Grand Committee

Monday 18th December 2023 Grand Committee

Monday 18 December 2023

15:45

Child Support (Management of Payments and Arrears and Fees) (Amendment) Regulations 2023

Monday 18th December 2023 Grand Committee

Considered in Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Child Support (Management of Payments and Arrears and Fees) (Amendment) Regulations 2023.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, I am pleased to introduce this statutory instrument, which, subject to approval, will help more families to access the vital support that is available through the Child Maintenance Service. It will also ensure that efforts and resources can be focused on taking action to collect unpaid arrears in those cases that will make the biggest difference to children. These changes build on a number of improvements that we have already made and are among the first in a further wave of legislative measures that we plan to bring forward to ensure that the service is more accessible, simpler and speedier and ultimately gets more money to more children more quickly.

Families are the cornerstone of our communities. Each family is unique, but the importance of the bonds that bind them together is universal. When these bonds fray or falter, the impact on children can be significant, including where parents separate. It is therefore right that we continue to take action to promote family cohesion and reduce conflict, so that children grow up with the love and support that they need.

It was an honour to respond to the recent debate on the Love Matters report, commissioned by the most reverend Primates the Archbishop of Canterbury and the Archbishop of York. The report delivered a powerful reminder of why love and support matter and the importance of strengthening and supporting family life, including ensuring that children get the best start in life.

The Child Maintenance Service plays a key part in that endeavour. It is part of a wide-ranging set of programmes and initiatives that my department is leading on. For example, through the reducing parental conflict programme, we are supporting parents to reduce the impact of frequent conflict. Delivered through local authority family services and with local community and faith partners, we are on track to have directly supported 40,000 parents in the last two years. Since we introduced it in 2014, the family test has been guiding policymakers in looking at the potential impact of policies on the family. It is something that I have actively supported in my role and I am committed to promoting it across government. Our new childcare offer has removed one of the biggest barriers to parents working and providing for their family, with a nearly 50% increase in the amount of childcare costs that parents on universal credit can claim back.

I will just highlight a number of other linked programmes happening across government. In addition to the childcare change for parents on universal credit, the Government are also substantially increasing the amount of free childcare that working parents in England can access, with 30 hours of free childcare a week all the way through from nine months up to their child starting school. Our £2.4 billion Supporting Families programme is showing how intervening early can improve outcomes for families in the long run. The Start for Life and family hubs programmes have created a network of centres and extra support for families with children.

I return to the Child Maintenance Service, which I oversee. Alongside the range of help that I have just outlined, it plays a crucial role in securing financial support for children where parents have separated, mandating, and where necessary, enforcing arrangements so that money flows from paying parents to receiving parents. This can benefit children and help to prevent them from falling into poverty. The Child Maintenance Service is currently supporting nearly a million children through maintenance arrangements. Between 2020 and 2022—the latest figures available—160,000 children were kept out of poverty each year because of parents coming to private arrangements and with our interventions through the Child Maintenance Service.

Furthermore, the Government supported two child maintenance Private Members’ Bills, which gained Royal Assent earlier this year. This included the Child Support (Enforcement) Act 2023, which we consulted on in November to seek views on how we accelerate enforcement by replacing the slow and outdated court-based process to obtain a liability order. Once implemented, this will reduce the process from 22 weeks to as low as six weeks, making it quicker to see money flow through for children.

These regulations are intended to further improve access to the Child Maintenance Service for all families and to ensure that it runs effectively to focus on getting more money to children. First, to improve access, the regulations remove the £20 application fee that currently needs to be paid to access the Child Maintenance Service. By way of background, the original rationale for introducing the fee in 2014 was to help parents to think twice before going down the statutory route by default and encourage them to come to their own arrangements. However, as part of an evaluation of the fee and its impact, we found that it has not quite worked as intended.

Research published by my department found that the fee is not a major factor for parents when making decisions about whether to apply to the Child Maintenance Service. Indeed, the evaluation found that families on lower incomes, who we know disproportionately experience conflict and are therefore often in need of support, can find the application fee a financial barrier to accessing the service. It is important to highlight that around 54% of all applicants already pay no fee because of existing waivers, such as victims of domestic abuse and those aged under 19. Therefore, we think it sensible to remove the application fee completely for all, ensuring that those most in need can get support more easily.

Secondly, the regulations will ensure that the service can more efficiently focus resources on getting larger, more-recoverable unpaid payments flowing to children. We continue to engage with parents who refuse to pay child maintenance and fail to take responsibility for their children, through a range of enforcement powers to collect unpaid amounts. However, in these regulations, we are taking a pragmatic approach to bring forward powers to write off very minimal amounts of £7 or less, in a small number of inactive cases that would otherwise have been closed were it not for this outstanding balance.

We are doing this for two pragmatic reasons. First, the reality is that keeping these cases open requires considerable resource and taking action to recover such small amounts often costs more than the actual value of the debt. Left open, the cost of maintaining them could increase for decades with no greater chance of money being paid to receiving parents. We need to ensure that taxpayers’ money, as well as the time and effort of caseworkers, is being directed effectively, such as by focusing action against parents who owe significantly larger sums and where the impact on children missing out on that money is greater.

Secondly, given that we will close only the cases in which we have stopped calculating child maintenance payments, it is likely that they are longer needed. This could be because the child has become an adult, the parents have reconciled or the absent parent has unfortunately died. It therefore makes sense to close these cases, not least for the certainty and clarity that it would provide for families. As I said, we expect only a small number of cases to qualify and the vast majority are likely to have outstanding arrears of less than £1. The full details of the criteria permitting write-off of a debt are set out in the regulations. As I said, they include cases where maintenance calculations have ceased and no payments have been made in the previous three months. In addition, the Child Support Act 1991 provides that, in order for write-off powers to be exercised, we need to be satisfied that it would be unfair or otherwise inappropriate to enforce liability in respect of the debt.

I believe both these measures to be proportionate common-sense changes that will further improve the Child Maintenance Service. The changes are good for parents, good for the taxpayer and, more important still, good for children. I hope that colleagues will join me in supporting these draft regulations and I commend them to the Committee. I beg to move.

[Lord Palmer of Childs Hill (LD)]

My Lords, I thank the Minister for his overview of the whole system. He eventually got to the regulations in front of us, but he gave us a good idea of the various things that the Government are attempting to do; I thank him for that.

I come to the regulations themselves. The Minister will, I am sure, be pleased to know that I and my party agree with the removal of the £20 application fee; it has been my party’s policy in the past couple of manifestos. We would, however, make an additional change: in addition to removing the £20 charge, it is Liberal Democrat party policy to remove the 4% charge for receiving parents using the collect and pay service. I would appreciate his view on the possibility of this.

The Minister pointed out that the Government are trying to be pragmatic in dealing with the rest of the instrument. I welcome the suggestion that up to £7 of arrears could be written off but I hope that the Minister can clarify whether that would be a one-off £7 at the end—with which we would have no problem—or could apply to more than one item of £7. Is this meant to be a generous action or is it to save administration costs, or a bit of both? He did say that it was pragmatic. Who gains and loses on this £7? I read the provision through and was not quite sure—perhaps it is just me—whether the receiving parents loses £7 or that the Child Maintenance Service in some way writes it off internally. I am not calling for it to be increased but does the Minister have any information as to whether an increase in the write-off—let us say it was £10; I am just dealing with the theory of it—would have any administrative effect? Would we save money? If it is meant to save on administration, is £7 an appropriate cut-off? I think that it is, but it is worth asking.

I will move on in dealing with this £7 write-off. My reading of the statutory instrument is that time arrears will be written off in only these limited circumstances: maintenance arrangements have come to an end because the payee parent has requested it; the paying parent has died; the child has died; the child is no longer a child; the parents have been cohabiting for more than six months; a new arrangement has been put in place; or the parent has failed to pay anything for the final three months. Presumably, there would be only one £7 sum of arrears rather than a series of £7 sums that could be written off unless a new arrangement were later put in place—for instance, if the couple got back together, then broke up or the payee parent requested that a new arrangement be put in place—but subsequently ended again. However, that would be some months or years down the track and would not happen too often, I hope. It may seem fairly obvious to the Minister but I have read the SI and it really is not that specific. The ambiguity is such that I would appreciate, for the purposes of Hansard, it being set out.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for introducing these regulations. I also thank the noble Lord, Lord Palmer of Childs Hill, for his careful questioning on the £7 matter; I shall leave that entirely to him and commend him on getting into the weeds in which I normally pride myself on lurking with these sorts of regulations. I very much welcome him to this space.

I was surprised and delighted to find a Keeling schedule in the Explanatory Memorandum. Can the Minister convey my appreciation of that to those responsible? It is often quite hard to track back the way in which regulations apply, so I am grateful for that.

As we have heard, these regulations do two things: they remove the £20 upfront fee payable to all those who are not exempt; and they waive arrears below £7 in certain circumstances, as described by the noble Lord, Lord Palmer. The Government introduced both this upfront fee and the ongoing fees after they reformed the child support system in 2012. The ongoing fees are to be retained, but these regulations remove the upfront fee at a cost of roughly between £1 million and £2 million a year. I should say at the outset that we also support these changes. However, I want to ask some questions, particularly about the charging point.

16:00

The Explanatory Memorandum notes that

“applications to the statutory scheme have been lower than anticipated”

at the time of the 2012 reforms. The EM references the NAO report issued last year, which made interesting, if worrying, reading. More parents are now making their own arrangements and fewer parents are using the statutory child maintenance system, presumably because of the fees. As the NAO notes, and the Minister reminded us, that was the aim. The DWP wanted to reduce the number of families who use the statutory system and get more people to make their own arrangements. Look at what happened: private arrangements have increased as expected, but the take-up of the statutory scheme has plummeted. It was expected to fall from 46% of parents in 2011-12 to 33% by 2019 but, instead, it went down to just 18% of separated families using the CMS in 2019-20. That is a collapse of demand for the state system.

Meanwhile, the estimated proportion of separated families with no arrangement at all increased from 25% in 2011-12 to 44% in 2019-20. If the Government were trying to put people off getting child support, it worked. The numbers are edging up a little now, but the latest figure I could find was that cited by the EM, which says that:

“The proportion of separated families with CMS arrangements stood at 19% in 2021/22”.

The memorandum suggests that:

“Removal of the application fee would remove a barrier to parents having a successful arrangement which will ensure that children will receive money through CMS”.

While welcoming this, I ask: what is the evidence that the upfront fee is the primary barrier putting people off, as opposed, say, to ongoing fees or other matters?

I will give the Committee some background. When the Government proposed to introduce fees for using the Child Maintenance Service, it was controversial. As I have been in this brief for a long time, I remember the much-missed Lord Mackay of Clashfern trying to amend the Government’s legislation on this very point. In the end, the Government resisted, but he drew them out and the Government were very clear: the upfront fee was meant to deter parents and get them to make their own arrangements, instead of using the state system; the ongoing charges were designed to get them to consider whether they could arrange payments between themselves, through direct pay rather than by using collect and pay. At the time, many concerns were raised that the fees would deter parents from using the state system at all, so the Government agreed to do a review 30 months after charging was introduced.

