Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Henig) (Lab)
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.
Radio Equipment (Amendment) (Northern Ireland) Regulations 2023
Lord Evans of Rainow
That the Grand Committee do consider the Radio Equipment (Amendment) (Northern Ireland) Regulations 2023.
Relevant documents: 27th Report from the Secondary Legislation Scrutiny Committee
Lord Evans of Rainow (Con)
My Lords, I beg to move that the draft Radio Equipment (Amendment) (Northern Ireland) Regulations 2023, which were laid before the House on 17 January 2023, be approved.
I think it would be helpful if I started by providing some of the background to this instrument. The instrument we are debating today relates to radio equipment, which is defined as any electrical product that emits or receives radio waves for the purposes of radio communication; this includes products such as mobile phones and smartphones. The regulations implement Commission delegated regulation (EU) 2019/320 in Northern Ireland and enable it to be enforced.
The radio equipment directive is an EU directive requiring that specified essential requirements be met by radio equipment placed on the EU market or put into service in the EU. The directive also permits the Commission to place additional essential requirements on radio equipment manufacturers. The directive was implemented in UK law in 2017 by the UK’s Radio Equipment Regulations 2017, which have been subsequently amended to reflect the fact that we have left the EU.
Under the current terms of the Northern Ireland protocol, Northern Ireland remains subject to EU law for radio equipment. So, while the Radio Equipment Regulations 2017 apply across the UK, some provisions apply differently in Northern Ireland. Today, the Prime Minister is due to make a statement on the protocol in the other place, which my noble friend the Leader of the House will repeat in the Chamber tomorrow.
Delegated regulation (EU) 2019/320 was issued by the Commission in 2018, adding to the essential requirements in the directive and requiring smartphones to be able to transmit their location data in calls to emergency services. This instrument seeks to amend the UK’s Radio Equipment Regulations as they apply in Northern Ireland to reflect the new essential safety requirements for smartphones. This will enable the regulation to be legally enforced in Northern Ireland, as required under the current terms of the Northern Ireland protocol.
If it is helpful, I will now explain in more detail how this instrument will achieve its purpose. Under the Radio Equipment Regulations, the overall objectives for how radio equipment must be constructed before it can be placed on the market are set out in the essential requirements. This instrument adds the new requirement for smartphones to be capable of transmitting their caller location in emergency calls to the existing essential requirements in the Radio Equipment Regulations 2017 as they apply in Northern Ireland. The additional essential requirement extends the scope of an existing offence in the Radio Equipment Regulations for manufacturers in relation to non-compliance with the essential requirements when placing products on the market. In addition, the instrument amends the regulations covering conformity assessment processes in the Radio Equipment Regulations 2017 as they apply in Northern Ireland. As a result, manufacturers will need to ensure that their products are assessed by EU notified bodies as being compliant with the regulation.
As set out in the legislation, not complying with this new requirement in Northern Ireland will be a criminal offence. However, I assure noble Lords that prosecution will occur only in very rare circumstances, if at all. This level of action will be taken forward only where it is absolutely necessary to protect consumers from unsafe products or address persistent or deliberate non-compliance. Enforcement officers will continue to take a proportionate approach to compliance and enforcement activities, in accordance with the Regulators’ Code. In most cases, we expect that compliance will be achieved without recourse to the use of criminal penalties.
I will now set out the impact for business of this instrument. The Commission’s own assessment suggested that the impact on smartphone manufacturers will be minimal. In part, that is due to the technical solution already being anticipated by the market, but it is also because nearly all new smartphones have the required capability already. Indeed, the European Commission’s assessment in its 2018 Explanatory Memorandum was that a technical solution incorporating global navigation satellite systems and wi-fi signal-based information was available in more than 95% of all smartphones at the time of writing. We expect that to be even higher since 2018.
