Grand Committee
Arrangement of Business
The Deputy Chairman of Committees (Baroness Kennedy of Cradley) (Lab)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Gender Recognition (Approved Countries and Territories and Saving Provision) Order 2023
(8 months, 2 weeks ago)
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Baroness Barran
That the Grand Committee do consider the Gender Recognition (Approved Countries and Territories and Saving Provision) Order 2023.
The Parliamentary Under-Secretary of State, Department for Education (Baroness Barran) (Con)
My Lords, this statutory instrument updates the list of countries and territories from which citizens are eligible to use the fast-track recognition process to obtain a gender recognition certificate. We laid the statutory instrument before the House on 6 December 2023. Subject to parliamentary approval, this will be the first time that the approved overseas countries and territories list has been updated since July 2011.
The Statement given by my right honourable friend the Minister for Women and Equalities on 6 December in the House of Commons generated a wide debate. The Commons Committee debate touched on the importance of communicating these changes clearly. It is important that everyone understands why we are updating this international gender recognition process, and that includes our colleagues internationally. Importantly, this debate is focused on the details of the SI and our need to make this update.
We are making these changes because the Government believe that it should not be possible for a person who would not satisfy the criteria to obtain legal gender recognition through the standard route under UK legislation to use the overseas recognition route to obtain a UK GRC. This would damage the integrity and credibility of the process of the GRA. There have been many changes in the international approach to gender recognition since the list was last updated in 2011. We have provided details of overseas countries and territories to be removed and added to the list laid on 6 December, which is available to view on legislation.gov.uk.
We have undertaken thorough checks, in collaboration with the Foreign, Commonwealth and Development Office, to verify our understanding of each overseas system in question and have measured them against the UK’s standard route to obtain gender recognition. My right honourable friend the Minister for Women and Equalities and the Minister for Equalities have both engaged extensively with posts, including those in the USA, Canada and Australia. I am confident that the international community understands the extent of the changes and their impacts on their citizens.
The overseas route to obtaining a gender recognition certificate sees low volumes of applicants. Of the 370 total applications in the last quarter, only 4% used the overseas route. Of the 7,043 applications received since 2009-10, 94% were standard applications and 5% were overseas applications. The impact on transgender people in this country and abroad will be minimal and this update brings the overseas route back in line with the standard route, allowing for more equality in application requirements.
Finally, it is extremely important to ensure parity with those who have taken the UK standard route to obtaining a gender recognition certificate. It would not be fair for the overseas route to be based on less rigorous requirements and consequently for the certificate to be acquired more easily. I beg to move.
Lord Henley (Con)
Before the Front-Benchers intervene, I wondered if I could ask my noble friend a question.
Baroness Thornton (Lab)
This is not the end of the debate; it is just that I have chosen to speak at the beginning.
Baroness Thornton (Lab)
As the noble Lord is aware, it is perfectly all right to speak now, but I always think when doing statutory instruments that, if you have a lot of questions, as I have, it is only fair to put them in first, so the Minister and the team can think about them.
I thank the Minister for her explanation. I would like to make one little prod or poke, as it were, to the Government over this matter because it was the subject of the first Statement that the Secretary of State for Women and Equalities chose to make in her job. She did not choose to talk about why more black mothers and babies die in the maternity units in our hospitals or why we have huge misogyny in our uniformed services. She did not choose to talk about the increase in violence that our LGBT+ communities are experiencing or the problems that disabled people have with our train service and in getting jobs. She chose not to speak about those things and the fact that she chose to speak about this issue says something. Reading that debate, I think that it probably achieved the exact political purpose she wanted.
However, we can agree, I think, that it is important that this list of approved countries is kept up to date, as the Labour Government provided for when we passed the GRA in 2003. I was there and involved in the discussions around the then Bill; I helped to put it on the statute book. The list was last updated in 2011. The Government at the time said that they expected to update it within five years, but that was 13 years ago, so it is timely that we should be doing this now. My first question is: have the Government stated when they expect this order to be updated next? What is the intended timescale as we move forward? The reason why we wanted to do this in 2003 is that we knew that the world was changing constantly in this area.
With the limited information on the criteria that have been adopted by the Government in making these decisions—there is a headline list included in the Explanatory Memorandum but no further detail—can the Minister give the Committee more detail on what criteria will be applied and an assurance that they will be consistent across each case? For absolute clarity, will the changes made by this instrument have an impact on those in the UK who already hold a GRC via the overseas route? What about the applications that are currently outstanding but were initiated before this order comes into force? Can the Minister give details on how the countries affected by this instrument were both consulted ahead of the change and notified that the change was being made?
Will the changes in this instrument have any impact on the mutual recognition of UK GRCs in other countries? Further, what discussions have Ministers had about mutual recognition in other areas including equal marriage, adoption and pensions, and whether they may be impacted? Can the Minister assure the Committee that those rights are safeguarded and that discussions have been had with the relevant countries on those issues? The Explanatory Memorandum confirms that the Northern Ireland Executive and the Scottish Government were consulted; I would like to know what the outcome of that consultation was.
