My Lords, I should advise the Grand Committee that if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
(1 year, 1 month ago)
Grand CommitteeThat the Grand Committee do consider the Pensions Dashboards (Amendment) Regulations 2023.
Relevant document: 44th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument).
My Lords, I am pleased to introduce this statutory instrument, which, subject to approval, will make amendments to the Pensions Dashboards Regulations 2022. The instrument removes the staging profile from the 2022 regulations and introduces a single connection deadline of 31 October 2026 for relevant occupational pension schemes to connect to pensions dashboards.
The successful introduction of automatic enrolment more than a decade ago, combined with a trend towards people working multiple jobs in their lifetime, has seen a substantial increase in smaller pension pots. Without intervention, the number of lost and forgotten pots will remain exactly that—lost and forgotten—and financial planning for retirement will become still more complex. Pensions dashboards will help hard-working savers to locate pension pots that they have accumulated over time, reconnecting them with lost and forgotten pension pots and supporting better planning for retirement. People will be able to view their various pensions, including their state pension, securely and all in one place online.
There can be no doubt that pensions dashboards have the potential to become a game-changer that will revolutionise the pensions landscape. The UK is not alone in realising the enormous potential that pensions dashboards bring. Countries such as Denmark, Israel and Australia have all established pensions dashboards as a feature of their financial landscape. However, the UK’s pensions industry is arguably unique by virtue of its scale and complexity. We should not underestimate the ambition and challenge of securely connecting thousands of schemes and of presenting data in a coherent manner, from state and private pensions, for the benefit of savers. We anticipate that, once all schemes in scope of the regulations are connected, the pension records of over 71 million memberships from relevant occupational pension schemes and providers of FCA-regulated entities will be accessible to people at the touch of a button, at a time of their choosing.
The reason for bringing forward these amendment regulations is that, at the end of last year, the Pensions Dashboards Programme, which is responsible for delivering the digital architecture that underpins pensions dashboards, informed my department that more time was required to complete the build of the digital architecture. The PDP faced several key issues: the technical solution has not been sufficiently tested and there is still work to do to finalise the necessary supporting documentation and to get the necessary systems in place to support the pensions industry with the connection process. It was concluded that more time was needed to successfully deliver dashboards and that a reset of the programme was required.
The Minister for Pensions subsequently issued a Written Statement in March 2023, announcing the delay and setting out that the Pensions Dashboards Programme would be reset to get it back on to a path for successful delivery. The decision to pause, review and reset the programme will provide it with the time to ensure complete delivery of the ecosystem and supporting documentation before industry begins to connect. So far, the reset has assessed the digital architecture and I am pleased to report that no fundamental issues have been identified. This has provided reassurance to the Government to move forward with amending the regulations.
The staging profile in Schedule 2 to the 2022 regulations set out the order in which different types of schemes, categorised by size and type, would connect to pensions dashboards. However, the 2022 regulations did not provide the flexibility necessary to deliver a programme of this magnitude—a digital undertaking that will enable users to search over 3,000 schemes to find their pensions.
This instrument curtails the period of uncertainty for the pensions industry. The staging profile in the 2022 regulations required the first schemes to connect at the end of August 2023. By laying these amendment regulations, we are seeking to avoid any perception that schemes would be in breach through no fault of their own. As mentioned, all schemes in scope will now be required to connect to dashboards by 31 October 2026 at the latest. The regulations will provide more flexibility to deliver pensions dashboards while retaining the broad framework of a phased approach to help to manage the flow of connections and maximise coverage as early as possible.
The Government will work with partners and the pensions industry on a connection timetable to be published in guidance. We expect that the connection timetable in guidance will prioritise large schemes with the greatest number of members. This will maximise the potential for savers to realise the benefits of dashboards as early as possible. The dashboards available point—the point at which dashboards will be available for widespread public use—could therefore happen before the October 2026 connection deadline in the regulations. Although the connection timetable set out in guidance will not be mandatory, there is a requirement for scheme trustees or managers to have regard to this guidance. Not doing so would be a breach of the regulations. The Financial Conduct Authority will ask its board to make corresponding deadline changes in the dashboard rules for FCA-regulated pension providers shortly after Parliament approves these amending regulations.
I will now explain what has not changed. Although the instrument amends the requirements on trustees or managers by removing Schedule 2, there are no other material changes to the regulations. All other requirements have been retained, including the requirements to be satisfied for qualifying pensions dashboard services, connection duties and requirements on “find” and “view”. Crucially, the requirement for the Secretary of State to provide six months’ notice ahead of the dashboards available point remains unchanged. The Government will continue to work with the industry on the matters that must be considered before dashboards are launched to the public.
The consumer is at the heart of all our endeavours. These relevant matters are important to ensure that pensions dashboards are launched to the public safely and securely, having been rigorously tested. Protecting the best interests of savers is the core principle behind dashboards and the Government remain firmly committed to ensuring that people’s data is accurate, simple to understand and, above all, secure. Dashboards will ensure that people always remain in control over who has access to their data, as existing legislation, including data protection duties, underpins the requirements that must be adhered to by pension providers, schemes and qualifying pensions dashboard services.
Accurate and high-quality data is essential to delivery and the success of pensions dashboards rests on the pensions industry’s ability to successfully match consumers to their information. The Government and the regulators have repeatedly advised the industry to get its data ready for dashboards. It should use the extra time to ensure that it can meet its dashboard obligations. Schemes and providers are already subject to existing statutory and other protections on data, including the accuracy principle under UK GDPR, which places a requirement on schemes to take all reasonable steps to erase or rectify inaccurate data without delay. It is crucial that dashboards give power to savers and not to scammers. Robust controls and standards will be built into the digital architecture to prevent potential scammers or fraudsters from gaining access to people’s information.
These amendment regulations will facilitate a collaborative approach to connection that delivers on our commitment to introduce pensions dashboards. Pensions dashboards have the potential to transform retirement planning for ever and these regulations are another step in the right direction. I therefore commend them to the Committee. I beg to move.
I am most grateful to my noble friend for the clear exposition of this statutory instrument and for the very helpful meetings that he and his officials have held with noble Lords over the past few months. I am also grateful to him for the letter that he wrote to me following the last meeting.
Looking around, I see some aficionados from our earlier debates on the pensions dashboard. I was looking at a debate from 28 January 2020, when I said:
“Over the weekend, I logged on to the Pensions Dashboard Prototype Project, which I found informative, but right at the end it said: ‘The industry and government hope to have Pensions Dashboard services ready by 2019’”.
At that time, we were debating a consultation document and the response to it. Again, I quote:
“Reading the response to the consultation document, we are told: ‘Once the supporting infrastructure and consumer protections are in place, and data standards and security are assured, most pension schemes should be ready to provide consumer’s information to them within three to four years’”.—[Official Report, 28/1/20; col. 1373.]
That was in January 2020. My noble friend knows that this project has been dogged by uncertainty and delay.
I have a specific point to raise about the identification service. Consumers will obviously have to identify themselves before they can access the dashboard. The Government’s initial proposal was to use Verify, a system sponsored by the Government with ambitious targets to have 46 government services accessible by March 2018. Sadly, that project was not a success. The NAO said that
“it is difficult to conclude that successive decisions to continue with Verify have been sufficiently justified”,
and the Government withdrew support from Verify in 2020. The pensions dashboard has had to develop its own service in the meantime.
In my noble friend’s very helpful letter, he referred to the new government service, GOV.UK One Login. He said:
“The core of the system has been launched: its sign-in element, a web-based identity verification journey, and a fast-track identity checking app”
are up and running. I have actually connected to and logged into One Login, and am now registered.