I assure noble Lords that the Government are not aware of any additional concerns from smartphone manufacturers in relation to the regulation since its EU adoption in 2019. I draw attention to the engagement conducted by the European Commission during the development of the regulation. To raise awareness on this instrument and its requirements, and to support business compliance, officials are liaising with the Northern Ireland district councils responsible for enforcing the radio equipment regulations there. We are making sure that they have all the necessary information to do so. In addition, industry guidance will be made available online by officials in the Office for Product Safety & Standards to ensure that businesses have what they need to understand how to comply with the regulation.
We are not currently considering introducing a similar requirement for Great Britain. The main reason for this is that, as I mentioned earlier, the European Commission’s assessment of the regulation sets out that almost all new smartphones currently on the market already have the technical capabilities required by it. We see no reason to mandate the requirement through legislation in Great Britain, given that existing widespread adoption. However, we will keep this under review.
This SI is necessary to give effect to Commission Delegated Regulation (EU) 2019/320. The UK is required to implement that in Northern Ireland under the current terms of the Northern Ireland protocol. The regulation requires that smartphones placed on the EU market from 17 March 2022 must be able to transmit their location data in emergency calls. This SI enables us to give effect to that requirement by amending the UK’s Radio Equipment Regulations 2017 as they apply in Northern Ireland. This will enable the new requirement to be legally enforced. As I highlighted, we expect that any prosecutions will be in only very rare circumstances, if indeed at all. I commend this instrument to the Committee.
Lord Lennie (Lab)
My Lords, thanks are due to the Minister for introducing the purpose, scope and effect of this legislation. I am a late substitute for my noble friend Lady Blake, who is unable to be here because of family illness; I am sure we hope that everybody gets well soon. Substitutes did not help Newcastle United yesterday; we lost, as you know.
The Secondary Legislation Scrutiny Committee said:
“The purpose of this instrument is to implement an EU Regulation in Northern Ireland (NI) which requires all smartphones placed on the EU market to be capable of transmitting caller location.”
Asked whether the Government considered introducing an equivalent requirement for smartphones placed on the market in Great Britain, the then BEIS department told us that,
“having engaged with UK industry representative trade bodies, it did not see any reason to ‘mandate a technical requirement through legislation that is (i) already adopted in almost all new smartphones and (ii) is not directly related to product safety’.”
As the Minister said:
“The Department said that it would keep its position under review.”
We support this statutory instrument. We are fulfilling a treaty commitment and working to ensure that Britain is a country where international laws are respected and followed, which I am sure is something that most of us believe in on all sides of the House.
According to the European Telecommunications Standards Institute, one of the biggest challenges facing the emergency services is determining the location of mobile callers. Ambulance service measurements show that, on average, 30 seconds per call can be saved if the precise location is automatically provided. Several minutes can be saved where callers are unable to describe their location verbally due to stress, injury or simply unfamiliarity with the area they are in, so it is no overstatement to say that technology saves lives. The faster a patient is located, the faster the emergency services can reach them—they are not very fast at the moment, but I hope that that will improve—and the faster they can receive treatment.
The question must therefore be asked of the Government: why has the legislation not been introduced in England, Scotland and Wales? I note the Minister said that 95% of smartphones meet the requirements, but I wonder what assessment he made of the incremental cost of introducing this legislation. Given that a legal requirement would have a minimal impact on manufacturers, can the Minister assure me that the department has made a thorough assessment of the potential of placing this standard on a legal footing in the rest of the United Kingdom?
Another relevant issue raised by the draft statutory instrument is its relationship to GNSS and the European-owned Galileo system. The EU regulation introduced by this instrument requires all smartphones to be compatible and interoperable with the Galileo system. It raises questions concerning the UK’s technological sovereignty following our expulsion from the Galileo programme. In 2018, the Government threatened to spend the entire UK science budget on duplicating Galileo because they had bungled negotiations on Galileo with the European Union. Four years on, the Defence Committee reported,
“with tens of millions of pounds money spent, the Government appears no closer to coming to any conclusions about development of the UK’s own space-based Position, Navigation and Timing (PNT) capabilities.”
Perhaps the Minister could update us on the PNT development: when we might expect it and, possibly, what the costs will be.