The 30-month review, as it was imaginatively called, used independent survey information, along with official statistics and other feedback from representative groups, to look at the impact of the charges. The survey work was solid—it was done by the National Centre for Social Research—and the 30-month review said:

“Evidence from the NatCen surveys tells us that some parents, particularly those on low incomes, can find the application fee difficult to afford, but we do not have any evidence that this is preventing these families from making an application. The research does not allow us to assess the relative impact of the application fee compared to other factors that parents consider when deciding whether to apply to the statutory scheme”.

Remember, that was 30 months after the fees were introduced back then—a decade ago.

What research has been done since to allow the department to understand fully the impact of the various charges, in the way that it was not able to do at the 30-month point? This is important, because the NAO says that the DWP’s

“research does not fully explain why take-up of the CMS is lower than it expected”.

Worryingly, lower-income households and some ethnic groups, including black parents, appear less likely to use the statutory scheme. The NAO says that

“the Department has not conducted research into why this might be”.

A year has elapsed, and I find it hard to believe that that is still the case, so can the Minister tell the Committee what research the department has done since last year, when the NAO pointed this out, to look into those factors?

The NAO made a number of recommendations. They included that the DWP should use survey data

“to monitor the number of effective arrangements across society”.

How often is this being done and does it look at the characteristics of those families who use the CMS? The NAO also suggested that the department should

“research ways in which more people who do not have effective arrangements can be encouraged to use”

the CMS and its services. Is that happening?

The NAO noted that around half of new direct pay arrangements either are not sustained or are not effective, and that the DWP does not monitor whether payments are being made. The NAO therefore recommended that the DWP should

“continue to regularly survey separated families with Direct Pay arrangements and publish a regular estimate of the effectiveness of the arrangements and whether the arrangements continue; and set out how … it will continuously improve its communication with Direct Pay customers to help them report missed payments, help prevent Direct Pay arrangements from failing, or … to promote faster transfers to Collect & Pay arrangements where appropriate”.

Is the department following these recommendations? What else is being done to make direct pay more effective? I look forward to the Minister’s reply.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the noble Lord, Lord Palmer of Childs Hill, and the noble Baroness, Lady Sherlock, for their general support for these regulations. Certainly, the noble Lord, Lord Palmer, was fully in agreement with what we are doing with the £20 application fee. I appreciate the noble Baroness’s very complimentary remarks about the regulations. We work hard to get them right and I will certainly pass her remarks on. I thank both Members for their valuable contributions during this short debate.

Providing for our children is a fundamental responsibility. Most people can independently reach agreement about arrangements under the Child Maintenance Service, but there will always be circumstances where this does not happen or is not possible, as I said. Sometimes relationships are complicated and conflicted and, of course, there are reasons due to domestic abuse. That is why the work of the Child Maintenance Service is so vital. To add to what I said in opening, it provides that safe service for parents who specifically face safety concerns, and it ensures that both parents actively play their part to support their children, whether they live with them or not.

I will answer the questions of the noble Lord, Lord Palmer, about writing off £7 arrears. This legislation will permit the Child Maintenance Service to write off small volumes of very low-value debt in cases that meet certain criteria and that would otherwise have closed if it were not for that outstanding balance. Writing off low-level debt will be permitted only in cases where it would be unfair or otherwise inappropriate to enforce liability in respect of the arrears. I will explain more in a moment but, broadly speaking, it applies where a maintenance calculation has ceased, under specific provisions of the Child Support Act 1991 and where no payments have been made towards the arrears in the last three months.

We believe that setting the threshold higher, which I think was the gist of the noble Lord’s question, would give the wrong message to paying parents about their obligations. As the flat rate for child maintenance—the minimum amount a parent is expected to pay to meet their statutory duty to maintain their children—is £7 per week, we consider setting the threshold just below that amount the best way to strike that difficult balance. I hope that helps to explain our rationale behind the policy.

The noble Lord, Lord Palmer, asked why we are removing the application fee, why it was not removed sooner and whether we are doing this for the benefit of the customers. As I set out, the application fee was introduced partly to provide an incentive for separated parents to make collaborative family-based arrangements to facilitate better outcomes for children. In removing the fee, we first needed to allow enough time to properly evaluate the impact of this measure. As part of this evaluation, evidence published by my department has shown that the fee is not a significant factor when making decisions, as mentioned earlier. Most importantly, evidence has also found that families on lower incomes disproportionately experience conflict and are less able to make a family-based arrangement. Therefore, the fee could act as a financial barrier to those families accessing the service. The removal of the fee is expected to lead to a relatively modest loss of income of around £1 million to £2 million per annum. Looking at this, we think that, on balance, this is the right thing to do.

The noble Lord, Lord Palmer, asked about collection charges. They are applied to all Child Maintenance Service collect and pay cases. Our research suggests that this encourages some parents to use direct pay. The charges are 20%, as he knows, on top of the liability for the paying parent, and—the gist of his question—4% of the maintenance received by the receiving parent. Charges such as the application fee were originally introduced to provide both parents with an incentive to collaborate. Running the collect and pay service incurs costs for the taxpayer, especially where collection and enforcement action is required to secure payments. Therefore, it is reasonable for most parents to contribute towards running such a service. In a survey conducted between 2017 and 2019, 44% of receiving parents said that collect and pay charges influenced their decision to use direct pay. To answer the question directly, the Government continue to keep the other Child Maintenance Service measures, including the 4%, under review. No decision is being made, but we are keeping it under review.

[Lord Palmer of Childs Hill (LD)]

Can that be changed without it coming back? It cannot, can it? The Government are missing an opportunity. The Minister said £7 per week. Is that what he meant?

[Viscount Younger of Leckie (Con)]

No, I did not mean £7 per week. I should have said £7 arrears. On the £4, I understand that we have to use legislation to take that forward, should we wish. However, it is not on the agenda and we are keeping that under review.

The noble Baroness, Lady Sherlock, raised a number of questions. I shall first address the points made about the NAO. The Government also thank the NAO for conducting such a thorough report on the value for money audit of the CMS. The Government’s response partially and fully accepted a number of the NAO’s recommendations, as the noble Baroness probably knows, including investigating why fewer people are taking up the CMS than expected, tackling any inappropriate barriers that prevent families using its services and improving the effectiveness of direct pay and collect and pay arrangements.

Another question the noble Baroness asked was about what evidence the department has relating to the drivers of the fall in usage of the statutory system. Having a maintenance arrangement is not right for all parents. We know that many who do not have one want one. The department is investigating existing research and data to understand why some parents chose not to have a child maintenance arrangement and to improve its knowledge of customers who use its service. This is work in progress and the noble Baroness raised an important question. It is also important to note that, since the conclusion of the value for money audit, we have already seen greater take-up from parents wanting to use the service, so that perhaps helps to answer the question.

The noble Baroness also asked whether there is any more information that we can share with her about what we are doing to improve the effectiveness of the arrangements. Over the past few years, the Child Maintenance Service has developed and delivered significant improvements to its online services. These services make it easier and quicker for parents to engage with the service and the majority of applications are now made online. We are also continuing to work towards implementing the recommendations on improving the effectiveness of direct pay and collect and pay arrangements. Customers on direct pay can now report missed payments via their online account. In addition, the CMS developed an email campaign in 2022 to prompt direct pay customers to get in contact if their direct pay case was not working for them. This capability will be considered for future campaigns to communicate better with parents. For collect and pay cases, the department has set out its fast enforcement plan, which includes specific test and learn campaigns and greater use of risk and intelligence to drive compliance. As part of this regulations package, we will be extending our write-off powers for arrears of less than £7 when, as I said, certain circumstances are met. This aligns with the NAO’s recommendation to review the approach to managing arrears. The Committee will also be aware of our plans to improve and accelerate our enforcement of CMS, as outlined earlier, and our plans to consult more broadly on the service types.

The noble Baroness, Lady Sherlock, was also concerned about take-up more broadly. I am sure she will appreciate that these regulations will make it easier for people to access the CMS.

There is a lot more that we could be doing. There is a major programme in my department on using AI and making it effective for not just this service but others within the department. I think the noble Baroness is aware of that from the Question I answered not so long ago. I make the point that human contact is incredibly important. In the various products that we have, we are all the time dealing with some of the most vulnerable customers in the country, as she will be aware.

16:15

The noble Baroness, Lady Sherlock, also asked what evidence there was to underlie the measures for the changes. A growing evidence base suggests that the application fee is not having the desired effect, as I said earlier. Research published by the department found that the application fee is not an overwhelming factor. The Government consulted on our plans to extinguish low levels of debt in the Child Maintenance Service, modernising and improving it. There was a general agreement with plans to extinguish low levels of debt in prescribed cases, and our consultation response addressed concerns about writing off arrears of larger amounts to clarify that only amounts below £7 were in scope of this change.

The noble Baroness also asked about increasing the number of effective child maintenance arrangements. Perhaps I can answer this by saying that the Government are committed to supporting as many people as possible to get effective arrangements in place. Research shows that nearly 60% of separated parents have a child maintenance arrangement, either privately or through the statutory scheme. Surveys conducted with separated parents show that around half of receiving parents without an arrangement do not actually want one. For those who want an arrangement, parents can use the new digital service “Get Help Arranging Child Maintenance” to get unbiased advice and support. Since 2022, applications to the CMS have been increasing. As mentioned, the Committee will be aware of our broader plans to improve and accelerate our enforcement powers, and we have announced a consultation to improve the ways in which we can collect funds.

I will certainly want to read Hansard to check that I have answered all the questions—and I mean all the questions—asked. The regulations will deliver a fairer, faster service for more families, particularly the poorest. As we approach the end of the year, I am pleased to say that the regulations are not just for Christmas—they herald the start of our longer-term legislative plans to improve the Child Maintenance Service, which I am looking forward very much to progressing in the new year and in the months ahead.

[Baroness Sherlock (Lab)]

I do not know whether it is too historic, but I possibly should have drawn the Committee’s attention to the fact that I have a historic pecuniary interest as a former director of the Child Maintenance and Enforcement Commission; I just want to place that on record.

I am grateful for and appreciate the Minister’s thorough response. He mentioned that the Government are doing more research. Will that be published? He also mentioned an email campaign in relation to direct pay. How is that going?

[Viscount Younger of Leckie (Con)]

On the latter point, which is a good one, I shall certainly need to write to the noble Baroness. On the former one, it is fair to say that we will write as well. Those will be added to a number of other questions that I may have to answer.

Motion agreed.

Hydrogen Production Revenue Support (Directions, Eligibility and Counterparty) Regulations 2023

Monday 18th December 2023 Grand Committee

Considered in Grand Committee

16:20

Moved by

[Lord Callanan]

That the Grand Committee do consider the Hydrogen Production Revenue Support (Directions, Eligibility and Counterparty) Regulations 2023.

[The Parliamentary Under-Secretary of State, Department for Energy Security and Net Zero (Lord Callanan) (Con)]

My Lords, these regulations were laid before the House on 8 November this year. On 26 October, the Energy Act 2023 received Royal Assent. The Act provides a legislative framework for hydrogen, including provisions relating to the hydrogen production business model—a funding model to support the production and use of low-carbon hydrogen in the United Kingdom. Delivering this policy will be essential to kick-start the hydrogen economy and move towards the Government’s ambition to have up to 10 gigawatts of low-carbon hydrogen production capacity by 2030, as set out in the British Energy Security Strategy.