In his letter to me, my noble friend went on to say:
“As you may recall, the PDP”—
pensions dashboard programme—
“has procured an interim identity service provider, whose contract runs until January 2024”.
At what point will the pensions dashboard transfer from this interim service? Will it transfer to the government-run One Login, which seems the obvious thing to do, assuming that it is as robust? By the time the system is launched in 2026 or earlier, will the interim service have been put to one side and will we all have moved over to One Login; or will the interim service still be the one that we have to use, for the next few years? I hope to hear that it will have transferred to One Login, so that we do not have to register twice—first with the interim one and then with One Login. That is my main point.
My final point is on the Secondary Legislation Scrutiny’s Committee report on this statutory instrument, published on 22 June, which I am sure my noble friend has seen. The committee raised two points in its conclusion, to which I am sure my noble friend will reply. In paragraph 27, it quoted its 16th report:
“We encourage the Government to take this opportunity to address the complexity and costs of the dashboard … by simplifying and standardising the system wherever possible”.
The committee confirmed that that remains its position in its latest report on this instrument. Finally, it said:
“We are disappointed to, once again, find our Report supplying basic information to the House that DWP should have published in the EM”—
the Explanatory Memorandum. I am sure my noble friend will respond to those points, in addition to my main point about the verification service.
My Lords, it is obviously deeply regrettable that the pensions dashboard has been delayed—again, I should probably say. If it is not ready, a delay to the connection is obviously necessary, so there is not an awful lot to be said about the regulations themselves. As we have just heard, the Explanatory Memorandum is less than fulsome on the reasons or the implications, as the Secondary Legislation Scrutiny Committee pointed out in its rather critical report, so I want to ask a few questions. I have not been able to attend some of the briefing sessions that the Minister has organised, so I apologise if I am covering what was said at some of those, but it might be worth having it on the record anyway.
What is the reason for the delay? The Explanatory Memorandum and the Minister talked about insufficient testing,
“more work … to set up adequate support for industry … and … to finalise … supporting guidance and standards”.
However, those are not reasons; they are not what has caused the delay. Delays of this nature are typically caused by inadequate scoping at the outset—we got it wrong at the beginning—by changes to the scope along the way, or by some combination of the two. Which is it? Who is responsible? What action has been taken to make those responsible for the delays accountable? If the team needs to be strengthened, has that happened?
The other possibility is simply that the dashboard was overcomplicated from the outset, which I think was what the Secondary Legislation Scrutiny Committee may have been alluding to. Are we sure that we are not gold-plating it? Are we reinventing the wheel here? For example, have we taken advantage of the experience of open banking? We could have piggybacked on that.
Is a third-party supplier involved? If so, who and what responsibility does it have for the delay? Are there penalty clauses in the contract? If a third-party supplier is not involved, is it sensible for us to try to do a project of this size entirely in-house?
The EM is very quiet on the cost implications. What was the forecast development cost? I am talking about not the overall costs of the dashboard over 10 years but the development cost. What is it now? How much has it cost to date? How much is still to be spent? Who will cover any increase—industry, government, taxpayer? How will that work?
When large software projects of this nature go wrong, they tend to keep going wrong. I come from a software world, so I have experience here. What comfort can the Minister provide that this really will be the final delay and that we are now properly on top of the project?
At the time of the Act that enabled the dashboard, we had a lot of debate about the creation of other, privately created dashboards, and there was a lot of agreement around the Room at the time that the Money and Pensions Service dashboard should be the first to be run. I agreed with that but, given the delays, perhaps we want to think about it again. What other dashboards is the Minister aware of being developed? Are any at a sufficient stage of development that it might be quicker or cheaper for the Money and Pensions Service to consider partnering with them?
Finally, can the Minister provide any forecast of when the dashboard will become available to the public?
I thank the Minister for so clearly setting out the purpose of the regulations. I enjoyed the reference of the noble Lord, Lord Young, to his previous contribution in the debate on this issue, which was well made. My position is that it is not disappointing that the Government’s enthusiasm for such an early launch has been tempered; I always considered that it would be a very complex project and I am delighted that there is now a much greater focus on the complexities and ensuring what is delivered. I never really wanted it delivered two years ago because I did not think that it would be well delivered then. It needs to be well delivered, because of the scale that it covers.
These regulations replace the pension schemes staging profile, staging deadlines and connection window with a single common deadline for connection of 31 October 2026. I want to reflect on the guidance to schemes on a new connection staging timetable.
The DWP’s description of the purpose of that guidance has varied according to which document is read—there is not an absolute consistency. The documentation ranges between encouraging schemes to meet the new timetable to threats of a breach of the regulations if they do not, and “having regard to” the guidance is a concept that is a little unclear. Can the Minister clarify what exactly is the status of that guidance and when a breach—and a breach of what in regulation terms—would be triggered?
I will move on to an issue that we probably have not debated a great deal in previous discussions of the dashboard. The Explanatory Memorandum refers to the monitoring and review of this legislation, saying that the approach to be adopted is
“to put in place a multi-strand evaluation strategy, the details of which are being explored”.
This strategy will
“ensure the critical success factors can be successfully tested with learning helping to further develop dashboards over time”.
The plans include research into dashboard usage, outcomes from that usage and information provided by providers. However, I cannot see any reference to key pensions public policy outcomes in those critical success factors. I did not see them when the previous regulations came with the Explanatory Memorandum and I cannot see them now.
To take it at its most basic, if, for example, as a result of dashboard usage, greater numbers of people took out more of their pension savings in their 50s or early 60s, is that a success because they have engaged, or undesirable because more people will have a lower income when they get to state retirement age? We have to be very clear what are the public policy aspirations we are seeking from that greater usage. Clearly, it is not set out, as far as I can see, in the critical success factors and the multistranded evaluation strategy—although I recognise that that is work in progress. Will any of those critical success factors identified in the Explanatory Memorandum be benchmarked against desired public policy outcomes over the long term?
Staying with that concept, what long term do we want as the outcome—not only from dashboards but a whole range of other things, although dashboards are before us today? Yesterday we saw eight papers on pensions, including analysis, consultations and consultation responses, all published in one go. I cannot let that moment pass without asking the simple question of the Minister: was any consideration given to how those eight papers and sets of proposals would impact on the multistrand evaluation strategy for the dashboard? I appreciate that the Minister may not be able to answer that today but it is an important question that needs answering.
For me, the decision by the department and the FCA to proceed with a gross investment performance metric in the proposed VFM framework, as announced yesterday, rather than net of all costs and charges, together with the continued dithering by the FCA over the transparency of costs and charges value reporting in decumulation products, is a backward step which does not resonate with the pension savers’ interest and informed decision-making. That was a deeply disappointing element of that VFM framework to read. We know from the FCA’s own findings that a wide range of charges are applied in the decumulation market, which should be rigorously assessed in a joint FCA/DWP/VFM framework. That has just been sidestepped.
Yesterday, the Chancellor referred positively to the Australian supers, but I point out that they have a tough regulatory requirement to report investment returns net of fees. If the Government are going to promote private market investment, where charges are higher, transparency of returns net of fees is essential if the saver is not to end up paying back the excess returns to the industry. The link to the evaluation strategy and the dashboard is: what information will be provided, what influences on behaviour are we expecting and how will that produce better outcomes? I must admit that, when I read that VFM framework, I thought it disappointing and rather contradicted the idea that members using the dashboard will make more informed decisions. I did not want the moment to pass without making that point.
My Lords, I, too, thank my noble friend for his clear exposition of the regulations. I am very supportive of them and I think they have general support around the Committee. Indeed, they are pretty essential, as my noble friend described. If we do not pass them, there is a danger that schemes currently required to load data to the dashboard by the end of August will be in breach, and there will be nothing they can do.