In outlining the rationale for requiring Galileo compatibility in smartphones, the European Commission argued for the importance of securing the independence and resilience of emergency services within the European Union. I hope that the Minister understands and agrees with that objective. What work are the Government doing to ensure that emergency services in the UK are similarly resilient?
Lord Evans of Rainow (Con)
My Lords, I am most grateful to the noble Lord, Lord Lennie. With regard to being a substitute, he is a very good one but, like yesterday, I am on the opposite side to him. I thank him for his valuable contribution.
For reasons that I will summarise, it is vital that the statutory instrument comes into force in Northern Ireland. The noble Lord asked why we have not carried out an impact assessment. An impact assessment has not been prepared for this SI because measures resulting from the Northern Ireland protocol are out of scope of the assessment. The Northern Ireland protocol has already been given effect in legislation through the European Union (Withdrawal Agreement) Act 2020, which added provisions and powers to the European Union (Withdrawal) Act 2018.
The noble Lord also asked why the UK does not implement this in Great Britain and whether the UK does not value its emergency services. As I said, we have no current plans to do so but we will keep this under review. It is important to remember that we are debating today an SI implementing an EU delegated regulation, which sets out EU requirements and is based on EU priorities. We have left the EU and discussion of the UK’s future plans for caller location requirements for smartphones is outside the scope for today.
The instrument is needed to give effect to Commission delegated regulation (EU) 2019/320, which applies in Northern Ireland, as we are required to do under the current terms of the Northern Ireland protocol. The instrument amends the UK’s radio equipment regulations as they apply in Northern Ireland to enable the new requirement for smartphones to be legally enforced in Northern Ireland.
Although this instrument will widen the scope of an existing offence in the radio equipment regulations, this is expected to result in prosecutions only in rare circumstances, and only when it is necessary to protect consumers from unsafe products or to address persistent or deliberate non-compliance. As I mentioned at the start, in the great majority of cases we expect compliance will be achieved without recourse to the use of criminal penalties.
I highlighted the EU Commission’s assessment of this regulation in 2018, which was that the impact on smartphone manufacturers is anticipated to be minimal. This is because nearly all new smartphones already possess the technology, and it is increasing. The Commission engaged industry during the development of the regulation, which it adopted in 2019. We are not aware of any concerns from smartphone manufacturers in relation to it. I commend this draft instrument to the Committee.
Code of Practice for the Forensic Science Regulator
(1 year, 8 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Sharpe of Epsom
That the Grand Committee do consider the Code of Practice for the Forensic Science Regulator.
The Parliamentary Under-Secretary of State, Home Office (Lord Sharpe of Epsom) (Con)
My Lords, forensic science is vital to the investigation and prosecution of crime. Without high-quality forensic evidence entering the criminal justice system, our ability to fight crime would be compromised. We are fortunate in this country to have some of the world’s best forensic scientists, who deploy their considerable skills to help deliver justice, but we cannot rest on our laurels.
Public confidence in the criminal justice system is vital. This confidence can be undermined if quality standards in forensic science are not upheld or maintained. This Government believe that, in order to set appropriate standards, a degree of statutory regulation is required, which is why it has been long-standing government policy—since 2016, in fact—that the Forensic Science Regulator should have statutory powers. That is why the Government supported the Private Member’s Bill that became the Forensic Science Regulator Act in 2021.
The Act established the regulator as a statutory officeholder. It gives powers to the regulator allowing them to act, as a last resort, when they have reason to believe that forensic science activities are being conducted in such a way as to create a substantial risk to the course of justice. It also requires the regulator to produce a draft statutory code of practice. This code defines which forensic science activities will be regulated and sets out the standards that providers will be expected to meet. It is the first time that a statutory code regulating the provision of forensic science has been produced anywhere in the world.
This code has been through a comprehensive consultation process, which revealed broad support among the forensics community. In fact, 83% of respondents to the consultation, which included stakeholders from policing, the commercial sector, academia and the judiciary, expressed their support for the model of regulation set out in the code. By adhering to the code and complying with its requirements, forensics providers will ensure that the evidence they gather and present to the courts is of the highest quality, in turn helping to maintain public confidence in our systems.
