards an agreement in the remaining chapters; the UK and the EU also agreed temporary measures to aid continuity of trade in 13 sectors until such an agreement could be reached. On 17 November this year, the UK and Switzerland successfully concluded a mutual recognition agreement in five of these remaining sectors. From hereon in, I will refer to this as the MRA.
The MRA supports trade in goods between the UK and Switzerland by reducing technical barriers to trade but, importantly, it does so in a way that protects the UK’s robust product safety system. The UK’s product safety legislation requires certain products to be assessed to ensure that they meet requirements in legislation. Sometimes this assessment must be done by third parties that are independent of the manufacturer. MRAs can reduce barriers and costs by allowing this assessment to be undertaken by a conformity assessment body—a CAB—based in the UK for export to the relevant country, in this case Switzerland. We make the same arrangements for Swiss businesses so that the agreement procedures carried out by recognised Swiss CABs are accepted for the purposes of our domestic regulations.
The SI that we are debating today implements this MRA to ensure continuity for UK businesses trading conformity-assessed goods with Switzerland. It does this by amending the earlier 2021 regulations made by my department, which implement MRAs with other countries so that they also include the Swiss MRA. I will return to this briefly when discussing the territorial scope and specifics of the regulations.
Let me now address the measures that we are taking to recognise Swiss bodies and appoint UK bodies under this MRA. This SI provides for the Secretary of State to designate CABs as competent to assess that certain goods comply with the regulatory requirements of Switzerland under the MRA as set out in the schedule to the SI. For example, this means that, where a UK- based CAB would like to be recognised by the Swiss authorities as capable to assess goods against the Swiss measuring instruments requirements, it can apply to UKAS—the United Kingdom Accreditation Service —to be accredited as fit to test against those Swiss requirements. The Secretary of State may then designate the body under the Swiss MRA to assess, for example, measuring instruments for export to Switzerland.
As a result, a UK manufacturer that uses the services of that UK CAB can now use the same body to do its accreditation for the Swiss market. It does not need to identify and start contracting with another CAB operating in Switzerland. This should reduce its costs and make it able to place products on the Swiss market more cost effectively, potentially passing savings on to consumers.
Lord Lennie (Lab)
My Lords, I thank the Minister for setting out the details of the regulations for us. I note that we have lost our one Back-Bencher, so it is now a two-person show, but there we go.
This instrument makes provision to give effect to a mutual recognition agreement—an MRA—between the United Kingdom of Great Britain and Northern Ireland and the Swiss Confederation. It amends earlier regulations. An agreement between the UK and the Swiss Confederation came into force on 1 September 2021 and contains the conditions under which each country will accept conformity results from the other. The five areas it covers are: electrical equipment; measuring instruments; radio equipment; transportable pressure equipment; and noise emitting equipment for use outdoors. The MRA for these is a mutual testing arrangement between Switzerland and Great Britain, but is there any expectation that the sectors covered by this MRA will be expanded in the future? The Minister referred to 12 areas and we have five with us. Are the other seven going to be covered by the regulation at some point in the future?
Equally, the MRA sets out how relevant goods can be tested—Switzerland against UK regulations and UK against Swiss regulations. Are there any notable divergences or are they simply technical adjustments between one and the other? The UK has MRAs with several countries agreed as part of arrangements made under the UK’s trade continuity programme. To this extent, the assessment is the same as that performed to assess conformity with requirements in third countries. This may reduce the need to duplicate conformity assessment. This will provide continuity. It will also have the benefit of saving time for manufacturers, with products being able to be placed on the market more quickly than if they were required to undergo a separate test of conformity in the UK as well as in Switzerland before they arrive.
The instrument implements the Swiss MRA in a similar way, by amending Schedule 1 to the 2021 regulations so that it includes all the domestic regulations which the UK may recognise for Swiss CABs to test against under the Swiss MRA. Since 1 January 2021, the UK and Switzerland have granted temporary bilateral access to goods conformity, assessed against each other’s regulations. Switzerland will no longer apply these temporary measures for new conformity assessment procedures carried out by bodies based in the UK after 31 December 2022. Under reciprocal arrangements set out in the Swiss MRA, conformity assessment procedures issued before this date will still be recognised for goods placed on the market in 2023, ensuring continuity of trade between the parties.
When the Swiss MRA enters into force in 2023, conformity assessment bodies will be permitted to issue new approvals for conformity assessment procedures once they are designated under the agreement. The Swiss MRA specifies the products and sectors to which it applies, such as radio equipment. The amended 2021 regulations also set the power of the Secretary of State to designate UK CABs for the purpose of assessing against Swiss requirements. The instrument amends Schedule 2 to the 2021 regulations to include product sectors of the Swiss MRA.
The main direct impact for business associated with this new legislation will be a one-off familiarisation cost, at a central estimate of £2,300. More specifically, as of 11 October this instrument would have familiarisation impacts on only around 300 affected businesses which are involved in the manufacture and sale of the products within the scope of the instrument, and which trade those products with Switzerland but not the EU. The familiarisation costs should presumably be balanced out by the reduced bureaucracy in having to meet a single assessment conformity. Have the Government made any assessment of the value of exports made by the 300 UK businesses to Switzerland that would be required to break even in this regard?
Lord Callanan (Con)
I thank the noble Lord, Lord Lennie, for his comments. It is clear that this SI will maintain our robust product safety framework, at the same time as reducing barriers to trade with Switzerland. It will do this by providing for recognition in Great Britain of conformity assessment by Swiss CABs for certain products under the MRA, while Swiss bodies will be recognised in Northern Ireland under their country’s MRA with the EU; and by providing for the Secretary of State to designate UK CABs to assess against the requirements of Switzerland for certain products under an MRA.
In response to the noble Lord’s questions, I will have to get back to him in detail on the points that he raised, and in writing. In the meantime, I hope he will give us forbearance and allow me to do that, while agreeing that technical agreements such as this play an important function in the landscape of new trade agreements that the Government are negotiating with partners around the world. With these agreements, we demonstrate our commitment to free trade through a variety of means to promote growth in the UK.
With my apologies for not having a detailed answer for the noble Lord, I will get back to him. I again commend these regulations to the Committee.