Replacing the statutory staging timetable with a single end date of October 2026 is understandable. It is also welcome that the reference date for the dashboard requirements of pension schemes is being moved to 2023-24 so that it can include some of the newer pension schemes, which will then have to go on to the dashboard. However, I would be grateful if my noble friend could help me with a few questions. It is fine if he would like to write to me; I do not expect him necessarily to have all the answers, although he may not be surprised by the questions.
My first question relates to the Government’s intention to publish a new timetable in the form of guidance. When will it be published? Also, my noble friend said that it will not be mandatory, although trustees must, as the noble Baroness, Lady Drake, said, have regard to the guidance and will get at least six months’ notice. What is the penalty for non-compliance with the guidance, if it is not mandatory? If it is struggling, a scheme may simply say, “We’re not going to do it because the amount of money we need to spend to get on the dashboard is not worth our while”. The customers and members of those organisations would then not benefit from the dashboard.
My second question relates to the vital issue of data accuracy, which is essential for dashboards. I hear what my noble friend said about accuracy requirements in the GDPR. Following our briefing meetings, I was grateful to him and his officials for a follow-up letter that clearly explained that the Pensions Regulator has set out in guidance expectations on data quality, record-keeping, measuring data once a year and trustees ensuring that processes and controls are in place so that data standards are of good quality. Master trusts are supposed to have processes for rectifying errors they have identified and then reconciling them. This is all in place and is most welcome, but I have to ask my noble friend: where does responsibility lie for checking the data, ensuring its accuracy and then correcting and reporting back that those data have been assessed and corrected? If that does not happen, on whom would penalties fall? To whom can members and the dashboard turn to ask, “Are you sure these data are correct?” Who is ultimately responsible for signing off on that or carrying responsibility for penalties if that does not happen?
I have another question, in the light of the comments from the noble Baroness, Lady Drake, about the number of releases we have just had from the DWP. I admire the work that has been done by the department—it has clearly been extremely busy—and a lot of it is really useful. However, how will the dashboard dovetail with the reforms proposed for small pots? The Government rightly want to help people—as is part of the intention of the dashboard—to merge pots and not leave small amounts of money in legacy schemes. What are the plans for integrating the dashboard rollout with the small pots reforms?
My Lords, I thank the Minister for bringing this statutory instrument to the Grand Committee. I have read the November debate and I look forward to a further detailed disposition from the noble Baroness, Lady Sherlock, with her usual forensic care. I will therefore not go into great detail; I am glad she will be winding up.
Can the Minister give me some reassurance? Compared to many others, I am coming new to this brief. Having looked through the regulations I see that there are no longer any binding interim dates, just one big deadline in 2026. Does the Minister not see how hard it will be to get busy pension schemes—commercial pension schemes—to prioritise this over their other day-to-day work? Other noble Lords have made the point about data being ready for dashboards. How much time will these pension schemes give to this, given that there are no interim dates and just one big date in 2026?
It seems to me that the issue is deadlines, and there is a need for the Government and pension schemes to nudge people to make sure that all details are up to date on the various pots so that they can pull that through to the dashboard when it is launched.
In a debate on 8 June, the Government elaborated on the need for dashboards to change the way people plan for retirement, and the Minister said that more time was needed to deliver this complex build. Paragraph 7.4 of the Explanatory Memorandum includes explanations. I have never seen so many explanations for why something has not happened:
“The technical solution has not been sufficiently tested, more work is needed to set up adequate support for industry with their connection journey and there is still work to do to finalise the necessary supporting guidance and standards”,
and so on. It is the biggest list of excuses for delay that I have come across for some time.
Other noble Lords have mentioned guidance in passing. Does the Minister believe that guidance will be sufficient to concentrate minds on the issue? I am not sure that guidance will be sufficient in many cases.
There are some small points, but I am not sure how they are addressed. I may have missed that somewhere, so I hope the Minister can provide me with an answer. For instance, how are widows’ and widowers’ rights to the pensions of their husband, wife or partner being dealt with? I had a similar case: I have a modest council pension pot and I asked what happens when I die; does my wife receive a contribution? That was six months ago and I still have not had a reply, and it is being dealt with by one of the very large pension funds. I would like some reassurance that these dashboards are not going to make the situation even worse.
In theory, pensions mainly apply to older people, although people seem to take them much earlier nowadays. It worries me that the whole idea of the dashboard is based on a knowledge and working use of IT. It may surprise noble Lords to learn that a lot of people do not use IT; many people just use their mobile phones to make calls. The whole principle of the dashboard and the way in which people access information is based on being able to operate an IT system. I have doubts because, even if the people concerned are not old now, as they get older and less able, when they will really want to know, they will be fiddling around not knowing how to get into the dashboard. Will we end up with big companies such as Aviva taking over pension schemes? I have no problems with Aviva. It seems to have taken over an awful lot, although it does quite well, but I am worried that many of the smaller pension funds will opt out.
Page 2 of the valuable impact assessment that was produced gives three options: do nothing, an alternative to legislation, and—the preferred option—the Government legislating. After reading all this, I wondered whether the first option, to do nothing, might have been safer, but we have to move forward.
We need to be careful, but we must say when this will happen, and the guidance has to be accepted by the pension funds so that they know when to do something, rather than waiting until October 2026 and saying, “Gosh, we have to do this by tomorrow”. My first point was that we need some interim dates to focus minds on this issue otherwise, as we were here a year ago and were here before then, we will be here again with another list of excuses, as detailed on this document.
My Lords, I thank the Minister for his introduction to these regulations and all noble Lords who have spoken. It is very nice to welcome the noble Lord, Lord Palmer, to the pensions dashboard crew; we look forward to having discussions with him on the later iterations of this project, which one sincerely hopes will not come to pass.
We have been very supportive of the pensions dashboard. Therefore, we agree with the noble Lord, Lord Vaux, that it is deeply regrettable that we are in this place and that the Pensions Dashboard Programme needed to be reset. I accept that my noble friend Lady Drake is right: if the digital architecture was not going to be ready to enable pension schemes to connect before the first deadline, which is the end of next month, it is clearly better to pause and get it right. After all, the dashboard service will enable access to trillions of pounds of assets and accrued benefits belonging to working people. It has to be secure as well as fit for purpose.
My noble friend Lady Drake is often a Cassandra on these matters; she sees these problems coming. My problem is not that the Government should pause and reset, if that is necessary; it is that they need to stop pretending that everything is fine, until the moment when it is suddenly not fine. That is a bit of a habit in government: “Is everything fine?” “Yes, yes, yes. Oh, no, it has all fallen apart, but will be fine again with a new deadline”. We somehow need to find a way of discussing things in politics that allows a grown-up approach to understanding when projects will be difficult. There is an overconfidence on the part of the Government such that, when everyone raises problems, Ministers are sent out with a brief that says, “No, it will all be fine; there is nothing to see here”, until it falls over.
I do not expect the Minister to solve that problem overnight, but I commend this to the Government as an opportunity to think again about how we handle big projects—and, in particular, how Parliament can have some accountability for them. An awful lot of money is at stake here—private, commercial and public. There ought to be some decent accountability over it.
Clearly, people such as my noble friend Lady Drake—indeed, many on these Benches—cautioned the Government that they were underestimating the complexity of delivering the dashboard and being overoptimistic about the speed, but we want a dashboard to work. I am with the noble Lords who are raising challenges about the reasons. We have had some helpful briefings, and some slightly less helpful official ministerial Statements, but the truth is that it is hard to know what exactly has gone wrong and why it was not picked up earlier.