Finally, my colleagues in the Commons asked about Germany. There seems to be some confusion as to whether it is being removed from the list. Can the Minister give us an update for clarity? What changes are being made to the German system and when will those changes come into effect? Will there be further changes to this list in the near future to respond to those changes?
Those are my questions. If the Minister cannot give us all those details in her answer, I would be quite happy for her to write to us and put her answer in the Library.
Lord Henley (Con)
My Lords, I apologise to the noble Baroness, Lady Thornton, for trying to get in to speak before her. I want to make only a brief intervention in this debate, merely because I am intrigued to know about the list of approved countries and territories and what is included. We have in the Explanatory Note a list of the countries that were included in 2011. It includes quite a lot of Australian states and territories, some of which have, I think, been added to this list. It then goes on to include others, including—as one would expect—countries of a progressive sort, such as Sweden.
What I find particularly peculiar is that it then includes countries such as Iran. What is the Iranian legislation on this matter? Are we allowed to see it? Is it appropriate? Is Iranian legislation really fit for purpose on a matter of this sort? I appreciate that, as my noble friend put it, only 4% of applicants are using the overseas route, so we are talking about tiny numbers, but the inclusion of countries such as Iran and one or two others—I shall not mention them, but Iran is probably the most obvious—requires some proper explanation from the Government about why they are there and what is the Iranian legislation behind it.
Baroness Barker (LD)
My Lords, I thank the Minister for her introduction of this SI. As she said, last December the Minister for Women and Equalities, Kemi Badenoch MP, announced that she was planning to update the approved list of countries and territories and remove countries that do not require a medical diagnosis in order to gain legal gender recognition. Her statement was based on a belief that checks and balances and a medical diagnosis are required. There is no evidence of higher crime rates or higher risks to women in those jurisdictions which use self-declaration of gender, so Minister Badenoch’s belief is unsupported by the evidence.
According to the Government’s statistics, fewer than 50 gender recognition certifications were granted through the overseas path in 2022-23 and the average number granted each year in the period from 2009 to 2020 was approximately 17. There is no breakdown of the countries where the original legal gender recognition was granted and there is no data about whether any of the individuals who gained legal gender recognition in the UK using this route have been prosecuted or convicted of any criminal offence. The actual impact of removing various countries is minimal according to the number of GRCs issued, but it may have important repercussions for those who are currently eligible but will not be under this proposed order, and there is no evidence that these individuals should have their current right removed. There is no reason to do so.
The impact of these proposals is unknown, due to the lack of statistics around the countries of origin and crime, but we should not assume that it is negligible. The Council of Europe’s Resolution 2048, which was passed in 2015, says that states should
“develop quick, transparent and accessible procedures, based on self-determination, for changing the name and registered sex of transgender people on birth certificates, identity cards, passports, educational certificates and other similar documents; make these procedures available for all people who seek to use them, irrespective of age, medical status, financial situation or police record”.
The UK remains a member of the Council of Europe, which is not the same organisation as the European Union.
As the noble Baroness, Lady Thornton, said, Germany remains on the list of approved countries despite introducing legal gender recognition by self-declaration in August 2023. Ireland is not on the current list, and it is not on the proposed list. It is proposed to remove recognition by parts of Australia, the entirety of New Zealand, certain states in the USA and lots of European Union countries. India and China have been added. India allows hijra to be recognised as a third gender, as well as allowing transition between male and female. It places surgical requirements for recognition as male or female, but the recognition is granted by a district magistrate. However, very few people are able to access the law due to difficulties in getting appropriate healthcare and fighting discrimination. In short, there is no consistency in the application process for the proposed countries.
However, there is one thing in common: they do not follow either the UN’s or the Council of Europe’s recommendations—that is the only thing. We are getting to the real reason why this Government, and Minister Badenoch in particular, chose to do this. This is the Government who could not find time to ban conversion therapy and the harm that that does to our community, and this is the Government who are seeking to remove a lot of protections from the LGBT community. Yet they found time to do this, which is likely to affect 20 people at most—people for whom there is absolutely no evidence that they pose any threat to anybody at all.
This is part of this Government’s ongoing war on human rights and the protections that human rights afford to minorities. It is part of their ongoing campaign to destroy human rights and the organisations set up to protect the rights of people who are, and should continue to be, protected under equalities legislation. The message from this legislation to the LGBT community is clear: you are no longer safe while this Government are in office. It is high time that they should go.
Baroness Barran (Con)
My Lords, I thank all noble Lords for participating in this short debate. I accept that the views expressed by the noble Baroness, Lady Barker, come from her own perspective, but her description of this Government’s records on human rights is not something that I recognise personally. I hope that, in my opening remarks, I was able to provide the Grand Committee with some clarity on the purpose and effects of this legislation.