Under the business model, projects will be paid a subsidy for the hydrogen produced through a revenue support contract, similar to the highly successful contracts for difference for low-carbon electricity production. The business model, contracts for hydrogen, will be managed by a hydrogen production counterparty. Initial projects are to be selected through allocation rounds run by the Department for Energy Security and Net Zero. To receive business model support, a project must be an

“eligible low carbon hydrogen producer”.

Where such a project is allocated support, the Secretary of State will issue a direction to the hydrogen production counterparty to offer to contract with that project.

I hope noble Lords noticed that, last week, we announced 11 major new electrolytic hydrogen projects across the UK that will be offered support under the hydrogen production business model. This represents the largest number of commercial-scale green-hydrogen production projects announced at once anywhere in Europe. These new projects, stretching all over the country from the south-west of England and south Wales to the Highlands of Scotland, will invest over £400 million up front over the next three years, in a major boost to the UK’s green economy. In addition, CCUS-enabled hydrogen projects have also been shortlisted through the track 1 phase 2 cluster sequencing process.

I turn now to the detail of the regulations and their important role in all this. Fundamentally, the regulations satisfy the duty in Section 66(4) of the Energy Act 2023 by determining the meaning of “eligible” in relation to a low-carbon hydrogen producer. They tell the world who can be eligible for support.

The regulations set out that only new hydrogen production facilities, or existing hydrogen production facilities adding new production capacity, that can demonstrate that their proposal for the production of hydrogen is capable of complying with the UK low-carbon hydrogen standard, will be considered eligible. This will ensure that eligibility keeps pace with how the Government define low-carbon hydrogen. I recall that a number of amendments tabled during the passage of the Energy Act 2023 sought to ensure that regulations on eligibility made reference to the low-carbon hydrogen standard, so I hope that the Committee will welcome these provisions.

The regulations also set out the process by which the Secretary of State may direct a counterparty to offer to contract with an eligible low-carbon hydrogen producer. This follows a similar approach to contracts for difference, with which industry is very familiar. Similarly, the regulations include requirements for a counterparty to publish the full contracts entered into and establish a public register of key information. As noble Lords would expect, such publication is of course subject to redaction of confidential information and personal data. The regulations also set out various requirements in respect of Secretary of State directions to a counterparty. They include the circumstances in which directions cease to have effect and enable the Secretary of State to revoke a direction before it has been accepted.

Furthermore, the regulations require a counterparty to promptly notify the Secretary of State if it is, or considers it likely to be, unable to carry out its functions. Your Lordships may think such a provision sounds familiar, and indeed it is; it is very similar to the approach taken by the Nuclear Regulated Asset Base Model (Revenue Collection) Regulations 2023, which I am sure the Committee is following very closely.

The department has considered the content of these regulations extremely carefully. We carried out a full public consultation earlier this year, seeking views on the principles enshrined in the regulations and satisfying the statutory requirement to consult, as set out in the Energy Act 2023. We received 28 responses from various organisations and members of the public. We carefully considered all of them, although I am pleased that the majority supported our proposals. Accordingly, in our government response, which we published on 30 October, we set out plans to proceed largely as proposed, albeit with some amendments made in response to the feedback that we received.

This secondary legislation represents an essential step for implementing the hydrogen production business model to ensure that we can support the deployment of low-carbon hydrogen projects to achieve those 2030 ambitions, to improve our energy security and to help achieve net zero. I therefore commend these draft regulations to the Committee.

[Lord Naseby (Con)]

My Lords, I very much welcome this statutory instrument and congratulate His Majesty’s Government on bringing it forward so speedily. I just wonder whether my noble friend has any idea of how many potential clients there are in the United Kingdom. That would be interesting in itself.

Regulation 2(4), on page 2, defining an

“eligible low carbon hydrogen producer”,

is very sensible and has thankfully been included. Of course, because of the publicity for the domestic trial in the north-east of England, hydrogen is getting a bit of an unfortunate image. I am not sure whether any incentive can be produced to help the local communities—which I would say are getting difficult, but let us say they are being very careful—to do those trials. If there is not, there is not, but this is a negative reaction and not one I welcome.

Finally, it is usual for most statutory instruments, certainly the ones on which I comment, to have a sunset clause for review. I do not see one, unless I have missed it, but that would have helped.

[Lord Teverson (LD)]

My Lords, as always, I thank the Minister for his excellent explanation of this secondary legislation and welcome how we are now moving forward at some pace on the hydrogen front. I also welcome the Government’s announcement that they are moving ahead with the carbon border adjustment mechanism, even though it is one year after the EU has done so. I do not know what has happened in the middle, as far as SME exports and that side is concerned. Their commitment to energy efficiency after the election perhaps raises some questions, but at least there is some intended movement there.

I also welcome the Government finally giving up on the hydrogen villages in England. This was clearly never going to happen or be real, and I am sure the Minister was at the forefront of those talking sense to his Secretary of State on that area, which is excellent.

As background, I read through the hydrogen standard. As it is Christmas, I was going to ask the Minister to explain the formula in there, because I could not understand it either. There is a training video on how to understand it, which I will watch on Boxing Day rather than before.

16:30

I will not go forward with that but I have some serious questions, one of which is on the reason for having a revenue subsidy rather than taking the well-proven contracts for difference approach to this. One of the big challenges around revenue support is that there is no incentive whatever on the producer to be cost effective. They are just given the revenue support, which I presume is the difference between their cost of production and the actual market price for hydrogen.

I may be completely wrong, but that is how revenue subsidies normally work. It means there is absolutely no incentive for those hydrogen producers to be efficient in their production—unlike a contract for difference, which is all around incentivising them to bring down the cost to a strike price, which they are paid, and then there is the difference between the actual market price and the strike price. I understand that it might be too early for this market to have sophisticated contracts for difference, but we manage this in other areas of innovation such as tidal stream, wave energy and geothermal. Why does it not happen with hydrogen? That is a real question which I would be very interested to understand.

I notice that there is a desire for 50% of this scheme, I think, to be from electrolysis production of hydrogen and/or low-carbon hydrogen. Is that still the target? Given what the Minister was saying, I think there will there be a balance between carbon capture—the breakdown of methane and burying the carbon—and electrolysis methods. I would like to understand that a little more.

On the timing, I get the impression that the Government are in a hurry. I was certainly pleased to hear that a number of schemes, which I also read about, were already in the process of early approval. But when there are rounds, as there are in CfDs, I will be interested to understand from the Minister how frequent those will be. I am also interested very much in the question of the noble Lord, Lord Naseby, about markets. In particular, which markets does the Minister expect this hydrogen to go into? There are many areas of industry; it is obviously difficult to decarbonise heavy transport. I am interested to understand that about all those areas. However, is there a budget for this? I presume that the Treasury does not sign these things off without knowing that there is a cap somewhere on how much it is going to cost. I think we would all like to know that as well.

On a personal note, I have decided to stand down at the end of this year as spokesperson on energy and climate change for the Lib Dems. Despite the Minister’s huge admiration for Liberal Democrats, I have very much enjoyed working with him. Over my time in the role, I perceive that he may have become even more dedicated to the subject than he was at the beginning. I have genuinely enjoyed our interactions and I wish him well. I am not retiring from the place and will stay involved in these issues, but not from the Front Bench. It has also been my great pleasure to work with the noble Lord, Lord Lennie, and the noble Baroness, Lady Blake, on legislation in similar areas to this.

[Baroness Blake of Leeds (Lab)]

My goodness. I was not expecting that announcement and have not been party to that information. I am sorry: I was not clear from the noble Lord’s comments whether he meant the end of this year. Perhaps he has secret information about when this Parliament might come to an end.

[Lord Teverson (LD)]

I meant this year.

[Baroness Blake of Leeds (Lab)]

Can I just put on record my appreciation for the incredible contribution that the noble Lord, Lord Teverson, has made in this area? I certainly benefited enormously from our working closely on the Energy Bill, and going forward from that.

I also echo the Minister’s comments on the progress that has been made; during the passage of the Bill, there were times when we wondered how we were going to get through it. I assure the Minister that the announcement of the first funding round, with its 11 successful green hydrogen projects, has been noted and is welcome. I certainly look forward to hearing about their progress.

I want to make a few comments on the regulations before us. As we have heard, this statutory instrument is one of the first to follow from the 2023 Act and we know that there are more to come. The regulations cover, in particular, the process whereby the hydrogen low-carbon business plan will be implemented during the initial allocation period of contracts for hydrogen producers; all of this goes towards the target of 10 gigawatts of hydrogen production.

As I understand it, schemes will be identified and quality-assured by the Minister, who will then direct the hydrogen counterparty—it is identical in structure to the low-carbon contracts company—to provide contracts for companies that have been deemed eligible. All of that is absolutely fine and the right thing to do, especially when we consider the initial allocation process.

The Explanatory Memorandum states that the initial allocation will give way to a competitive tender process later on. Some more detail on that would be useful as we go forward; perhaps it will be forthcoming. However, at this moment in time, we are considering the initial allocation process, which is to be informed by the centrepiece of the SI: the low-carbon hydrogen standard, which has been outlined for us today. This refers to a detailed document setting out the greenhouse gas emissions and sustainability criteria that programmes applying for an allocation contract should follow.

I note the stringent qualifying criteria for a project’s eligibility. Of course, they require a project not to exceed a certain level of carbon emissions and to measure fugitive hydrogen—that is, the process whereby hydrogen is produced and all the implications around hydrogen—for its duration. It is a system-wide standard for the low-carbon nature of that hydrogen. For a project to get a direction from the Minister, it must comply with the standard when it receives agreement to proceed.

I just want to pick out that point. As we understand it, the standard will evolve. Indeed, the standard to which the SI refers is version 2 of the UK low-carbon hydrogen standard; that evolved from the initial standard, which was produced immediately after the Act was passed. Version 2 has emerged from consultation with the correction of various elements of the initial standard that could have caused difficulties. It has tightened up several matters that were uncertain, difficult or in need of clarification. It is absolutely clear in the documentation and the Explanatory Memorandum that it is intended that the standard will evolve; this means that the department envisages that it will produce further iterations of the standard in future. The low-carbon hydrogen standard as it currently stands is therefore likely to change. Does the Minister think that this will present some difficulties for those companies that have had their contracts approved? Clearly, although they will be signing up under version 2, they may not necessarily comply if we move on to versions 3 or 4—or more. It would be good to get some assurances around what the implications will be for companies in the earlier rounds.

There needs to be a bit of thought about whether those companies could be disadvantaged as we go forward. Will the Minister have some discretion in considering this? Of course, it could go either way, although it is very unlikely that there would be a relaxation of the carbon emission standards, but there is something to pick up there. Is it possible that, with these changes, companies might be put in a place where there are more costs, expense and planning? It would be useful to have more understanding of the methodology that will be used to determine whether companies are continuing to adhere to the standard once it is set in the contract. From the initial comments, I understand that the Minister is satisfied that this will work well. Could he expand on some of the changes that might come along?