In practical terms, this means that all forensics providers who deliver forensic science activities to which the code applies will have to declare compliance with the code. In addition, they may also need to attain accreditation and establish quality management systems for the activities they undertake. Non-compliance with the code will not in itself automatically mean that the evidence gathered will be inadmissible—it is always the courts who ultimately decide whether to accept evidence—but compliance with the code will reduce the risk of substandard evidence entering the system. Compliance with the code will make it far more likely that providers are producing high-quality forensic evidence to the courts. Compliance with the code will help protect the integrity of the criminal justice system and guard against miscarriages of justice.
I very much hope that noble Lords will support this code of practice, which I commend to the Committee. I beg to move.
The Earl of Lindsay (Con)
My Lords, I thank my noble friend the Minister for providing this opportunity to consider the Motion that the 2013 draft code of practice for the Forensic Science Regulator, laid before the other place on 26 January, be approved. I warmly welcome the Forensic Science Regulator’s code of practice as an important further step in ensuring the quality, consistency and integrity of our forensic sciences across England and Wales. The code builds on the non-statutory codes of practice and conduct issued by the previous regulator and incorporates much of their content.
I particularly welcome the code’s recognition of the importance of accreditation against internationally recognised standards in driving quality improvement, trust and confidence in the critical services of forensic providers. Technical competence and consistency across the mixed economy for the provision of forensic science services should be a vital part of a fair and functioning criminal justice system. This code of practice will help achieve that.
I should declare an interest as the chair of the United Kingdom’s national accreditation body, UKAS, which is the sole national body recognised by government for the accreditation of organisations against nationally or internationally recognised standards. Accreditation provides assurance of the impartiality and competence of providers, which we can all agree are imperative in the criminal justice system. UKAS and the Forensic Science Regulator have been working closely since the FSR role was first created; together, we have achieved consistent success in improving standards through the accreditation of forensic science providers in both the private sector and police forces. UKAS will continue to work closely to deliver the vision of the Forensic Science Regulator with respect to compliance with standards and, through the accreditation of forensic providers, the demonstration of the appropriate competence of the practitioners undertaking this critical work.
I believe that this code of practice will support and encourage a culture of improvement and a commitment to quality, competence and impartiality across forensic science provision. I am delighted to add my support to its approval.
Lord Thomas of Cwmgiedd (CB)
My Lords, I, too, warmly welcome this code of practice. As the Minister so eloquently pointed out, we have one of the best five forensic science services in the world and have made enormous strides in getting forensic science set on a course of absolute science, rather than old wives’ tales or police lore. That is a huge step forward, which this country has been instrumental in taking.
However, it is right to say that there have been several serious miscarriages of justice—I have sat on several of them—where forensic scientists have not behaved with competence or integrity or have gone beyond what they are qualified to speak about. I therefore warmly welcome the work of the two non-statutory regulators, Andrew Rennison and Dr Gillian Tully, and now the statutory regulator, Mr Gary Pugh, in all they have done to try to eliminate the problems that have caused difficulties in such cases.
The noble Earl, Lord Lindsay, has spoken eloquently about accreditation, which is key. Also key is the fact that, within organisations, there must be a senior appointed individual who can be made responsible for lapses that occur. I regard as the most important part of the code the part that sets out standards of impartiality and integrity. As I have said, there have been cases where this has not always been so. Much to my regret, in some cases, there has been a lack of professionalism. One must remember that forensic scientists are often put under a great deal of pressure; standards of integrity to resist pressure, particularly from police officers who are anxious to secure a conviction, are therefore essential. The record of what has happened is well known so I need not go into it.
Secondly, it is important to stress the duty of the court. Thirdly, I very warmly welcome—it may be due to Mr Gary Pugh’s personal integrity and experience—the duty to guard against miscarriages of justice.