The Minister told us the reason, saying
“the technical solution has not been sufficiently tested and there is still work to do to finalise the necessary supporting documentation and to get the necessary systems in place to support industry with the connection process”.
A cynic would say that, basically, that means that it was all fine apart from the technology, the paperwork and the systems. That is not an explanation of what went wrong. It is a little like when my washing machine breaks and a helpful friend will say, “What’s wrong with it?” and I reply, “It’s not working. It’s not washing clothes—I don’t know”. We need more than that. I know that the Minister is keen to have his officials talk to us, but there needs to be some process of public openness and accountability when things go wrong, so that there is the ability to hold to account and understand. However, here we are, with this reset.
As we have heard, the original timetable was hardwired into secondary legislation, hence the need for the instrument. As the Minister explained, it amends the 2022 regulations to remove the staging profile, staging deadlines and connection window and insert instead a common requirement for all schemes to connect to dashboards by 31 October 2026. The new approach is described like this in paragraph 11.1 of the Explanatory Memorandum:
“Through this instrument, the Department for Work and Pensions is retaining the policy of compulsory connection by a set date and intends to encourage a staged approach set out in guidance, rather than mandated in Regulations”.
Therefore, the answer to the noble Lord, Lord Palmer, is that there will be interim dates in the guidance, but they will be suggested interim dates. It is not yet quite clear what that will mean in practice. Trustees and managers will need to have regard to such guidance but as I understand it—the Minister can clarify it—that would not necessarily mean that they are obliged to comply with the suggested dates, or presumably they would be not suggested dates but mandated ones.
That raises some key questions. With a single compulsory connection deadline, is there not an obvious risk of a backlog of schemes still waiting to connect as we get close to 31 October 2026? What action will the DWP take if there is evidence of back-ending by schemes or of backlogs building up? That is not just our concern. Dr Yvonne Braun, a director of the Association of British Insurers, said:
“Our members have indicated they’re willing and able to continue to comply with a voluntary timetable, although it would have been our preference that these remained a regulatory requirement to prevent a last-minute rush of firms connecting to the system. We ask that government keeps this under review and considers making the staggered dates a regulatory requirement again if it should become clear that the wider industry is not taking the same approach”.
What is the Government’s response to that?
Although the timetable in the guidance will not be mandatory, we know that scheme trustees or managers must have regard to it, as not doing so would be a breach of the 2022 regulations. They will also be expected to demonstrate how they have had regard to it. However, as my noble friend Lady Drake said, the language of the Explanatory Memorandum is much more about encouragement. Paragraph 7.6 refers to MaPS and TPR communicating with
“trustees and managers of schemes in scope to encourage connection ahead of the single connection deadline, in line with the connection dates set out in guidance”.
It is not clear to me where the line lies between compulsory and voluntary when it comes to guidance. Can the Minister clarify that?
Can the Minister explain what “have regard to” means in practice? Is there an established meaning of this in law? It is a phrase that comes up, so can he help us on that? A crucial question is what would count as not having regard to the guidance. For example, suppose a scheme manager reads the guidance carefully and develops a plan to connect just in time for October 2026, and she is confident her scheme will be ready by then, does that count as having sufficient regard? Suppose lots of others do the same thing, and they all get to that point but cannot connect because there are too many of them and the system cannot manage it, are they in breach of the law? Have they failed then to have due regard to the guidance? What is their position?
My Lords, I thank the Committee for its broad approval for these regulations. I start by making the point that it was helpful to hear from the noble Baroness, Lady Drake, who is highly respected in this House for her pensions expertise. She welcomed the regulations and pointed out that, back in 2019, in her view, these regulations were far from being ready—she is of course correct in saying that. I value her broad support this afternoon. However, I acknowledge that there are a huge number of questions to answer in this debate, for which I thank noble Lords.
Throughout their development, pensions dashboards have received cross-party support in both Houses. Your Lordships will no doubt share my disappointment that we have needed to amend the original timeline. It is vital that the foundation upon which the dashboards ecosystem is built is safe and secure, as I said in my opening remarks. However, I am certain that the Government have made the right decision in slowing things down for the benefit of consumers.
I thank my noble friend Lord Young. I am grateful to him for reminding us of past deadlines—and indeed of past deadlines missed. I reassure him and the Committee that we are getting back on track. I hope that, in answering a lot of the questions raised today, I provide reassurance on that.
My noble friend raised the revised Explanatory Memorandum. During scrutiny of the regulations, the Secondary Legislation Scrutiny Committee felt that the EM could have provided more detail on the impact of the amendment regulations. Officials in my department subsequently provided a written response to the committee, and the department has replaced the EM with a revised version that provides the further detail requested by the committee. The DWP recognises the value of parliamentary scrutiny and the requirement for comprehensive explanatory material. It has begun internal action to strengthen its assurance processes.
I will answer the question raised by my noble friend Lord Young on the One Login, probably towards the end of my speech. I very much take note of what he asked.
I turn now to the broader issues regarding the dashboards and the reset. This was raised by the noble Lord, Lord Vaux, and the noble Baroness, Lady Sherlock, but it is a general theme. For example, he asked whether we had made the reset too complex. He also asked how much the scope has changed. As I said in my opening remarks, dashboards are complex, but the design is right. It is based on security and information, and on an understanding, from user research, about the information that users expect. The scope has remained the same throughout.
The noble Lord, Lord Vaux, went further, in asking questions about why the delay came about. I am probably repeating myself, but it is a project of significant undertaking, requiring the development of new technology that will permit individuals to find their pensions by searching thousands of pension schemes, which collectively hold millions of pension records. It became clear that the PDP would require additional time to deliver the complex technical solution to enable the connection of pension providers and schemes. I believe that my department took swift action to address the issues as soon as we knew that they had arisen. As I said earlier, the delay is frustrating, but it is vital that the foundation on which the dashboard’s ecosystem is built is safe and secure.
The noble Lord, Lord Vaux, also asked about the cost to the taxpayer. The dashboard project is funded by the financial services levy and the general pensions levy. These levies pay for the Pensions Dashboard Programme and the MoneyHelper dashboard, including staffing costs. The PDP has a spending review allocation through to 2025-26, and allocations beyond this point have not yet been determined. As the regulatory impact assessment shows, there is an increase in direct costs to industry of £69 million. I hope that provides some help.
The noble Baroness, Lady Drake, raised the so-called Mansion House package. I will give an overarching response on that. Since her appointment, the Minister for Pensions has focused on reforms to the private pension system, which have centred on introducing greater fairness, adequacy and predictability for today’s auto-enrolled generation of savers. The DWP has been working closely with the Treasury on a package of measures set out by the Chancellor in his speech the day before yesterday, as the noble Baroness knows, all designed to drive better outcomes for pension savers.
These are all part of a wider government agenda to improve the opportunity for investment in alternative assets, including high-growth businesses, and to improve saver outcomes. We believe that a higher allocation to high-growth businesses as part of a balanced portfolio can increase overall returns for pension savers, leading to better outcomes in retirement. We want to ensure that our high-growth businesses of tomorrow can access the capital that they need to start up, scale up and list in the UK. I am happy to write to the noble Baroness with further information. She asked about the value for money framework, so I will write to her about that.
My noble friend Lady Altmann asked about enforcement actions for schemes and whether or not they adhere to the guidance. The timeline in guidance will not be mandatory. However, trustees and managers must have regard to the guidance on connection. Trustees and managers will be expected to demonstrate how they have had regard to the guidance, and a failure to do so will be a breach of the regulations and therefore could result in enforcement action. All trustees and managers must connect by the deadline set out in legislation. I reassure my noble friend that failing to do so could result in action by the regulator, as I suspect she probably knows.