During the consultation, some respondents suggested that further information could be published in a contract register, including outturn volumes, CO² capture rates and CO² capture quantity. It is obvious that a balance needs to be struck between transparency and what useful information is kept confidential but, as making this information public seems like it would have a positive impact, is it that the impact is not deemed significant enough to lower confidentiality? Alternatively, is it that there are further drawbacks to publishing this information that have led the Government to proceed with the initial approach? A bit more clarification around that decision-making would be welcome. On the other hand, 10 of the 23 respondents disagreed with information that the Government are proceeding with publishing, primarily due to the financial aspects. Could the Minister please elaborate on the decision-making process there?

I welcome the progress that has been made and look forward with interest to see how we can move forward in the area of hydrogen, which seems to be fairly fraught—I note the comments of the noble Lord, Lord Naseby. I am also interested in the response on the review. It is very noticeable that that is missing, because of the process. But, in such a new departure, a review would be useful and welcome.

[Lord Callanan (Con)]

I thank all noble Lords for their contributions to the debate. Low-carbon hydrogen will be an essential part of our future energy mix, and the hydrogen production business model seeks to address one of the key barriers to its deployment: the higher cost of low-carbon hydrogen, compared to higher-carbon counterfactual fuels. The Government remain committed to delivering on our hydrogen ambitions—first, those to help support energy security, but also our decarbonisation goals.

The message from the 2023 progress report from the Climate Change Committee was the need to deliver policies to enable deployment at scale of new industries such as hydrogen. I think that sentiment is widely recognised across this House and by industry. Last week’s announcement represents a major step forward in helping producers to deliver a fuel of the future today, backing some of our fantastic businesses here in the UK to go greener. These regulations are vital to enable those contracts to be awarded, so that projects can take the investment decisions that will kick-start the deployment of low-carbon production in all parts of the United Kingdom. But we are not stopping there. A new second round of funding is already available for producers to apply for, so that they can develop the next round of projects and then subsequent ones that help to build on that success. I will deal with some of this in more detail as I go through the questions raised by noble Lords.

16:45

First, in answer to my noble friend Lord Naseby, the number of future projects is of course slightly uncertain—it depends who comes forward. Many of the existing projects that have already been awarded in hydrogen allocation round 1 funding may well choose to add extra bits on to their production plans, if it proves successful, and bid in future rounds. Nevertheless, separate to that, we are aware of a large pool of hydrogen projects that may seek support in future allocation rounds. Indeed, some projects that were not successful in this round might well hope to sharpen their pencils and bid in future rounds. Such is the nature of a competitive bidding process. We need to kick-start the hydrogen economy that we all want to see, but we also must ensure that we get appropriate value for money for the taxpayer and the bill payer; I hope all Members of the Committee support that.

Building on the success of this HAR1 round, which has announced the intention to support 125 megawatts of low-carbon hydrogen production capacity—across 11 different projects all over the UK, as I said—we have already launched hydrogen allocation round 2. Our aim in HAR2 is to provide up to an extra 875 megawatts to take the total up to 1 gigawatt by the end of next year. That is an ambitious target and it will depend on utilisation, delivery and value for money, but there is certainly no shortage of potential bidders; many have already approached us and we wish them all the best of luck with their bids.

My noble friend also raised an issue not connected with the SI at all: the proposed hydrogen village trial in Redcar. It was clear that the trial could not go ahead as designed, as the main source of hydrogen supply on which it relied would not be available by 2026. The leader of the local council also wrote to inform us that there was an increasing level of public opposition to the trial. We had always said that we would not proceed unless the public in the area concerned were behind the trial. Those two factors together resulted in the decision not to proceed. There is still a much smaller trial going ahead in Fife, however. We will of course look at the evidence that it brings forward to take a decision in 2026, as we always said we would, on whether hydrogen will ever contribute to domestic heating decarbonisation—and if so, how.

I will respond to some of the points raised by the noble Lord, Lord Teverson. I think that he is slightly wrong on his first point about having revenue support or CfD. This provides the opportunity for the level of subsidy to reduce as the market price for hydrogen increases. In my view, that is like contracts for difference rather than revenue support. In this case, a revenue support contract is effectively a contract for difference, because it is a variable premium paying the difference between a strike price, which represents the cost of producing hydrogen, and a reference price representing the market value of hydrogen. That of course provides the opportunity for the level of subsidy to reduce as the market price for hydrogen increases.

Our Government remain committed to driving cost reductions in future allocation rounds, and we hope that future projects will be able to benefit from the learnings and experiences of the first rounds. Growing our hydrogen economy must continue in the context of being affordable and delivering value for money across the economy.It is undoubtedly the case that the first allocation round is relatively expensive, but for HAR2 we have increased our focus on delivery and cost reductions by increasing our weighting of cost assessment in the application process and including cost reductions as a key objective of delivering HAR2.

With regard to future round frequency, I can tell the noble Lord, Lord Teverson, that we are aiming to run annual allocation rounds of the hydrogen production business model from 2025 through to 2030. We have further ambitious capacity aims of up to 1.5 gigawatts of hydrogen through hydrogen allocation rounds 3 and 4. He also asked about the budget to help to give producers the certainty they need for the years ahead. The Government are providing more than £2 billion-worth of revenue support over the 15-year contract lifespan, ensuring that there is a guaranteed price for the clean hydrogen that those projects provide.

In response to the questions asked by the noble Baroness, Lady Blake, first, with regard to competitive allocation, earlier this year we published a call for evidence on price-based competitive allocation for low-carbon hydrogen. This sought views and evidence from the industry on the market conditions required to eventually transition to price-based competitive allocation for the hydrogen production business model. The call for evidence summary document summarised the responses received to that call, which, alongside our own evidence-gathering, have been used to inform the development of the future policy framework for the hydrogen allocation rounds. The hydrogen production delivery road map, which was also published alongside last week’s announcement, sets out our plans for future hydrogen allocation rounds, including plans to move to annual allocation rounds out to 2030.

The noble Baroness is right that we intend to go to a more competitive allocation process in future, but for that to work effectively there would need to be a transportation and distribution system around the whole of the UK. At the moment, the off-takers for hydrogen production are located fairly close to producers, geographically, but it is our objective in the medium term to get a transportation and storage system around the whole country which would enable the distribution of hydrogen and a much more competitive process, in that businesses would then have a choice of which producer they use to supply their low-carbon hydrogen.

The noble Baroness also asked about updates to the low-carbon hydrogen standard. Projects seeking support under the hydrogen production business model are required to evidence that the project is capable of meeting the low-carbon hydrogen standard as part of the application for revenue support. With regard to her question about the standard evolving over time, Regulation 2(6) makes it clear that once a producer is deemed eligible under the regulations, it would be unfair to subsequently render it ineligible merely on account of the publication of a new version of the low-carbon hydrogen standard. In other words, it would not be retrospective. Future projects will need to take account of updates to it, but existing projects that have already been approved meet the standards that were applicable at the time. That reflects various other parts of energy efficiency and clean heat policy, where we have adopted a very similar approach.

I say to the noble Baroness that is important to be able to update the standard, because the fantastic thing about this area is that the technology is evolving all the time with new methods of hydrogen production coming on stream. For instance, we have had to update the standard to take account of some innovative companies that are using a process called pyrolysis, which can produce hydrogen from natural gas while producing a by-product of solid carbon only, not gaseous carbon dioxide. Again, that will not necessarily be at a commercial scale any time soon but there are exciting technologies for the future, developed by some really innovative UK companies.

However, a direction issued by the Secretary of State, pursuant to Section 66(1) of the Energy Act, may require a hydrogen production revenue support contract to be offered on terms that require compliance with a later version of the standard. To provide certainty for investors, we intend for any review of and updates to the standard to occur in advance of allocation rounds rather than during them. Where it is considered necessary to introduce updates during an allocation round, which is the period between the launch of the application window and the awarding of contracts, we will aim to provide plenty of notice to projects of any potential changes as part of the allocation or negotiations process.

We have proposed that review points for the low-carbon hydrogen standard coincide with future contract awards through the hydrogen production business model. We would not expect any changes to be applied retrospectively to contracts that have already been awarded through these schemes. The hydrogen production business model contract will not require producers to comply with any future amendments to the low-carbon hydrogen standard after the date on which the contract is signed. Again, that is to provide confidence to producers that the rules they will need to comply with for the purpose of receiving support under the contract will not be changed retrospectively. That is only fair. Subject to the final contract terms and conditions, we expect that producers will be able to follow future changes to the low-carbon hydrogen standard, where relevant, should they choose to do so. The counterparty will be responsible for monitoring compliance with the low-carbon hydrogen standard.

Stakeholders raised other information that should be included on the register, such as CO₂ capture rates and the carbon intensity of low-carbon hydrogen produced. Understanding how to include such metrics requires further consideration, and we will keep them under review.

My noble friend Lord Naseby and the noble Baroness, Lady Blake, raised the point that this instrument does not include a statutory review clause, in line with exemptions under Section 28(3) of the Small Business, Enterprise and Employment Act 2015. The duty to review regularly provisions in secondary legislation is exempt where the power or the duty is exercised to make or amend provisions in secondary legislation in connection with the giving of grants or other financial assistance by or on behalf of a public authority.

I think I have answered all the questions that I was asked. Before I conclude, I say what a great loss the noble Lord, Lord Teverson, will be to these Grand Committee discussions on statutory instruments, often late in the afternoon with few observers. He is right that I am not necessarily a huge fan of all Liberal Democrats but, like all hard and fast rules, there are always exceptions to be made—and he is by no means the worst of them.

[Noble Lords]

Oh!

[Lord Callanan (Con)]

Damned by faint praise. We have always had an excellent relationship and I am sure we can look forward to many exchanges from the Back Benches when he has left the Front Bench of Liberal Democrat politics and joined the real world of politics that the rest of us take part in. I am joking—it has been a pleasure to work with him. On so many issues we generally agree and see eye to eye. It has been fun working with him, and I am sure we will have lots of contact in the future. I thank him for all the work that he has done contributing to these discussions and many of the legislative discussions we have had in the Chamber. With that, I commend these regulations to the Committee.

Motion agreed.

Trade Union (Deduction of Union Subscriptions from Wages in the Public Sector) Regulations 2023

Monday 18th December 2023 Grand Committee

Considered in Grand Committee

16:59

Moved by

[Baroness Neville-Rolfe]

That the Grand Committee do consider the Trade Union (Deduction of Union Subscriptions from Wages in the Public Sector) Regulations 2023.

Relevant document: 3rd Report from the Secondary Legislation Scrutiny Committee

[The Minister of State, Cabinet Office (Baroness Neville-Rolfe) (Con)]

My Lords, the regulations are known as the check-off regulations and stem from Section 15 of the Trade Union Act 2016. This is the last secondary legislation to be brought into force as part of that Act; each aimed at modernising industrial relations in the UK. I am pleased to take this final piece of legislation through, as I had the honour of taking the Act through the House some years ago.

The regulations define a relevant public sector employer for the purposes of Section 15 of the Trade Union Act. That provision requires relevant public sector employers, which allow employees to pay union subscriptions directly through payroll, to charge trade unions a cost substantially equivalent to the cost that they incur for providing the service. In addition, public sector employers must be satisfied that there is an alternative way of union members paying their subscriptions aside from check-off, such as through direct debit.