It is also important that the code goes into detail. There have been serious problems in relation to footwear analysis, DNA and fingerprinting, and it is good to see those now firmly covered by standards. There has also been worry about the way evaluative opinions have been formed. Many experts—not merely forensic experts—stray outside their sphere of expertise and seek to act more as advocates than as independent experts, relying on matters to which the code refers. I am very glad, therefore, that there is a firm steer for evaluative opinions.
The strength of the code can be seen by the fact that it deals with infrequently consulted experts, making it clear that, although they are not subject to accreditation, they must abide the standards of the court. It is surprising to see the spheres in which expert evidence is often needed, and from people who will never have given expert evidence before, or where the court may never have had expert evidence. Therefore I see this as a landmark in trying to make certain that we buttress our outstanding reputation as a nation in forensic science and strengthen that position for the future.
I will ask two questions of the Minister. First, what is to be done to ensure that the code is publicised and enforced? Secondly—I have spoken on this on many occasions—is the Home Office really getting to grips with other issues in forensic science and taking forward the need to keep forensic science ahead of the game, particularly in digital forensics?
Lord Coaker (Lab)
My Lords, I thank the noble Earl and the noble and learned Lord who have contributed to this important if short debate. They said that this is an extremely important step forward by the Government, and we welcome it as well.
I thank the noble Lord, Lord Sharpe, for his introduction. I also thank my friend in the other place, Darren Jones MP, and indeed my colleague and noble friend Lord Kennedy, who would be most upset if I did not mention that he was part of the Private Member’s Bill effort which became the Forensic Science Regulator Act in 2001. That was an important step forward and shows how sometimes Private Members’ Bills can make a real difference. As noble Lords realise, the Act required the regulator to produce a statutory code of practice so that all those doing forensic science activities uphold and maintain proper standards, which both the noble Earl and the noble and learned Lord said is so important, and which indeed many forensic scientists do.
This statutory instrument is the new code of practice. It builds upon non-statutory codes of practice and integrates much of their content. Upholding good forensic science standards is absolutely vital to our criminal justice system. The code applies to all those carrying out forensic science activities: individual practitioners, academics, private and public sector organisations, or indeed forensic science units.
With those general comments I have a few questions for the Minister. A report by His Majesty’s Inspectorate of Constabulary and Fire & Rescue Services showed that, when it came to digital forensics, the police have not kept pace with the scale of the challenges they face. The report said that, in some cases, they simply did not understand what digital forensics meant. It found, in the words of the inspectorate,
“delays … so egregious that victims were being failed”.
Could the Minister give us any indication of what progress has been made following the recommendations of that report?
The Home Office also considered an impact assessment on the Forensic Science Regulator in 2013, but it has not been updated since. With this new regulator and statutory code, has an internal impact assessment from 2021 been made? There was a deadline of October 2022 for all police laboratories to be accredited. Can the Minister give an update on whether that target was reached?
Lord Sharpe of Epsom (Con)
My Lords, I thank all three noble Lords who have spoken in this short debate. I am grateful for their considered and constructive contributions.
I pay tribute to the Forensic Science Regulator for producing such a detailed and comprehensive code of practice. The code is a significant piece of work, as befits an instrument that will help to drive up quality standards. It is long, but builds on other non-statutory codes of practice and conduct and incorporates much of their content, meaning that much of its content will already be largely familiar to forensic science providers. The code sets out for the very first time definitions of forensic science activities and specifies which of those activities it applies to. As I said in my opening remarks, this is the first time that has been done—and not just in England and Wales; this is a world first.
I turn to some of the specifics that have been raised. I thank my noble friend Lord Lindsay for his positive remarks and for the UKAS perspective. I am sure he would acknowledge that accreditation for forensic science activities is not a panacea, but experience has shown that it raises quality standards by improving processes and ensuring that if failures happen then appropriate steps are taken. In addition, accreditation helps drive standardisation to support cross-force co-operation and efficiency.
It is fair to say that achieving accreditation takes time and resources, but evidence from non-accredited laboratories has always been open to challenge in court and there is a real risk of losing cases as a result, which goes some way to answering the question from the noble Lord, Lord Coaker.