Then the question of liability arises. If an individual makes a poor decision based on inaccurate information, what then happens? Making pensions dashboards work involves multiple parties, so the question of liability if something goes wrong needs to be considered, but on a case-by-case basis. Pension schemes, qualifying pensions dashboard services and MaPS will all be subject to complaints management by the relevant ombudsman. This means that if the party at fault does not deal with the user complaint satisfactorily, the relevant ombudsman may investigate complaints and make determinations to put things right.
My noble friend Lady Altmann asked about standardisation of data, which is an important question. The Pensions Dashboard Programme is seeking to standardise many aspects of data. The regulations set out clear requirements relating to connection and the value and other data. MaPS will publish standards relating to data. The Financial Reporting Council had updated its requirements regarding the calculation of values to improve the consistency of projections.
The noble Lord, Lord Palmer, asked about digital access. His specific question was about those who do not use it, which is a fair point. It is true to say that, moving forward, this is primarily a digital solution we are providing, but there are existing resources still available, including the provision of annual statements. I hope that gives him some reassurance about those who are not quite as digital as others.
The noble Baroness, Lady Sherlock, asked about transparency on progress. I remind her and the Committee that the PDP publishes a six-monthly report. Additionally, it holds a briefing sessions with interested Peers—which I pledge to do on a regular basis—and we are keen to give as much information as we can. I hope that, from past form, she will be reassured on that.
A number of questions were raised by not only my noble friend Lady Altmann but the noble Baroness, Lady Sherlock, and I will attempt to whisk through them in the time available. The noble Baroness asked whether, with a single compulsory connection deadline, there is a risk of a backlog of schemes trying to connect as the deadline—31 October 2026—approaches. That is a fair question, and other Peers raised the same point. The regulations include a requirement to have regard to guidance issued on connection. We will be engaging with industry on guidance that will set out the proposed connection timetable. There have been positive signs among leading providers of their intent to adhere to the guidance, which is helpful. Similarly, the ABI published a statement indicating that its members would look to connect as per the guidance. The Pensions Regulator may take action where the trustees or scheme managers fail to have regard to the connection guidance and is assessing whether any changes need to be made to its compliance and enforcement policy.
The noble Baroness also asked what action the department would take if there was evidence of back-ending and backlogs building up. The DWP will work with the Pensions Dashboard Programme and regulators to monitor connection activity, and will use insight from industry to inform how we can best help to maximise adherence and remove potential barriers for schemes. Our expectation is that, given the widespread support for dashboards, the schemes will adhere to the connection profile in guidance. However, to provide more reassurance, we will keep this approach under review and will consider changes, including further legislation—note that—if problems emerge.
The noble Baroness, Lady Sherlock, asked several questions in relation to our intention to publish a revised connection timeline in guidance. She asked—as did my noble friend Lady Altmann—when the guidance on proposed connection dates will be published. We will work with industry this year on agreeing the connection timetable to be published. We intend to publish it as soon as possible.
The noble Baroness, Lady Sherlock, asked what role the regulator would play in encouraging schemes to follow the guidance, given that trustees and managers must have regard to it. She and the noble Lord, Lord Palmer, also asked about clarity on encouragement to compliance. The regulator will write to all schemes, informing them of their proposed connection date, as set out in guidance, and the action that they need to take to connect by the set date. The regulator will expect trustees to be able to demonstrate how they have had regard to the guidance. As I mentioned earlier, failure would result in enforcement action.
My noble friend has been very helpful. Is it the Government’s objective that the Government’s One Login will be the access point to the pensions dashboard?
The answer is yes, eventually, but I will need to write to my noble friend to qualify what I mean by that. That is the aim and it makes sense, but I cannot say that it will be by a particular date. I shall write to my noble friend.
I shall conclude quickly because I realise that others are waiting for the next debate. I thank all noble Lords in the Committee for the points that they have made. I commend the regulations to the Committee.
(1 year, 1 month ago)
Grand CommitteeThat the Grand Committee do consider the Consumer Rights Act 2015 (Enforcement) (Amendment) Order 2023.
My Lords, the order will enable trading standards to fully exercise its investigative powers to check compliance with the Tobacco Products (Traceability and Security Features) Regulations 2019. Smoking is the single leading cause of preventable death and disease in the UK, accounting for approximately 76,000 deaths a year. The Government are committed to addressing the harms of tobacco and have announced an ambition for England to become smoke-free by 2030, supported by a package of measures to cut smoking rates.
Alongside that approach, HMRC has a role to play in charging duty on tobacco products to deter smoking, as well as raising revenue to cover the cost to the NHS. HMRC has another key role in tackling the illicit market. One of the main challenges in tackling smoking prevalence, aside from the addictive nature of nicotine, is the illegal trade in tobacco products. That increases both the affordability and health risks for smokers.
The UK’s tobacco track and trace system, introduced in 2019, helps to prevent the illegal trade in tobacco products by making it more difficult for smugglers and counterfeiters to operate. The system provides a way to verify the authenticity of tobacco products and ensures that they have been legally procured and distributed. Tobacco products are tracked from point of manufacture through to point of retail, and at all stages in between.
To supply tobacco for sale in the UK, an entity must be registered for tobacco track and trace and must obtain an economic operator ID. Over 50,000 businesses are already registered, but there are inevitably those who deliberately choose to operate within the illicit supply chain, and we need to tackle such activity.
At Budget 2020, the Government announced plans for tougher, more effective sanctions to tackle the sale of illicit tobacco. An HMRC consultation which ran from December 2020 to February 2021 proposed that the sanctions be linked to the tobacco track and trace system and available for use by both HMRC and trading standards. HMRC and trading standards already work closely together to tackle the illicit tobacco market—for example, through their joint initiative of Operation CeCe. Under that initiative, illegal tobacco products are seized from retail and residential premises, disrupting the market, and preventing fraud.
Respondents to HMRC’s consultation supported the introduction of tougher penalties for illegal products found in retail and residential premises. They also supported extending powers to trading standards to better tackle non-compliance.
Primary legislation providing the powers to make regulations to introduce the new sanctions was introduced in the Finance Act 2022. Its provisions include powers to make regulations to issue penalties of up to £10,000, seize product involved in a contravention, and exclude retailers from the tobacco track and trace system, thereby restricting their ability to buy duty-paid tobacco for retail purposes.
The consequent regulations required for these sanctions to take effect will be achieved by the making and laying of two statutory instruments. The first is the Tobacco Products (Traceability and Security Features) (Amendment) Regulations, which was laid on 12 June. It sets out the detail of the new sanctions and how they will be implemented. It confers investigation functions on trading standards specifically related to track and trace. The second SI is the Consumer Rights Act 2015 (Enforcement) (Amendment) Order 2023, which we are debating. This will make a small amendment to the Consumer Rights Act 2015 to allow trading standards to exercise its existing powers under the Act in relation to the investigative function conferred under the Tobacco Products (Traceability and Security Features) (Amendment) Regulations 2023.
That function will see trading standards investigating breaches of tobacco track and trace and referring them to HMRC, which will administer the sanctions. This approach will play to both organisations’ strengths. Trading standards will have an additional tool to deal with what it finds during its compliance visits. It will then be able to refer information to HMRC, which will administer the penalties and ensure that the most appropriate sanction is applied and enforced. These sanctions will serve as a strong deterrent against businesses involved in street-level distribution of illicit tobacco, helping to protect the public and our economy. I therefore beg to move.
My Lords, I confess that usually when I speak on a statutory instrument I am trying to look for why it really should have been in primary legislation, not secondary. In this case, this strikes me as a genuine SI. It is almost a moment of great excitement.