Should employers not be able to secure payment substantially equivalent to the costs of providing check-off, or should there not be an alternative payment available to employees, employers must cease to provide check-off. The Government believe that this will ensure that check-off services are provided by public sector employers only where there is no cost burden to the taxpayer and to guarantee members have choices about subscription payment methods.

The regulations will not come into force until a reasonable transition period has taken place to allow everyone adequate time to make arrangements to comply with the regulations. To this end, they will come into force on 9 May 2024, six months after laying. This is a generous transition period, considering that the regulations were previously due to be laid in 2017. Therefore, employers have had a significant awareness of the impending changes.

The Government have also provided to the House the Explanatory Memorandum and a full impact assessment, and we will publish guidance on GOV.UK to be issued to public sector employers to help them to familiarise themselves and comply with the regulations.

I will remind noble Lords why the Act’s reforms to check-off in the public sector are significant. The Government are committed to the responsible and transparent use of taxpayers’ money and so believe that the administration of payment of union subscriptions for public sector workers should not be carried out at the expense of the taxpayer.

During the passage of the Trade Union Act 2016, the House debated the original drafting of Section 15 at length. It suggested that check-off services should not be provided by public sector organisations on behalf of their unions, owing to the cost burden on the taxpayer. However, through the legislative scrutiny and amendments made in this House, Section 15 of the Act was revised to no longer require public sector employers to remove check-off services, but rather that the costs associated with doing so should be recharged to trade unions and alternative options should be available to trade union members. The Government were grateful for the scrutiny of the House in refining the provision and continue to believe that this strikes a fair and appropriate balance between providing value for money and fostering good and modern industrial relations in the UK.

The regulations will apply across the public sector to those bodies listed in the Schedule. There was significant engagement in this House on the organisations in scope, resulting in the Government considering the ONS definition of “public authority” too broad. As a result, the Government decided to use the list of bodies from the Freedom of Information Act and its Scottish equivalent as the starting point to define the scope of the regulations, making it clear that the intention was to include only organisations that are funded wholly or mainly from public funds.

Of that list, the Government have removed organisations that do not routinely employ staff, are an advisory body or expert panel, are funded by a levy on a finite or discrete group, or are predominantly commercially focused, to ensure that the scope is proportionate to the aims of the regulations.

The Cabinet Office has also engaged each Secretary of State on the proposed scope, seeking their confirmation that the regulations capture all bodies necessary to deliver the policy aim. In addition, a two-week consultation was undertaken with the Scottish Government to ensure that Scottish bodies were appropriately captured.

The check-off regulations will deliver benefits to the taxpayer. The impact assessment has identified that the intervention will equate to a present benefit saving of approximately £1.5 million per year and just over £12 million over the next 10 years. These benefits arise as the regulations seek to alleviate the burden for public sector employers that offer check-off services but do not yet charge trade unions for the cost of administering them.

I wish to be clear that the regulations we are considering stem from the Trade Union Act 2016, which was introduced, as noble Lords will remember, as a 2015 manifesto commitment. Despite delays owing to other government priorities relevant to the UK’s exit from the European Union and the coronavirus pandemic, this has been a long-term ambition of the Government in our aim to modernise industrial relations in the UK.

The purpose of these regulations is to deliver value for money for the taxpayer and choice for individuals in a balanced way that reflects the discussion in this Committee. They do just that, and I beg to move.

[Lord Wallace of Saltaire (LD)]

My Lords, I have seen many Chekhov plays; this is not half as enjoyable an “Enterprise”.

This SI comes here under an Act of 1992, as amended in 2016. The House of Commons briefing on it reminds me that the Conservatives tried it on in 2014 but were blocked by the Liberal Democrats in the coalition. So they brought it back later and it is to come into force in May, a maximum of six months before the next election in the dying days of this dying Government.

The instrument is extraordinary in the sense that it goes through a list of more than 200 bodies, some of which are in any sense autonomous public bodies. I used to work for several universities and I note that they are caught up in the scheme—but, then, so are the Crofting Commission, the Highlands and Islands Enterprise, the Gaelic Media Service, Historic Environment Scotland and even the Scottish Road Works Commissioner. I assume that this must all be compatible with the conventions of the devolution settlement. I note also that, in terms of local government in England, Together for Children—it is based in Sunderland—Slough Children First and the Sandwell Children’s Trust are brought under this umbrella as well. The total amount of public money that this careful enumeration of all these subordinate bodies will save is estimated to be £1.5 million a year.

As I read this SI over the weekend, I thought of the principles that are at stake here: limited government; government that should be as local as possible in order to be as close to the people as possible; and that government should have respect for the importance of autonomous institutions in civil society. These are principles that Liberals and Conservatives used to share, when Harold Macmillan was Prime Minister and Conservatives still read Edmund Burke rather than Ayn Rand and Friedrich von Hayek. This statutory instrument is illiberal and unconservative. Such a degree of detailed centralisation and interference in civil society used to be called socialism. Edmund Burke used to talk about the importance of local communities, little platoons and self-government. This instrument is much more in the style of authoritarian populism, like those right-wing Republicans in the United States who believe that the free market is all that matters rather than a free society.

One of the things that horrified me most as I read the Explanatory Memorandum and the impact assessment were the 40 or 50 references to the TaxPayers’ Alliance as a prime source of evidence for the arguments made. I am sure that the Minister is familiar with the TaxPayers’ Alliance. It was founded by Matthew Elliott after a period in Washington attached to Americans for Tax Reform; that was founded by Grover Norquist, who once famously said:

“I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub”—


tax cuts at all costs and to hell with the public sector.

The undue influence of American Republicans on the Conservative Party, the flow of funds to right-wing think tanks, in particular those based in 55 Tufton Street such as the TaxPayers’ Alliance, and the links with hard-right think tanks here are part of what seems to many of us to be going wrong with the Conservative Party. I rather suspect that the Minister, whom I offer the compliment of thinking of as a one-nation Conservative, probably quietly shares a view.

The impact assessment does say that the savings to His Majesty’s Government will be at £1.5 million a year, and it estimates the cost to the trade unions at about £13 million a year, thus enforcing significant increases in membership fees. It also says:

“Costs to public sector employers may include some loss of goodwill with employees and trade unions”.


Well, that is much less important, is it not? It seems to me that that matters. After all, the Government’s relationship with civil servants and public sector workers has deteriorated steadily over recent years. We have seen that in the recent strikes and in the loss of a number of first-class civil servants; I know that some of those with whom I most enjoyed working when I was in Government have now left or taken leave. That raises problems about the quality of how we are governed.

The impact assessment also says:

“The policy will engender taxpayer faith that the Government is spending their money responsibly”.


Well, taxpayers’ faith in the Government spending their money responsibly is currently having to cope with the Government’s failures to deal with the Covid effort and to enquire into that, and with the revelation yesterday that the noble Baroness, Lady Mone, admits to having made £60 million in profit from Covid contracts, rather larger than the £1.5 million we have spent here. I suggest this will not engender much additional taxpayer faith.

The Minister herself said that the Government are committed to the transparency of public expenditure. I hope that is true, and that we will see, as we go further into the question of how much government waste there was on Covid contracts, that the Government are actually committed to transparency rather than to a continuing cover-up.

The Minister will note that there have been changes in the nature of trade unions over the last 40 years. There are fewer manual workers and more professionals—public service professionals above all. The majority of trade union members now have degrees. They are civil servants, doctors, nurses, researchers and teachers. They used to be part of the core vote of the Conservative Party, and I suggest to the Minister that they are an important part of that vote, which the Conservatives have lost and will not regain unless they alter their attitude to the public sector.

The bias against public service and the public sector as such, which we have seen on the right wing of the Conservative Party, is one of the most unattractive dimensions of this dying Government, holding down their salaries and wages while allowing private sector pay to soar. Ministerial treatment of civil servants as if they were servants, and the well-evidenced examples of bullying of civil servants by Ministers, have been a problem in which civil servants need unions to defend them and look after their interests. The public sector does need unions to protect them and good civil servants are vital to the quality of British government.

I find very little to like in this SI; if Labour had wished to move a regret Motion, the Liberal Democrats would certainly have supported it. The only good thing to be said for it is that it will take effect only in the last months of this Government, and I suspect that any Government that come in afterwards will quietly stop its implementation.

[Lord Davies of Brixton (Lab)]

I just ask the Minister: are the Government still attached to the role that the Conservative Party has traditionally seen for trade unions in maintaining social harmony? Do they see trade unions as an essential component of a harmonious society, by providing a platform for workers to express their concerns and negotiate with employers, thereby contributing to social cohesion and stability?

17:15

If those continue to be the views of the Government, it is odd that they introduced an Act which mandates a particular element of industrial relations. I would have thought that undertaking industrial relations through legislation was, manifestly, a bad thing to do because employers within the public sector—anywhere on the list—could already implement this requirement. Indeed, it has been enforced in some areas of employment. These regulations require public sector employers to not pay for check-off, even where it is clear to the local management of that company that it contributes to good industrial relations. Why are the Government legislating for a particular approach which is more properly and better dealt with employer by employer?

Oddly, this is not necessarily an issue of one way being better than the other; some trade unions indeed favour doing it through direct debits, but the issue should be resolved between the employer and the trade unions within that organisation—and not be enforced by a mandate from the Government. It is quite clear why the Government are doing this. I do not really need to spell it out, and will not, but I very much enjoyed and endorse the remarks of the noble Lord, Lord Wallace of Saltaire. My first question is: why are the Government interfering in a matter that should be best dealt with at the level of industrial relations?

Secondly, this is all based on the cost pressure. Maintaining good industrial relations has a cost. That goes to the central issue here: are this Government still interested in good industrial relations? Some stress was placed on the modernisation of industrial relations, so my third question is: if the Government are interested in modernisation, why do they not let trade union ballots be undertaken through the internet? Clearly, the Government are not allowing participation through the internet because they wish to place a burden upon trade unions and to minimise participation.

Those are my three questions. Why are they interfering in industrial relations? Do they accept that good industrial relations involve a cost? If they are interested in modernisation, why not have ballots through the internet?

[Baroness Chapman of Darlington (Lab)]

It is a pleasure to follow the noble Lord, Lord Wallace, and my noble friend Lord Davies; they made some very good points that I would have made myself. I will not repeat what the noble Lord, Lord Wallace, said in terms of advice to the Conservative Party; I suspect that the Minister will, as he said, have secretly agreed with some of it. It is sad what has happened to the Tory Party. It is sad that the Government have picked what is, in the scheme of things, such a minor issue—for goodness’ sake, what is happening with our public services?—when to pretend that it will somehow restore the faith of the British taxpayer is laughable. Certainly, no one in the Committee this afternoon is buying it. This is a classic case of getting the facts to fit an argument that the Government want to have.

We know that for some reason Conservative Governments tend to want to limit check-off, whereas we on these Benches see it as more of a positive and helpful thing in supporting good industrial relations, as my noble friend Lord Davies said. I would have thought that these things, small scale as they are—although I will go on in a minute to talk about some of the data, or the lack of it, that the Government are choosing to rely on to make their case—ought to be resolved locally. Local managers and trade union officials resolve things all day, every day. That is the norm.