Accreditation across the board helps to ensure a level playing field and consistent quality standards, which also goes some way to answering the questions from the noble and learned Lord, Lord Thomas, particularly those around impartiality and integrity. It is acknowledged that some forensic providers and police forces have failed to achieve accreditation across a range of forensic disciplines, which can cause miscarriages of justice, abandoned trials and so on. This code, together with the powers in the Act, will allow the regulator to issue compliance notices against forensic providers that are failing to meet the required quality standards.
In answer to the comments of the noble and learned Lord, Lord Thomas, about whether and how this will be supported by the forensic science—I hesitate to call it “industry”—caucus, as I said in my opening remarks, the office of the Forensic Science Regulator engaged in a statutory consultation which ran from 8 August to 31 October 2022. There were 110 responses with 3,000 comments from across the forensic science community—again, as I said—including from policing, academia, the judiciary and the commercial sector, with 83% of respondents overall expressing support. The private and commercial sector has actively been calling for regulation for a long time because it understands the value of quality and wants to compete on a level playing field. This is the crucial point: almost 80% of policing respondents expressed support. Based on those numbers, I think it will be largely self-enforcing. It is fairly obvious that the industry is going to be very excited about this progress.
The noble Lord, Lord Coaker, asked about the HMICFRS report that showed that digital forensics were perhaps a little left behind. We have invested around £10 million in this financial year—2022-23—in the new digital forensics programme in the Police Digital Service that will support forces through automation and better safeguard victims’ privacy and in other new technology to increase forces’ capacity to process digital devices. We are working very closely with the NPCC and other criminal justice system partners to understand clearly current national performance and implement the recommendations of the HMICFRS inspection report on digital forensics. The Home Office has undertaken a national data collection project which looks more widely at governance, operating models, resources, training, technical capabilities and funding, which all impact on the ability of the police to conduct timely investigations and provide high-quality forensic evidence to support CJS outcomes. However, I acknowledge that this is a rapidly evolving space, so I suspect this is a debate we will come back to at greater length in future.
In answer to the questions asked by the noble and learned Lord, Lord Thomas, about digital, about 90% of forces have some ISO 17025 accreditation for digital forensics, but no force yet has accreditation for all digital forensics activity. As I just said, significant progress is still required to meet full compliance. It is for that reason that the new statutory powers for the regulator are so important.
The noble Lord, Lord Coaker, asked about the impact assessment that was completed in 2021. It was an internal assessment for Home Office policymakers, but we will be very happy to publish that in due course.
None of this is sudden. It has been government policy for many years that providers should have accreditation for the forensic science activities they conduct. The previous non-statutory regulator regularly published timetables for providers to achieve accreditation, often giving several years’ notice. Since 2016, it has been official policy that the regulator should have statutory powers underpinned by a new statutory code. The Act received Royal Assent nearly two years ago. In answer to the question, the regulator did not expect all providers to be fully compliant by October. This is a grace period to allow those providers who are already well advanced to become formally accredited to the code before it comes into force.
I hope I have answered noble Lords’ question. Approval of the draft code of practice today will help pave the way for better and higher quality forensic science in the criminal justice system in England and Wales. However, that is not the end. The overriding need to maintain high-quality standards continues. The new powers that the Forensic Science Regulator Act provides, taken together with this draft code of practice, will help driven up quality standards, improve outcomes and maintain public confidence. I commend the draft code of practice to the Committee.
Motion agreed.
Non-Domestic Rating (Rates Retention: Miscellaneous Amendments) Regulations 2023
Baroness Bloomfield of Hinton Waldrist
That the Grand Committee do consider the Non-Domestic Rating (Rates Retention: Miscellaneous Amendments) Regulations 2023.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, these regulations make changes to key elements of the business rates retention system. The amendments themselves do not enact any new policy but instead action policy decisions that have already been taken.
By way of background, the business rates retention scheme was introduced in 2013. It allows local government to keep 50% of the rates that are collected locally; the other 50% is paid over to central government. Under the business rates retention system, authorities that see their business rates income fall significantly in any year can receive a safety net payment. The cost of the safety net is paid for by levying a percentage of the business rates income of authorities that have seen their business rates income increase significantly in any year.