I am very happy to say that these Benches support this measure, which, as the Minister says, enable trading standards to investigate more effectively illicit tobacco sales by small operators and retail outlets and to refer evidence of contraventions to HMRC for action, with potential penalties up to £10,000. We know from past surveys that some 18% of tobacco sales have been illegal. That leads me on to a series of questions to the Minister for further clarification.
At this time of cost of living pressures, some people will be tempted to buy cheaper, illegal or illicit cigarettes. I ask the Minister: is illicit activity increasing now at this time of increasing cost of living pressures, or are we continuing to see a diminution? I would be interested to know what the impact is and whether there has been any significant change that requires aggressive action.
When will the relevant guidance for businesses be published? I do not believe that is available yet. Indeed, when will the sanctions be implemented? Perhaps the Minister could give us some sense of the timetable. There is also no statutory review clause, so how will we know how effective these new powers are? If the powers are granted but are generally not used, I think the Minister knows that potential offenders will feel doubly empowered by new rules that then turn out to have no teeth, so it seriously matters that we track this. When we are tracking, will there be any measures to let us estimate the deterrence effect of the measure? That is probably one of its most important aspects.
Behind illegal sales by small and local outlets there is sometimes just a very small-scale operation, but at times it is very much linked to organised crime on a major scale. How is that link going to be investigated as trading standards becomes more engaged in this process?
The sale of tobacco to children is obviously a serious concern to all of us. Are outlets engaged in underage sales to be a particular target? Will there be any prioritisation, as far as the Minister is aware? Will enforcement involvement include the sale of non-compliant tobacco, blunts and shisha, which have sometimes been seen as a way to manoeuvre around the rules in the recent past?
The tobacco industry has a history of offering to help, or provide intelligence to, local trading standards. I have to say that civic society groups that are attempting to decrease smoking tend to view that with deep suspicion as a conflict of interest, designed to basically push tobacco sales from the illicit side but into legal purchasing rather than discouraging purchasing as a whole, and to improve the industry’s general standing and reputation. I wonder how that is going to be handled.
Does this measure also impact on non-compliant sales of e-cigarettes and vapes? We know these products are increasingly being targeted at non-smokers and youngsters, even though we have little information at the moment on what the effects are of the long-term usage of e-cigarettes and vapes.
The Government have a target to make the country free of tobacco smoking by 2030, and we support their goal of achieving a smoke-free generation. Smoking, as the Minister has said, remains a leading cause of premature death and is related to many severe and chronic illnesses and damages lives, as well as being a drain on the NHS. However, the pace of decline in smoking that followed the 2007 ban on smoking in English pubs and clubs has dwindled. How much is this measure expected to focus on reducing overall smoking? I confess that there is always a slight suspicion when HMRC is involved that the focus will be more on increasing revenues to HMRC than on reducing the overall activity—in this case, just moving it from the illicit arena into the legal arena.
If the Minister could add a little more enlightenment, we on these Benches are happy to support the statutory instrument.
My Lords, we support this measure. I shall reiterate a couple of facts mentioned by the Minister. Smoking is the biggest cause of preventable death in the UK. It accounts for some 76,000 deaths each year, with half of all smokers dying of a smoking-related illness. It is estimated that smoking costs NHS England over £2.5 billion every year. Alongside high-level policy, such as the smoking ban introduced by the last Labour Government in the Health Act 2006, evidence suggests that high duty rates have had a positive impact by reducing the number of people who start smoking and increasing the numbers seeking to cut down and quit.
With 21% of cigarettes sold in the UK currently illicit, clearly the illegal trade in tobacco products undermines these important contributions to public health. It deprives the Exchequer of vital revenue and reduces the deterrent effect of high duty rates. We therefore support harsher penalties for those who seek to avoid paying such duties and commensurate powers for trading standards to tackle those who procure, supply and distribute illegal tobacco and profit from the illegal trade.
I would like to ask the Minister three questions. First, she mentioned that the combined application of fines, powers to seize illicit products and the new sanctions is designed to have a deterrent effect on retail outlets and street-level distributors. This point was also made by the noble Baroness, Lady Kramer. Are there any plans to communicate these powers to potential offenders so that the deterrent effect might be enhanced? Secondly, where illicit product is sold through retail outlets, what data exists on whether the owner of a retail outlet is aware of such sales versus illicit sales carried out surreptitiously by an employee, and therefore whether enforcement measures are always correctly targeted? Finally, what communication, co-operation and co-ordination exists between HMRC and the Border Force to tackle the supply of illicit product at source?
My Lords, I thank both noble Lords for their contribution to this short debate. I am afraid that the speed of our debate might mean that I will need to write to them regarding some of their questions. I will address the ones I can.
The noble Baroness, Lady Kramer, asked whether the cost of living pressures have caused an increase in the illicit market. My understanding is that there has been a negligible increase in it. Some smokers are switching, for example, to hand-rolling tobacco from ready-made cigarettes to save money. That is the kind of behaviour shift we are seeing.
As for when we will be implementing the provisions provided for in the two statutory instruments, trading standards will start work on 20 July when the tobacco tracking and security SI commences.
Regarding the types of tobacco that will be covered, I can say that the tobacco track and trace system applies to only cigarettes and hand-rolling tobacco, but this makes up approximately 97% of the tobacco market. The system and the penalties are intended to be extended to other tobacco products, such as cigars, cigarillos and shisha, but that will be from May 2024. There is a plan to extend over the remaining market.
Both the noble Baroness, Lady Kramer, and the noble Lord, Lord Livermore, asked about the deterrent effect. We should see a decrease in the current tax gap for tobacco duty. We anticipate that we will see an increase in compliance activities undertaken by trading standards. The visibility of businesses selling illicit products being penalised will have the deterrent effect that both noble Lords asked about.
Tackling this issue at the smaller scale, where trading standards visits premises—the noble Baroness, Lady Kramer, also talked about links to more organised crime—will continue to be a focus. Activity in that area is driven by HMRC, which is the delivery partner, rather than trading standards.
The noble Baroness asked whether outlets engaged in underage sales will be targeted under this measure. My understanding is that, in each local area, trading standards looks at the priorities for targeting enforcement activity. It has powers when it comes to underage sales. The effect of this SI is to ensure that trading standards can make use of the enforcement mechanisms under track and trace, in addition to its powers on underage sales, plain packaging and other consumer issues. The priorities for trading standards visits are set locally, rather than nationally.
The noble Baroness, Lady Kramer, asked about e-cigarettes and vapes. Track and trace does not apply to them but, as she may be aware, we have a call for evidence open at the moment that focuses particularly on the use of vapes among underage consumers or children, which will look at that issue more closely.
On the question of the public health benefits of this measure versus revenue protection, they are mutually reinforcing. Illicit tobacco can have health implications, because it is not subject to the same health and safety regulations as legitimate products. It has been found to contain arsenic, mould and rat droppings, for example, so that issue is at play. The availability and affordability of tobacco products also impacts on smoking rates, which is why the duty that we have in place helps to reinforce our strategy to stop smoking. Making sure that people do not engage in the illicit market also reinforces that strategy.
I will not pretend that protecting the duty owed to the UK Government is not an important objective for HMRC; it is one that we continue to support. However, it mutually reinforces the wider ambition for England to become smoke-free by 2030. As I said, the Department of Health and Social Care announced a package of measures to cut smoking rates, acknowledging that we need to go further in this space. They include expanding access to new treatments, rolling out a national incentive scheme to help pregnant women quit, and using a new approach to health warnings.
I am conscious that I have not answered all noble Lords’ questions, but I undertake to follow up in writing. There is broad support for the SI, but I am sure that the answers to those additional points will help your Lordships to understand how it will have the impact that we all hope it will have. I therefore commend this instrument to the Committee.