There are occasions that we all know about where the Government have chosen to get themselves involved or to pick a fight. We have seen what has happened in the NHS. Far be it from me to give the Government advice on good industrial relations, but they need to take some advice from somewhere because there are disputes that have been going on for far too long that are having a direct impact, for example, on patient care in the NHS, where the Government have been far from helpful.

It is striking that the Government admit that they do not have reliable information on the extent of the use of check-off by government departments and are relying on estimates, most heavily, as the noble Lord, Lord Wallace, said, those from the TaxPayers’ Alliance report of 2014. This is interesting because it claims that only 22% of those offering check-off were reimbursed by trade unions. At the moment, as we know, it is already possible to be reimbursed, but when it asked the same question of local councils, the LGA found that 67% were reimbursed. There is no attempt within the report provided by the Government to explain this difference. I think we can all come up with our own explanation of why these two organisations might have come to very different outcomes, but it is extraordinary that a policy change such as this, which could have some negative repercussions, is being based on such wide-ranging estimates. Given that we do not have accurate information about how many people use check-off or how many organisations are already reimbursed, it is impossible to know what the financial impact of the changes that the Government are implementing will be when taken against the potential damage to good will.

A number of questions arise from this. On devolution, which the noble Lord, Lord Wallace referred to, my reading is that these regulations will apply to England, Wales and Scotland. We know that many public services are devolved. I think I am right that industrial relations more widely are a reserved power, but the Minister will correct me. For example, obviously much negotiation goes on between the Senedd and public services in Wales, so why is it that this measure will be mandated from Whitehall? I have not asked the Welsh Government—perhaps I should have done—what their attitude to this is, but I am assuming that the Minister has had conversations with her counterpart in Cardiff. Can she let us know the Senedd’s view on this issue?

The estimated savings are bizarre and do not seem to take account of the diversity of services within the public sector in terms of the rates of trade union membership, the use of check-off and the rate of reimbursement. Big assumptions are being made about the standardisation of involvement in check-off. No justifications for them are provided.

Employers are required to assure themselves that the reimbursement amount is—this is the phrase the Government use—“substantially equivalent”. I am not clear what that means. We accept that a cost of check-off exists. That cost is then calculated, that money is to be reimbursed by the relevant trade union and that amount is to be substantially equivalent. I am interested in that choice of words, as I would have thought the Government’s aim would be better reflected by use of the term “full cost recovery”. I have heard “substantially equivalent” used for medical devices and sometimes in maritime situations, but I do not understand why it and not an alternative phrase has been used here. Perhaps the Minister could explain.

It seems very strange that on page 8 of the impact assessment, in its analysis and evidence, the Government rely on the TaxPayers’ Alliance’s assertion that 90% of public sector bodies use check-off to justify the need to act but later, on page 26 of the same document, when estimating the cost of implementation, the Government repeatedly assert BEIS data that states that 56% of public bodies offer check-off. Can the Minister explain why the document relies on different figures for the same thing to support action? One overestimates the need and the other underestimates the cost. This does not seem a very sensible way of making policy. If there is no accurate information, perhaps the Government should say so or perhaps go out to consultation to get some more accurate data.

It is fascinating to read in the Explanatory Memorandum that the Government did not think that consultation would be helpful because

“the principles of this provision were debated extensively in Parliament … in 2016”.

This is a bit shabby. I follow our proceedings very carefully, as I am sure do the noble Lord, Lord Wallace, and my noble friend Lord Davies. To say that because we had an extensive debate in Parliament in 2016 there is now no further need to seek advice, comment or consult more widely is quite extraordinary. It perhaps overemphasises the interest which people outside the House take in our proceedings. There has been no opportunity for the main partners in this endeavour to share their thoughts because, the Government say, they did so seven years ago. That is not good enough.

The guidance to employers is not available, so we are not able to assure ourselves that employers will be given sufficient advice to make calculations about the cost, agree reimbursement and assess this “substantially equivalent” phrase. None of that is available to us for this debate and it would have helped to have sight of it. If we had examined the guidance, it would have helped us to assess how much care—I think that is the right phrase—the Government are taking on this. On the face of it, it appears that Ministers are reaching for this policy for reasons of political positioning or because they are seeking some sort of wedge issue rather than because of genuine concern about the practical impact. They do not know how widespread check-off is, how many individuals are involved or how many public bodies are affected. They therefore cannot possibly know what, if any, impact this will have in savings to the taxpayer.

This is not a good way to carry on. We expect better of the Government when they ask us to agree this sort of thing. I will listen carefully to what the Minister says, but I put on record our dissatisfaction with the way that the impact assessment is written and its reliance on different data sources. This slapdash approach is because the Government are hell-bent on getting this done without considering some of the issues that I raised as carefully as they ought to.

17:30

[Baroness Neville-Rolfe (Con)]

My Lords, I am grateful to the noble Lord, Lord Wallace of Saltaire, and the noble Baroness, Lady Chapman of Darlington, for their contributions to the debate and the good questions that they have asked. I should perhaps start with the noble Lord’s description of the wide-ranging nature of the list. I agree that it is wide-ranging, and that is necessary. However, I am sorry that in a sense he criticised the impact assessment. I was pleased that there was an impact assessment. He and I and other Members of the House have been proponents of the use of impact assessments because they allow the sort of questions that we are asking today, and they are not always used. Obviously, I point out in relation to the costs of check-off that direct debit is an alternative.

The noble Lord asked a number of technical questions on the estimates, as did the noble Baroness. The easiest thing for me to do is to look at them in Hansard and write to them in answer, but I will make two points. First, I understand that the guidance should be online from tomorrow. I am sorry that it is not available today. The normal course of events—the Commons starting on this first and then us getting it—has perhaps meant that we have not had the benefit of the guidance, but I will write and send the link to it because that would be helpful. I also agree with him about the changing nature of trade union membership. He will remember very well that I worked at Tesco, a trade-unionised company, and spent a lot of time working with the union in growing the company. Personally, I work very well with civil servants and their unions. We need to minimise costs, however, which is one reason behind the changes that we are discussing today.

Perhaps I should pick up the noble Baroness’s point about consultation. As she said, the regulations stem from the 2016 Act, which was consulted on as a whole. During the debates on the then Bill, the current policy position on the check-off regulations was set out, which was to charge trade unions a reasonable cost and to ensure that there was access to an alternative method of paying union subscriptions. That was an agreed compromise instead of requiring public sector employers to remove check-off altogether. It is important to repeat that background.

The Government have upheld the commitments that they made to engage, rather than consult, with affected bodies. That has included four consultations with government departments and the Scottish Government on the schedule of scope. The Cabinet Office has also engaged trade unions’ workforce policy leads and some employers on the impact assessment and for views on the guidance. There is no single source of information of cost of check-off to the taxpayer. That is one reason why the TaxPayers’ Alliance report was used, but we have supplemented it with more recent data from the BEIS management and well-being practices survey. We also conducted consultation with employers in each of the public sector workforces, including the NHS, local government, police forces, maintained schools and academies and the Civil Service. I acknowledge that a lot of this is anecdotal, but it has provided some more recent data as a comparison and means of testing the assumptions made in the two reports. However, as I promised, I will look at the points that the noble Lord made.

[Lord Wallace of Saltaire (LD)]

Just to add, the disgust with which we saw the depth of dependence on the TaxPayers’ Alliance relates to the position of this body, which received an E—the bottom range—from Who Funds You? for the opaqueness of its funding. It is clear that some of its funding comes from very right-wing bodies in the United States; it has held public, open conferences with, I believe, the Heritage Foundation. It seems deeply improper for the Government to depend so heavily on such a very partisan think tank. The Tufton Street group in particular is doing its best to pull the Conservative Party very much to the right, against its former traditional conservatism.

[Baroness Neville-Rolfe (Con)]

I cannot just accept that, I have to say; I believe that views from all different directions can be valuable in debate, and that includes the TaxPayers’ Alliance. I explained why it had done some work in this area. It was used in these estimates—entirely transparently—and we have also taken data from other sources. I nevertheless thank the noble Lord for his comments.

[Baroness Chapman of Darlington (Lab)]

The point is that the TaxPayers’ Alliance is a campaigning organisation. Our concern is not that it is included at all; the Minister is quite right in what she said about a range of sources and perspectives. But given that there is a lack of data, which the Minister has acknowledged, it seems a little odd that it is relied upon quite as much as it is. You do not need to make any assertions about some of the estimates that the TaxPayers’ Alliance is making to pursue the policy. It seems a bit strange that it is included.

My attention was drawn to this by what is on page 23 of the impact assessment. There is a little table that lists probable estimates of savings to the public sector. It just seems strange that—to take the Civil Service, as the first example—the high estimate of savings is £149,000, the low estimate is £1,500, and the most probable estimate is £11,500. Then, however, there are local authorities, for example, with a high estimate of £161,500, a low estimate of £91,000 and a most probable estimate of £161,500. It just is not clear how some of these figures have been reached. Are the Government treating the TaxPayers’ Alliance evidence with equal weight to a survey conducted by the LGA, for example? That would seem a strange thing to do without further inquiry or more critical analysis. Maybe this is a point to make to officials behind the Minister rather than the Minister herself, but it is not really what we would expect in this kind of document.

[Baroness Neville-Rolfe (Con)]

I commend officials for producing a detailed impact assessment and I will not renege on that. I also think that the TaxPayers’ Alliance is a perfectly respectable source. Obviously, every think tank has different people working for it; some people are excellent at estimates and some are not. I have already said to the noble Baroness that I will go away and look in a little more detail at the estimates. This impact assessment was not written by me personally, of course, but I will take it away and have a look. I commend the use of different sources of data and data standards. The noble Baroness probably knows that that is what I would want, but I will of course take a look.

Perhaps I can move on and just try to answer one or two of the questions about devolution. Matters of industrial relations are clearly reserved and there is no obligation for the UK Government to consult with the devolved Administrations. However, the Scottish Government were consulted on the scope of the regulations to ensure that they capture all public bodies that are wholly or mainly funded by the taxpayer. Wales is not in scope as a result of the Trade Union (Wales) Act 2017. The Government will take action to bring Wales into scope at the earliest possible opportunity.

I should mention that the TUC has been engaging with us on, and had input into, the guidance. I noticed its flash new logo on its writing paper. This also included engagement with employers in the public sector, so I hope that that provides some reassurance.

In conclusion, I am confident that the regulations provide a fair and appropriate intervention and capture an appropriate scope to meet the policy aim. They allow check-off to continue, as was agreed during the passage of the Trade Union Act 2016. They represent a reasonable direction of travel and continue to support productive industrial relations in the UK—which, Members may recall, was my experience during my past career at Tesco. To return to the point that the noble Lord made, of course the trade unions have a role to play in our society, so I am delighted to have this opportunity to be at the Dispatch Box today to put to bed the last of the regulations relating to that Act. I hope that colleagues will join me in agreeing the regulations, which I commend to the Committee.

Motion agreed.

Higher-Risk Buildings (Keeping and Provision of Information etc.) (England) Regulations 2023

Monday 18th December 2023 Grand Committee

Considered in Grand Committee

17:41

Moved by

[Lord Gascoigne]

That the Grand Committee do consider the Higher-Risk Buildings (Keeping and Provision of Information etc.) (England) Regulations 2023.