The detailed rules of the business rates retention scheme are set out in multiple sets of regulations. The Non-Domestic Rating (Rates Retention: Miscellaneous Amendments) Regulations 2023 make changes to four sets of regulations to ensure that policy measures determined elsewhere can be incorporated into the ongoing administration of the business rates retention system. They are: the levy and safety net regulations, the rates retention regulations, the transitional protection payments regulations and the levy account basis of distribution regulations.
First, several changes to the levy and safety net regulations are necessary to mitigate the impact of the 2023 revaluation of business rates on the business rates retention system. These regulations will adjust the calculation of baseline funding levels, which are used to calculate whether an authority triggers a safety net payment. These changes will make sure that authorities are not overpaid or underpaid as a result of the 2023 revaluation. In addition, authorities in Greater Manchester, Liverpool City Region, West of England, West Midlands and Cornwall have enhanced arrangements, which mean that they retain 100% of the business rates that they collect. As a result, these regulations will also adjust calculations for those authorities so that their safety net calculation remains accurate and reflective of the arrangements that have been agreed with them.
As is usual each year, the regulations also need to amend the calculation of authorities’ retained rates income to ensure that it includes relief schemes designed by the Government. Where the Government provide a new national business rates relief—such as the retail, hospitality and leisure discount—local authorities, as the bodies that collect business rates, award that relief to local businesses in their area. The Government compensate local authorities for the income they lose in doing this, which we take account of in a different part of the system. Therefore, the regulation changes here strip out the impact of the income reductions so that local authorities are not compensated twice for the same loss of income. These regulations also codify new business rates retention values for three restructuring authorities from 2023 to 2024: Somerset, Cumbria and North Yorkshire.
We adjust the rates retention regulations to amend the City of London off-set, which is an amount of business rates income that the City is allowed to retain outside the business rates retention system, due to its low resident population. Regulation 3 will make amendments to ensure that the off-set amount is uprated by the same inflationary uplift as core business rates retention figures.
We also amend the transitional protection payment regulations following the Chancellor’s Autumn Statement, which announced a transitional relief scheme as part of a package of targeted measures to ratepayers who would otherwise face large bill increases following the revaluation of business rates. Transitional protection payments compensate local authorities for their lost income from transitional relief. Regulation 2 will make a small amendment to ensure that where transitional relief is applied, it is calculated before the application of public lavatories relief. This will ensure that compensation is calculated and paid on the true cost of the transitional arrangements put in place following the revaluation.
Finally, the schedule to these regulations changes the basis of distribution regulations so that core funding allocations for the recently restructured authorities are actioned on the correct basis. Most immediately, this will ensure that, as announced in the local government finance settlement, every authority in England will receive a share of the £100 million surplus currently held in the business rates levy account.
In conclusion, this is a highly technical set of regulations. Most of the provisions simply give effect to previously agreed policy decisions, and they ensure that the correct calculations will continue to be made under the business rates retention system. I commend them to the Committee and I beg to move.
Baroness Wilcox of Newport (Lab)
My Lords, I draw attention to the fact that I am a vice-president of the Local Government Association, as noted in the register. I thank the Minister for introducing this statutory instrument. The regulations make various amendments to the system for the local retention of non-domestic rates established by Schedule 7B to the Local Government Finance Act 1988.
The current Chancellor’s Autumn Statement business rates package and this year’s revaluation of business rates will mean that all regions in England will see a decrease in average bills, which can only be of benefit to struggling high street businesses that have been unduly affected by unprecedented energy costs, together with inflationary pressures which were unduly exacerbated by the reckless fiscal policies of the previous Prime Minister and her Chancellor, bringing the UK economy to the very brink.