(1 year, 1 month ago)
Grand CommitteeThat the Grand Committee do consider the Business and Planning Act 2020 (Pavement Licences) (Coronavirus) (Amendment) Regulations 2023.
Relevant document: 44th Report from the Secondary Legislation Scrutiny Committee
My Lords, the regulations that we are considering today were laid in draft before this House on Wednesday 7 June under Section 23(6) of the Business and Planning Act 2020 for approval by resolution of each House of Parliament. If approved and made, these regulations will extend the temporary pavement licence provisions for 12 months to 30 September 2024 and will come into effect the day after they are made.
These pavement licence provisions create a faster, cheaper and more streamlined consenting regime for the placement of removable furniture, including tables and chairs, on pavements outside premises such as cafés, bars, restaurants and pubs. These measures have been successful in supporting businesses, making it easier for businesses such as pubs, restaurants and cafés to facilitate al fresco dining with outside seating.
We know that the hospitality sector was one of the hardest hit by the pandemic, and the economic effects of that period persist today. It is therefore vital that we extend these provisions for 12 months to continue to support its recovery from the impact of the coronavirus pandemic and to avoid unnecessary confusion while we seek to make the streamlined process permanent through the Levelling-up and Regeneration Bill.
I will briefly remind the Committee of the background to these regulations. Part VIIA of the Highways Act 1980 sets out a permanent local authority licensing regime for the placement of furniture such as tables and chairs on the highway. However, the process involves a legal minimum of 28 days’ consultation. That is problematic because many local authorities take much longer to determine applications, and there is no statutory cap on the fee that local authorities may charge.
Therefore, with effect from 22 July 2020, temporary pavement licence provisions were introduced in the Business and Planning Act 2020 to support the hospitality sector in response to the coronavirus pandemic. These proposed regulations use enabling powers in the Business and Planning Act 2020 that allow the Secretary of State, where they consider it reasonable to do so, to mitigate an effect of coronavirus to extend the temporary provisions subject to parliamentary approval.
I turn to the detail of the regulations. The sole purpose of the regulations is to change the four references to the expiry date of these temporary pavement licence provisions in the legislation, amended from 30 September 2023 to 30 September 2024. The regulations do not change any other part of the temporary placement licence provisions. Subject to the regulations being approved and made, businesses will be able to apply for a licence under the process set out in the pavement licence provisions in the Business and Planning Act 2020 for the extended period until 30 September 2024. The regulations do not automatically extend licences that have already been granted under the current provisions, so businesses will need to apply for a new licence should they wish to have one in place during the extended period.
Local authorities are encouraged by the guidance to take a pragmatic approach in applying the relevant provisions, so that it is as convenient as possible for businesses to apply for a licence during the extended period. I will briefly remind noble Lords of this process.
All licence applications are subject to a seven-day public consultation period, starting the day after that on which the application is made, and then a further seven-day determination period, during which the local authority is expected to either grant a licence or reject the application. If the local authority does not determine the application before the end of the determination period, the licence will automatically be deemed to have been granted in the form in which the application was made, and the business can place the proposed removable furniture within the area set out in the application for the purposes proposed.
Licence application fees will be set locally but capped at a maximum of £100. All licences will be subject to a national non-obstruction condition and smoke-free seating condition, as well as any local conditions set by local authorities.
The granting of a pavement licence covers only the placing of removable furniture on the highway. A pavement licence does not negate the need to obtain approvals under other regulatory frameworks, such as alcohol licensing. Once a licence is granted or deemed granted, the applicant will also benefit from deemed planning permission to use the highway land for anything done pursuant to the licence while the licence is valid, such as using furniture to sell or serve food or drink supplied from or in connection with the relevant use of the premises.
The regulations will enable cafés and restaurants to continue to obtain quickly and cheaply a licence to place furniture on the highway outside their premises. If these regulations are not introduced, there is a real risk of undermining the steps that hospitality businesses have taken to recover from the economic impacts they have suffered as a result of the pandemic.
We are seeking to make the streamlined approval process permanent through the Levelling-up and Regeneration Bill. Failure to extend this measure would result in a gap in service and a return to the process under the Highways Act 1980, which would be confusing and costly for businesses and local authorities alike.
All of us in government have seen the positive impact of al fresco dining on the vibrancy of many of our high streets. I express my gratitude to local authorities for the huge effort they have made in this matter and for their hard work to enable businesses to thrive while building vibrant high streets, leading to the success of these measures. The draft regulations will allow al fresco dining to remain a reality for these businesses and provide much-needed continuity for another year while we seek to update the permanent measures through the Levelling-up and Regeneration Bill. I commend this instrument to the Committee.
My Lords, I warmly support these regulations and congratulate my noble friend on bringing them forward. My only concern is about the ability to reach out and consult organisations representing the disabled, which I will come to in a moment.
In her introductory remarks, my noble friend mentioned what this will mean for the hospitality sector, and I warmly support that for the reasons she gave. The sector suffered heavy losses during the Covid pandemic, and it is gratifying that tourists are now returning to areas such as London—and North Yorkshire, to a certain extent—in waves that we have not seen since the pre-pandemic days of 2019. That is very welcome.
I had the good fortune and honour to chair the ad hoc Select Committee on the Licensing Act 2003 and, similarly, the follow-up committee. I was delighted that the Liaison Committee allowed us to conduct a further, follow-up inquiry. One of the issues that struck us during that inquiry was how to reach out to interested affected groups, such as organisations and groups representing the disabled, and how best to catch their attention if there was a licensing application that may be of interest or concern to them.
Can my noble friend put my mind at rest in that regard? I think she said that each individual licence is subject to a seven-day consultation, so I would like to know what mechanism local authorities use in that regard.
I note that paragraph 10.1 of the Explanatory Memorandum attached to the regulations says:
“No formal consultation has taken place on this measure”.
Perhaps one would not have expected a consultation for the reasons that my noble friend gave, that this is a continuation and a renewal. This is my main concern here. We all know disabled people and partially sighted people—they are represented in both Houses of Parliament. One error of these regulations, or any licensing application applied under them, would be if those people were not reached out to under each individual licensing application.
On a lighter note—this is not really about a pavement application—when coming back down St Martin’s Lane in the daytime today, I passed Stringfellows, which is a well-known restaurant establishment, and I was rather struck by an orange leaflet that had great prominence on two of its doors. It has applied for a renewal of a sex establishment licence as a sexual entertainment venue. I realise that this is without the remit of today’s debate, but I will write to my noble friend with a copy of the notice. We spent hours looking line by line through the Licencing Act 2003; I like to think that I am fairly interested in licensing, but it was news to me that we have any sexual entertainment venue licensed in London or any other part of this country.
I look forward to my noble friend’s response on the consultation, not just of these regulations but of each individual licence application under the regulations before us.
My Lords, that conjures up a new image of a pavement licence for Stringfellows.
I had better remind the Committee of my relevant interests in this regard as a councillor and as a vice-president of the Local Government Association.
The pavement licencing regulations are very positive and I am pleased that they will be rolled over. I have one or two questions. Even in my less-than-warm part of Yorkshire, this has been a positive move—that is the good news. However, I wonder why, when these regulations were first considered, there was no thought about an automatic rollover for businesses that had made an application and had fulfilled their obligations under the licence, and about which there had been no complaints. For businesses there is now additional bureaucracy every year when they have to make an application to the local authority. That is my first point.