[Lord Gascoigne (Con)]

My Lords, the Building Safety Act 2022 established a new regime for building safety, with stronger oversight of higher-risk buildings and stronger legal duties on those responsible for the safety of higher-risk buildings, known as accountable persons. These regulations set out technical requirements for accountable persons for occupied higher-risk buildings, specifying the information they need to keep for their building and the information they need to share with various people. This information is referred to as the “golden thread information”. The regulations also make minor clarifying amendments to regulations made earlier this year.

These regulations should be considered alongside the Building Safety Act and Higher-Risk Buildings (Management of Safety Risks etc) (England) Regulations 2023. Together, these requirements implement the new regulatory regime for occupied higher-risk buildings so that these buildings are managed safely. There will be new legal duties on those responsible for ensuring building safety in higher-risk buildings, with clearer accountability backed by stronger enforcement and sanctions to deter and rectify non-compliance. Together with other regulations made already, these regulations introduce a step change in improving building safety in higher-risk buildings, making sure that residents’ homes in these buildings are places where they are safe and can feel safe.

The golden thread of information is vital to accountable persons fulfilling their duties under the Act. The information, which includes details of the risk assessments and safety measures in place, will help accountable persons have confidence that they are meeting their statutory duties, making sure that they can demonstrate this in their safety case report and, ultimately, keeping residents safe. A full list of the golden thread information that accountable persons must keep is set out in Schedule 1 to the regulations. This includes building plans; the latest assessments of fire and structural risks; details of arrangements in place to manage these risks, including schedules of repairs and maintenance; and the up-to-date resident engagement strategy and safety case report.

The safety case report will be submitted to the building safety regulator for assessment, usually as part of a building assessment certificate application. It will contain an overview of the building, together with details of the accountable persons’ assessments of building safety risks for that building and a demonstration that the measures in place to control and manage those risks are sufficient. The safety case report will serve to provide reassurance that the spread of fire and structural safety risks are being proportionately managed on an ongoing basis, helping to ensure that residents are, and can feel, safe in their homes.

17:45

The Building Safety Act also set out that accountable persons must share information with each other and with other persons with an interest in the safety of the building and residents. This includes the building safety regulator, persons responsible for the wider building, the local fire and rescue authority, the client for any building work in the building and, in certain cases, a landlord. The regulations set out the detail of what information must be provided to residents and the owners of flats in a higher-risk building, as well as the information that must be handed over when an accountable person leaves their role. They also set out when certain information may be redacted and not shared due to security, commercial confidentiality or data protection concerns. These exemptions vary depending on whom the information is being shared with; for instance, there are no exemptions to sharing information with the building safety regulator.

Following further work with the Ministry of Defence, these regulations make a minor amendment to the Higher-Risk Buildings (Descriptions and Supplementary Provisions) Regulations 2023, which were made in March. Currently, standard residential buildings where UK or foreign military personnel live that meet the height or storey threshold are excluded from the higher-risk regime. This amendment will bring these buildings within scope of the higher-risk regime unless they are exclusively used or owned by the Ministry of Defence. This amendment will ensure that the scope of the higher-risk regime aligns with Dame Judith Hackitt’s recommendation that all high-rise residential buildings should be included in the higher-risk regime.

The regulations also make a minor clarifying amendment to the Higher Risk Buildings (Key Building Information etc.) (England) Regulations 2023, which were also made in March this year. This amendment clarifies what part of the building a principal accountable person is responsible for where there are multiple accountable persons for the same higher-risk building. This ensures that all accountable persons, including principal accountable persons, know which part of a higher-risk building they are responsible for, so that every part of every higher-risk building is accounted for in terms of assigning responsibility to an accountable person.

These regulations are key to implementing the new regulatory regime for higher-risk buildings so that these buildings are managed safely and will bring about the systematic, lasting change that we know is needed for people to be and feel safe in their homes. I hope that noble Lords will join me in supporting these draft regulations. I beg to move.

[Lord Stunell (LD)]

My Lords, I am pleased to speak on this statutory instrument, which is certainly of great importance. We should never lose sight of the fact that all the work that has been done on the Building Safety Act, the Fire Safety Act and the subsequent regulations, which the Minister has sketched in for us, was triggered by the terrible fire at Grenfell Tower, in which 72 people died and many others suffered life-changing injuries and experiences.

I welcome the fact that the Government were so whole-hearted in their acceptance of Dame Judith Hackitt’s report on what should happen. The Liberal Democrats supported both those Acts of Parliament in their passage through Parliament and we shall support this statutory instrument today, but not without some questions on the way. In posing my questions, I understand that the Minister endured, if that is the right word—certainly he took part in—a debate on Thursday that very much overlapped with some of the concerns I am going to raise today.

The first of those concerns is that, in our view, the scope of these regulations and, indeed, the Acts is not sufficiently wide to give the protection that is needed. The limitation of this statutory instrument to high-rise buildings taller than 18 metres is one example of that.

Secondly, it has taken a very long time for this statutory instrument to reach us. It took five and a half years to get the Building Safety Act on to the statute book, and it has taken another 12 months for this particular statutory instrument to come into play. Was that lethargy, complacency or perhaps something else? There seems to be a trend for watering down and neutering some of the building safety regulation regime. Whatever turbulence there may have been in politics in the past 12 months, there has certainly been some turbulence in how the building safety regime has evolved. For six months, there was no building safety regulator after the resignation of the first regulator and a long delay in appointing a replacement.

Of course, the Levelling-up and Regeneration Bill, now an Act, had to have its Long Title changed by a government amendment so that it could also tinker with the building safety regulatory regime, potentially taking it away from the purview of the Health and Safety Executive, which is the one trusted—or perhaps feared—body that the construction industry takes seriously. It will potentially instead be embedded in a completely new body, the shape of which we do not know, but we do know that we shall not have any parliamentary opportunity to debate, change or modify it.

I have two questions. First, can the Minister explain the 12-month delay, and can he reassure us that it is not part of a slackening of urgency in putting a comprehensive scheme in place? Secondly, is this the last statutory instrument that is needed in order to complete the regime, which is now urgently needed and which many actors in the construction industry are ready to get ahead with but lack the information from the Government to show them what they are supposed to do?

I have some more detailed, and perhaps technical, points about this documentation. I appreciate that the Minister may find that they are beyond the scope of his brief, and, if he wishes to reserve his position and write, that is fine. Nevertheless, they should be addressed by the Minister in considering this statutory instrument. In raising my points, I have made particular use of the evidence base provided by the Government in the impact assessment. I start simply by raising the issue that appears in paragraph 42 of that document, which reminds us that there will be a duty to display a building assessment certificate to the public on or in the building. That is very sensible, and we certainly support that proposition, but what is the method of enforcement of that display?

I have previously asked questions about the parallel requirement that a display energy certificate should be publicly displayed at the entrance of publicly accessible buildings. I asked how many public buildings actually had such a display, because I knew many did not, and I was told that no one had any knowledge at all of who did or did not display those display energy certificates. There is one in Millbank House, where my office is, so I am certainly not accusing the Parliamentary Estate of failing to do that, but if there is no enforcement system, the intention becomes a dead letter. So my third question is: can the Minister supply more information about how the display is to be monitored and enforced?

I now raise a point which comes in the evidence base document at paragraph 45 about the need to store the data electronically. Does the department foresee that being to a common standard, with a common database, or is every one of the 14,000 buildings that have been registered with the building safety regulator free to adopt its own system of storing material? Will that material be available to the building safety regulator, and if so, in what form? It is a technical question, but it seems to me one that the construction industry needs to know the correct answer to very early on. Linked to that is what kind of electronic database will still be supported by its inventor and seller in 60 years’ time, or even in 25 years’ time? What is foreseen as the way to make sure that this material does not simply become inaccessible just by changes in technology? How will all that work?

My next question relates to paragraph 47, which seems somewhat out of place with the statutory instrument. It refers to storing relevant information, and then goes on to say that irrelevant information should not be stored because it

“could undermine the purpose of the golden thread”.

Taken together with the correctly reported view of Dame Judith Hackitt that incomplete information was very often a challenging factor in her inquiry, it seems to me that we should find out more about what the Minister or the department think is irrelevant, as opposed to relevant, information. For instance, to take a historical example, is the fact that a fire compartment was made safe with asbestos relevant or irrelevant information? Of course, the debate last Thursday was about the change in regulations for fire retardants; is that relevant or irrelevant information?

When I looked at the statutory instrument itself, however, I could not see any reference to irrelevant information not being required, so I think that has somehow crept into the explanation but not the text. Maybe the Minister could tell me whether that is a correct or incorrect reading. My point is that it is difficult to know what is irrelevant, and that it can change over time as more knowledge emerges about the risks of particular materials. I would have thought that, if it does appear in the statutory instrument, the Minister might want to see it taken out.

I very much welcome what appears in paragraph 54 about the need to inform residents not only of the building’s safety features, but of the residents’ obligations in relation to using the building in a safe manner. That will obviously include not propping open fire doors, making sure that fire extinguishers are not misused, keeping combustible materials out of public circulation areas and so on. We welcome all that, but does the Minister believe that there is or should be any sanction or enforcement for residents who fail to comply with those requirements? As a former councillor and former MP, I am well aware of the discussions that are had, for instance, between social landlords and some tenants of social accommodation, about the challenge of achieving that.

18:00

My final point—I hope the Minister is pleased to hear the word “final”—is about Part 5 and the exemptions, which he mentioned in his helpful introduction. I am trying to understand the changes between the first iteration of these regulations—which, as he said, was in March—and them now. It is disappointing that, as well as being slow, we also have to revise the regulations that have been issued before they have even come into force. What exactly is that revision? Is it bringing more buildings into scope, which is what I understood the Minister to say, or is it taking some buildings out of scope, which is what my first reading of the regulations led me to believe? If my reading is right, I am obviously concerned to hear whether the department thinks that barracks and hotels are somehow lower risk at height than other domestically occupied buildings.

The Grenfell Tower disaster has been a terrible wake-up call for the construction industry, the Government and public and private sector regulators. It is a matter of regret that it has taken so long to get to where we are and for the necessary safeguards to be put in place. This statutory instrument is a necessary part of that regime, and we welcome it to that extent, but bringing it forward today is a sad illustration of the loss of urgency and pace within the Government. I look forward to the Minister’s response.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I draw attention to my interests set out in the register as a serving councillor on a district council and a county council, a vice-president of the LGA and vice-president of the District Councils’ Network. I do not think I have had the opportunity to welcome the Minister to his new role, so I do that now. I thank the DLUHC team—we do not do that enough—for a clear and thorough Explanatory Memorandum, which was extremely helpful in reducing the number of questions that I will ask this afternoon.

We are now more than six years on from the tragedy of the fire and the loss of 72 lives at Grenfell Tower. I am pleased to see that progress is being made at last to address the multitude of issues that arose from it and previous dreadful fires, such that as Lakanal House in Camberwell in 2009. I pay tribute to the determination and commitment of the survivors of Grenfell and the other campaigners, such as the Cladiators, the National Leasehold Campaign, End Our Cladding Scandal and the UK Cladding Action Group. Their powerful voices and front-line witness have enabled the landmark legislation of which this statutory instrument forms the latest step. At last, we are moving to a point where the responsibilities of all concerned—the construction and development industry, freeholders, statutory agencies and the regulator—are becoming clearer. Importantly, we are moving to a point where those responsible for failure can be held accountable for their actions, although we must keep our eye on enforcement processes, as it seems they are not the strongest part of this new regime. The noble Lord, Lord Shipley, referred to the well-understood and respected powers of the HSE, so can the Minister say whether the building regulator will have equivalent strength in terms of enforcement powers?