Britain is doing much worse than other western economies, which have faced the same pressures from Covid and Russia’s invasion of Ukraine. Britain is the only G7 economy still smaller than before the pandemic and has the slowest growth forecast over the next two years. The cost to working people and businesses is clear and profound: the worst cost of living crisis in 40 years; soaring energy and food prices; £400 a month more to pay on the average mortgage through higher interest rates; and the highest taxes for the British taxpayer in 70 years.
A Labour Government would change things for business by implementing a cut in business rates for small and medium-sized businesses, paid for by a temporary increase in the digital services tax, among a host of other costed measures to plan for a stronger, more secure economy. Labour has a plan to back business by bringing business rates in line with the modern economy. We will bring in an annual revaluation of business rates, rather than the ad hoc basis on which this Government operate, to give the sector the stability and reassurance that it needs. Through our model, the heavy burden of taxes will move from SMEs and high-street business to online giants, which for too long have got away with contributing too little to our economy. However, until Labour gets into government and delivers the transformation that businesses deserve, we need an urgent increase to the threshold for small business rates relief, raising it from £15,000 to £25,000.
We will get the cost of living under control and make Britain more resilient, laying the foundations we need for a thriving, dynamic economy in the future. Furthermore, Labour will make the business tax system fit for the 21st century by ultimately scrapping business rates and replacing them with a system that incentivises investment and levels the playing field between high-street businesses and global giants.
It is not just the billing authorities that need to prepare for new non-domestic rates. For many of the individuals and groups paying the new rates, financial and administrative overhauls such as this can be a costly operation. The LGA highlighted the need for councils to be compensated for the cost in staff time and the potential new technologies involved in the revaluation of rates and bringing in the transitional scheme. It is welcome that the Government have already announced that administrative costs for local authorities will be covered, as with previous schemes, under the new burdens doctrine, but the short time to input these changes will still cause problems that council staff do not need.
I therefore ask the Minister, first, will these current changes be continued into future financial years so that councils across England, together with local businesses, can have certainty when planning future budgets? Secondly, what will the Barnett consequential be for the devolved Governments because of this legislation, and how soon will they receive any extra funding from Whitehall?
Despite our concerns and our alternative policies, I say that anything that helps business to survive in these extremely difficult trading times is needed, and we therefore support this statutory instrument.
Baroness Bloomfield of Hinton Waldrist (Con)
My Lords, I thank the noble Baroness, Lady Wilcox, for her contribution to the debate. I appreciate her setting out some of the future directions of a possible Labour Government, and I thank her for her comments on the benefits that the Chancellor’s Autumn Statement and these regulations will bring to the high street.
The noble Baroness asked why we were not considering an online sales tax. The Government have decided not to introduce such a tax, but we are in the process of consultation and the response to that will be published shortly. Concerns have been raised about complexity, market distortion and the unfair outcomes between business models.
This revaluation will rebalance the tax burden to reflect the growth in online retail. Large distribution warehouses are expected to see total rates paid to increase by about 27%, while retail, hospitality and leisure businesses are expected to see total bill decreases of over 10%.
I think the noble Baroness creates an unnecessarily gloomy prognosis of the future of the UK economy. The Chancellor’s business rate support package means that businesses will benefit from support worth £13.6 billion over the next five years. Together with the revaluation, that package ensures that bills will more accurately reflect current market values while protecting businesses from large bill increases. The Government remain committed to implementing the outcomes from the business rates review, and we will bring forward legislation as soon as parliamentary time allows.
The noble Baroness had another couple of questions, but I fear I will have to write about the impact on Barnett consequentials and whether the current changes will carry over to the future. I apologise for not being able to answer those now.
These are indeed a highly technical set of regulations that are necessary to ensure that the rates retention scheme continues to operate effectively and as intended. If the amendments detailed in this SI are not made in time for the relevant calculation to be made in early March 2023, local authorities will not receive the safety net payment to which they are entitled or will pay the wrong amount of levy for 2021-22. Additionally, if changes are not made to values used in the levy and safety net calculation in response to the revaluation ahead of 1 April 2023, authorities may pay or receive the wrong amounts of levy or safety net in 2023-24 as well. The regulations ensure that this does not happen, and I hope the Committee will join me in supporting them.