I have raised my second question before. Businesses now have the opportunity to trade on the public highway. The public highway is owned by the public and must be maintained by the public. One wonders whether there ought to be a rental income for the local authority from the business for the use of the highway. Local authorities are cash-strapped as it is, and any form of additional income would be welcome. I say that because I think the licence income is very small; I think I heard the Minister say it was £100 maximum. Some establishments use quite a lot of their highway if they have a good frontage, and there ought to be some income there for the local authority.
My Lords, I was interested to hear the comments of the noble Baroness, Lady McIntosh of Pickering, about Stringfellows. I understand—only from posters on the Underground, believe me—that it is known for its Magic Mike performances. The idea of these being subject to pavement licences is a bit mind-blowing, but you never know what will happen in London.
This SI is the third extension to the regulations permitting the rapid application process for businesses to obtain pavement licences. We understand that this is a temporary provision pending the introduction of permanent changes in the levelling-up Bill. The introduction of this power during Covid undoubtedly had a very positive effect for the small businesses it was intended to support—in fact, it probably saved quite a lot of them from extinction. It has also created a vibrant outdoor eating and drinking culture in many of our high streets—including where I live—which has enlivened and invigorated them very positively. We therefore will not be objecting to this SI.
However, I have a few questions for the Minister, which I shall put to her as briefly as possible. First, during the debates on the pavement licence section of the levelling-up Bill, the noble Lord, Lord Holmes, rightly raised the issue of ensuring that our pavements are accessible to all. The noble Baronesses, Lady McIntosh and Lady Pinnock, both commented on this. The noble Lord said:
“I simply wish to reassert the primary purpose of the pavement. It is not a place for excessive A-boards, advertisements, marketing materials or sprawling seating. It is a place to connect people. It is a place where we can meet on our streets. Yet, all too often, we experience inaccessibility, obstacles and problems when we are simply trying to go about our daily business. This is bad enough for anybody, but for those of us who use guide dogs or wheelchairs it can often be an impossibility”.—[Official Report, 22/5/23; col. 646.]
He also raised the issue of e-scooters being littered across pavements.
I understand from previous answers from the Minister that local authorities will be encouraged to take the needs of all users into account when considering licence applications. I hope that she will be sympathetic to amendments to the levelling-up Bill in this regard. It might really help if we could approach an organisation such as the Royal National Institute of Blind People to get some guidance about what would help people with visual impairments to cope with this kind of street trading.
Secondly, the issue of cost was mentioned by the noble Baroness, Lady Pinnock. While I appreciate that the Government and all of us want to give small businesses every chance to recover from Covid without imposing any further costs on them, it does not seem fair that local authorities, which are also recovering from the financial burdens of Covid, should take these costs on themselves. The Minister will be very aware that the Local Government Association has long held the view that councils should be able determine such costs relating to the full cost recovery of issuing licences. I can see that in the short term we would not want to impose any further financial burdens on small businesses, but will the Government give further consideration to this when the measures become permanent as part of the Bill?
I would like to ask the Minister about the seven-day application process. Most applications will be by a delegated authority for licensing officers to consider. Should there be a contested application, for example, local authorities have to by law give seven days’ notice of a meeting. That is a bit tricky if the licence has to be considered within seven days. I wonder how that is going to be dealt with.
Finally, when debating this issue in the other place my honourable friend Sarah Owen, the MP for Luton North, rightly raised the support that could be provided to small businesses through the non-domestic rating system. As we are currently in the process of that Bill going through your Lordships’ House, is the Minister able to give the same small businesses being supported by pavement licences any reassurance about how the Government intend to support them further by provisions in that Bill?
We have no hesitation in supporting this SI. We all want those small businesses which have been helped by it to continue to thrive.
My Lords, I thank noble Lords for their contributions on these draft regulations. As I previously outlined, these regulations continue our support for the hospitality sector’s economic recovery from the coronavirus pandemic and give support to businesses in uncertain times with global inflation. As we have heard, this extension will give businesses extra support for another year. I thank noble Lords for their support for that across the Committee.
A number of points were raised, and I will go through them. Accessibility was quite rightly bought up by my noble friend Lady McIntosh of Pickering and the noble Baroness, Lady Taylor of Stevenage. This is very important. I have met my noble friend Lord Holmes more than once about this issue. I continue to talk to him. Of course, pavements must always be accessible to everyone, regardless of their mobility needs. As such, this condition applies to all temporary pavement licences issued by councils. If the conditions are not met, the licences can be revoked.
The pavement licence guidance says that in most circumstances a minimum of 1.5 metres of space should be kept clear between an obstacle and the edge of the footpath. That is for everyone, whether it be wheelchairs, buggies or just people who need a little more space to walk safely around our town. This will continue to apply under the extended provisions. We work with disabled people through the Disabled Persons Transport Advisory Committee, the Royal National Institute of Blind People and the Guide Dogs for the Blind Association. This guidance has always been refined even further after speaking to them, to ensure that local authorities consider the needs of all people when setting conditions and making decisions.
In terms of local particularities, because areas differ, local authorities may also wish to review any local conditions they have set in relation to access and safety. That is really important. Local people know best about their towns and villages. The noble Baroness, Lady Pinnock, asked about automatic rollover. I can understand the reasoning behind this, but we want to ensure that the community continues to have a say. We know that in communities some people may say that it is fine, but I think we should ask, so we need an annual consultation just to check that everything is going right, and that people are happy with what is being delivered.
The noble Baronesses, Lady Taylor of Stevenage and Lady Pinnock, brought up the issue of income for local authorities. There is always a balance between money for the council and the cost to businesses. The £100 is a cap. Some local authorities do not charge anything; I was hearing of one such the other day. They may be much wealthier councils than others so can afford to do that, or they may prioritise small businesses at a particularly difficult time, but it is a cap. Looking further towards the future, the Levelling-up and Regeneration Bill that is going through the House looks at higher levels of cost to businesses. Again, though, they will be caps; they will not be required to be charged. It is important that local authorities have the flexibility to do that.
The noble Baroness, Lady Pinnock, mentioned visible barriers. I will take this issue back and we will have another discussion about it. I certainly know from personal experience that al fresco dining is wonderful; it makes our streets look so much more interesting at times, and it is lovely to sit out. However, the ones with the barriers around them seem much more sensible to me. I will take that back to the department. I will not forget; I will come back to her.
I thank the Minister for doing that. My worry is that I think that was initially included in the first set of regulations, and I wonder why it has somehow been taken out. But I will wait for an answer.
I am interested in the answer as well, so I will definitely come back to the noble Baroness on that.
As I say, the measure also refers to the issue of non-domestic rates, mentioned by the noble Baroness, Lady Taylor of Stevenage. Non-domestic rates are important revenue for local authorities. Again, it is about balance: if you lower them for businesses, that is good for businesses, but then we have to make that up in some way for local authorities.
I think I have answered everything. I will check Hansard tomorrow, and obviously I will send a letter if necessary. Did I miss something?
On the non-domestic rates issue, we have raised the point during the course of the Bill, which my noble friend Lady Hayman has been dealing with, about the fact that there is disparity in treatment between online businesses and the kind of small businesses that we are talking about that operate on our high streets. As we go through the process of further consideration of the Bill, we need to think about that because it would be a way of giving more support to those small businesses and perhaps getting online businesses to pay a bit more of their fair share towards the tax cost in this country.
I know that will be an issue as the Bill comes back on Report.
I shall conclude. We believe that extending the temporary pavement licence provisions through these regulations is necessary to support food and drink hospitality businesses. That is particularly important when we consider how badly affected they were by the pandemic. These temporary pavement licence measures have already been very successful in supporting that sector in its economic recovery and getting it out of the pandemic. They will enable that success to continue and provide much-needed certainty to businesses in their planning for the coming years. I thank noble Lords for taking part, and I commend the regulations to the Committee.