My first concern is that, even with the strongly stated intent of the Government and the Secretary of State—and, I am sure, the Minister—remediation is still not progressing as quickly as it should. This is not just in relation to cladding; other serious and potentially high-risk defects have been identified but not addressed, as we in my local area know only too well from the experience of the beleaguered residents of Vista Tower in Stevenage. The financial and other impacts of this on residents have been truly devastating; many issues relating to insurance, mortgages and so on remain unresolved.

As we go through the process of considering building safety SIs that implement the various steps towards full implementation of the Building Safety Act, can the Minister reassure us that the department is also keeping an eye on the bigger picture, especially in relation to the remediation that was urgent six years ago and in too many cases has still not been done? Like the noble Lord, Lord Shipley, my party is greatly concerned about the situation in relation to buildings up to 11 metres.

I turn to the regulations. As the Minister said, they are about the golden thread of information, the principal accountable person and any other accountable person for what is classified as a high-risk building. It is vital that all leaseholders and residents are given a voice and empowered by this new regime through that critical information. We have spoken about the previous learning. I have a number of issues to raise in relation to the SI before us.

I start with a serious issue that will be concerning all the action groups and the residents they represent. In a number of places, the SI and the Explanatory Memorandum refer to the significant costs of the administration of this information-sharing regime. Quite understandably, based on the debacle and daylight robbery that some leaseholders have seen in relation to service charges, there are legitimate concerns that this will see considerably more unaccountable costs piled on to the charges that beset all leaseholders at the moment. With the only recourse often being via the complex route of a First-tier Tribunal, what reassurance can the Minister offer residents that there will be some oversight of the passporting of the costs of this regime?

Regulations 7 and 8 set out the role of the accountable person in sharing information with residents and owners of residential units. I appreciate that a great deal has already been done in determining the role of the accountable person but can the Minister outline whether a register of such persons is to be kept and maintained by the regulator, as well as whether that document will be publicly accessible?

This SI rightly focuses on the recommendations in Dame Judith Hackitt’s report that there should be a golden thread of information connecting information held on building safety, and that this should be transparent to residents, leaseholders and homeowners. My concern about Regulations 15 to 18 is that they have the potential to provide a get-out clause from this golden thread for unscrupulous building owners. The regulation around the security exemption is fairly straightforward and clear—I was particularly pleased to see that the exemption for MoD buildings will not apply where there is a small number of MoD families living in a building that is not owned or managed by the MoD—but I share the concern of the noble Lord, Lord Shipley, about why an MoD building should be different from another type of building in this regard.

The exemption that particularly concerned me was the “commercial sensitivity” exemption in Regulation 17—[Interruption.] My apologies: I have been calling the noble Lord, Lord Stunell, by the name of the noble Lord, Lord Shipley. That is my flu brain not working, I am afraid. I know that this exemption was one of a small number of challenges that came up in the consultation process. We have all seen the misuse of commercial sensitivity in other contexts, from viability in planning to classification of documents. One only has to think of all the issues relating to the procurement of the cladding at Grenfell to be concerned that commercial sensitivity should be applied only where it is absolutely necessary. What steps will the regulator take to ensure that this is the case? Will the regulator have powers to intervene if there is a dispute about whether a document can be classified as commercially sensitive? Can the Minister reassure us that it is intended that this exemption be used only in exceptional circumstances and be subject to challenge?

Schedule 1(15) sets out in detail the documents to be retained in relation to the golden thread information; that is helpful, as the noble Lord, Lord Stunell, said. I have one query on this, which relates to the references to “mandatory occurrence reporting”. There is a table in paragraph 208 of the impact assessment that sets out some of the detail of what constitutes a mandatory occurrence. Can the Minister tell us whether that is an exhaustive list? Would the reporting of a mandatory occurrence also contain information about mitigation steps needed to prevent future occurrence?

Schedule 3, on resident engagement, helpfully explains residents’ right of access to documents. Can the Minister clarify whether prospective purchasers will be able to access these documents? We have heard a lot from people in the industry about the concerns that any prospective purchaser has around buying a property in a high-rise building. It seems really important that prospective purchasers, as well as those people already living in the building, can access these records. Lastly, can the Minister explain whether these important issues relating to document access and retention will be subject to periodic review to ensure that they are working as intended?

We are as concerned as the Government to see building safety moving forward with no further delay, so we will not oppose this SI. With more than 4 million people in the UK living in buildings over 11 metres tall, including 1.3 million in buildings over 18 metres—we need to see the 63 consultation responses in the light of those huge numbers, but we all know how tricky consultation can be—we need to ensure that all the outstanding recommendations of the Hackitt report are implemented as quickly as possible. We look forward to considering the Leasehold and Freehold Reform Bill in your Lordships’ House so that we can propose further ways to tackle some of the inequities of the outdated feudal leasehold system that also have an impact on building safety.

[Lord Gascoigne (Con)]

I thank noble Lords for their contributions. As the noble Lord, Lord Stunell, said—I cannot remember what phrase he used; he may have said “endured”—last week’s discussion, put forward by the noble Lord, Lord Goddard, was certainly a thoughtful one. I spoke to the noble Lord, Lord Goddard, earlier and congratulated him on it; it showed the virtue of the House and the contributions that many of your Lordships make to it.

In a similar vein, the comment was made that not many attendees were there. What is important is not the number of attendees but the quality of the debate. I pay tribute to the noble Lord, Lord Stunell, and the noble Baroness, Lady Taylor of Stevenage, who have thrown many fine questions at me. I will certainly try to answer them as well as I can, but they have shown that this has been another constructive debate.

I will try to answer now some of the points made. Forgive me, but I may miss a few while I am trying to give answers; I will certainly make sure that we respond in writing to those. There are some points on which I will have to write with further information.

The noble Lord, Lord Stunell, asked about the length of time and the delay. The right thing to say is that, given that these changes are so wide-ranging and systematic, we must ensure that we get this right. That will take time, I am afraid, but I can genuinely assure him that this is not slackening—again, a word that I think he used. It is a necessity to get it right.

The noble Lord also asked whether this could be a broader regime, as well as about height and things like that. The height of 18 metres was agreed following engagement with stakeholders and the definition of “high-risk” after Dame Judith’s report, which originally suggested 10 storeys; that would be around 30 metres. The 18-metre threshold is set in the Building Safety Act and was debated during its passage. The scope covers buildings that present the highest risk, protecting those residents who need it the most.

I was asked when the regulations will come into force. As noble Lords will know, they will go through Parliament and, once they are approved and the related commencement regulations are signed by the Minister, they will come into force alongside the Higher-Risk Buildings (Management of Safety Risks etc) (England) Regulations 2023 and Section 83 of the Building Safety Act 2022.

I was asked whether we will keep the new regime under review. The building safety regulator will do so, and this is in line with its statutory duty under the Building Safety Act. I was also asked about how the electronic database will be handed on and whether it will be kept up to date. The accountable person will need to hand an up-to-date database on to the next accountable person, and it must be transferred electronically, without the data being lost or corrupted. This means that it is, in effect, easily transferable to the next person, but it is the responsibility of the accountable person to ensure that they are keeping the information up to date and able to be transferred.

18:15

The noble Lord, Lord Stunell, asked about the changes made on military premises and why we are making them. The current standard residential buildings, which are not owned or managed by the Ministry of Defence, are excluded from the higher-risk regime, even if it is just one unit in the building. However, these buildings do not have the same security concerns as buildings owned and used exclusively by the MoD. This amendment will ensure that the scope of the higher-risk regime aligns with Dame Judith Hackitt’s recommendation that its focus should be on high-rise residential buildings.

Both noble Lords mentioned the costs in effect being passed on to residents, which is a concern. A number of other protections and schemes have been put in place for residents, such as the cladding safety scheme and the building safety fund. These protections extend to costs associated with identifying and remediating all historic building safety defects. Landlords will be allowed to pass on the ongoing costs of the new building safety regime to leaseholders, and these will be orders of magnitude smaller than the remediation costs. This is needed to allow accountable persons to gather the funds to enable them to comply with the duties of the new regime.

In relation to these regulations, having the right information about a building is a vital part of the building’s safety. Although some costs will be involved, this is necessary to ensure that residents are, and feel, safe in their homes. The level of cost will depend on the information already held by the accountable person. Accountable persons may choose to absorb or spread some of these costs, rather than passing them straight on, and this mirrors long-standing principles for service charges—that is, the cost of looking after a communal shared building is shared between those who benefit from the areas. Ultimately, I think that is right, and I reassure both noble Lords that we have done as much as we can to try to minimise those costs and keep them proportionate but also, crucially, not burdensome.

The noble Baroness, Lady Taylor, asked what exemptions we will allow. For residents and owners of residential units, there are exemptions on the basis of security, commercial confidentiality and data protection. No information should be shared that compromises the security of that building. Personal data should not be shared, except with the data subject—apart from permitted data, which is the data that the principal accountable person must display in the building.

[Baroness Taylor of Stevenage (Lab)]

I made the point that I understand about the personal and the security data, but my concern is that the commercial confidentiality data has the potential to be misused by unscrupulous landlords. What is and what is not subject to that needs to be tightly defined, and there needs to be a mediation process run by the regulator to decide—rather than the poor old leaseholder, who is already besieged, having to go to the First-tier Tribunal to get hold of the information they need.

[Lord Gascoigne (Con)]

I hope the noble Baroness will forgive me for not addressing her question rightly. I will certainly make sure that that point has been registered; it may already have been, but I will make sure that it has. In that vein, I will write to confirm one way or the other. I will have to write to the noble Baroness on a number of points that she raised around remediation and the mandatory occurrence training—I think she mentioned that there is a table. I will have to write on that. As I say, there are a number of other issues—

[Lord Stunell (LD)]

I thank the noble Lord; he is being very thorough in his responses. Can he just pick up the point I made about the public display of the building safety certificates, and the parallel I drew with the unsuccessful regime for display energy certificates?

[Lord Gascoigne (Con)]

I am afraid that I will have to write to the noble Lord on that. I did clock it, but I do not have an answer in front of me. I will certainly ensure that he gets a response. I did write it down; I hope he will forgive me for not having an answer before me.

As I alluded to earlier, this has been a meaningful discussion with some good points. The noble Baroness, Lady Taylor, thanked the department; I know that officials will be listening—not just those that are present here, but others who will be watching it and reading Hansard. These debates and discussions do help to improve policy.

To conclude, the golden thread of information is at the core of the safe management of buildings. These draft regulations set out the information that those responsible for managing occupied higher-risk buildings must keep and share with others, including residents. Together, these measures support the creation of a new proportionate building safety regime that protects the safety of residents in high-rise buildings. Once again, I thank both noble Lords for their contributions today and the views they have expressed. I beg to move.

Motion agreed.

Committee adjourned at 6.22 pm.