I will try to take some of the questions from the noble Baroness, Lady Thornton, in turn. She asked about our international engagement and how other countries would be aware of these changes. Diplomatic posts have been notified of the changes. We provided them with comprehensive question and answer documents that address potential misconceptions about what this statutory instrument does. We have worked very closely at ministerial and official levels with the Foreign, Commonwealth and Development Office throughout the process, and we are monitoring the international reaction to the legislation.
The noble Baroness remarked on the delay in this work. I can only agree with her that it is overdue. We have delivered on other commitments, such as the reduction in the fee. There is no firm date for the next update of the list; we have said that we will review it frequently.
The noble Baroness also asked about how we are applying the criteria. As outlined in the Explanatory Notes to Section 2(4) of the Gender Recognition Act 2004, we have determined the phrasing “at least as rigorous” to mean, in this instance, that the criteria must match the UK legal gender recognition process. This has been applied consistently across every country and territory. Where there have been equivalences that are compliant with the UK system, we have acknowledged those, too. The full list of criteria used for this update can be found in the Explanatory Memorandum to the draft order on the legislation section of GOV.UK.
My noble friend Lord Henley asked specifically about Iran. The detail that we have on the Iranian legislation is that it goes beyond our criteria. He asked whether we had reviewed that; my assumption is yes, but if there is anything different from that, I will write to him to clarify.
The noble Baroness, Lady Thornton, asked about the impact on outstanding applications that are in process. This is not retrospective so, if people have started the process and were eligible formerly, they would still be granted a certificate.
The noble Baroness asked about the feedback from Northern Ireland and Scotland. Obviously, we had to consult with them ahead of laying the instrument. There was no comment from the Northern Ireland Administration, and the Scottish Administration had some criticisms of the Government’s approach, which is perhaps unsurprising given their approach to this issue.
I think I have answered most of the noble Baronesses’ questions, but we will check in Hansard and—
Baroness Barran (Con)
The legislation in Germany has not yet been passed. The noble Baroness alluded to this—forgive me; it was on my list.
As a team within the equalities hub, we remain very open to discussing these topics and some of the wider policies that both noble Baronesses raised.
Social Housing (Regulation) Act 2023 (Consequential and Miscellaneous Amendments) Regulations 2024
(8 months, 2 weeks ago)
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Baroness Scott of Bybrook
That the Grand Committee do consider the Social Housing (Regulation) Act 2023 (Consequential and Miscellaneous Amendments) Regulations 2024.
The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)
My Lords, this draft instrument makes technical, consequential and miscellaneous amendments to primary and secondary legislation following the passage of the Social Housing (Regulation) Act 2023.
For far too long, too many tenants have not received the quality homes and services they need and deserve. Social housing tenants deserve decent homes and to be treated with fairness and respect by their landlords. Where they experience problems, these should be resolved quickly. Where they have complaints, these must be listened to. On too many occasions, this has not happened, and we know that getting this wrong can, sadly, lead to tragic consequences. We cannot forget the Grenfell Tower tragedy, nor the tragic death of two year-old Awaab Ishak from prolonged exposure to damp and mould that was left untreated. These events were the catalyst for change.
The passage of the Social Housing (Regulation) Act was a landmark moment for the social housing sector. The Act facilitates the biggest change to the regulation of social housing in a decade, paving the way for the introduction of a new proactive consumer regulation regime. The proactive regime will drive up standards in social housing, with regular inspections of large landlords, new tenant satisfaction measures and stronger enforcement powers for the regulator to take action when things go wrong.
During the passage of the now Act, we made a number of major amendments, and I am thankful for the constructive input from noble Lords and the other place. A key addition was the introduction of Awaab’s law. This will help to ensure that hazards in social housing are assessed and then repaired within set timescales. The Act facilitates the introduction of new competence and conduct standards that will professionalise the sector to improve the quality of service that tenants receive. The 2023 Act also made a number of changes to strengthen the existing economic regulation regime.
To ensure that existing legislation remains accurate following the passage of the 2023 Act, the regulations contained in this instrument make several consequential amendments to relevant primary and secondary legislation. Part 1 of Schedule 1 makes consequential amendments to the Housing and Regeneration Act 2008, which are necessary in response to the provisions set out in the 2023 Act. Such changes include amendments that reflect the change to when a housing moratorium starts and the addition of new entries in the index of defined terms in the 2008 Act which signpost definitions added or amended by the recent Act.
Part 2 of Schedule 1 makes consequential amendments to other relevant legislation, including the Housing and Planning Act 2016. These changes are a consequence of provisions in the 2023 Act which make changes relating to moratoriums in the event of an insolvency, the definition of whether a registered provider is “non-profit” and what constitutes an “English body” for the purposes of who can be registered.
Part 3 of Schedule 1 makes consequential amendments to the Social Housing Rents (Exceptions and Miscellaneous Provisions) Regulations 2016 in consequence of a change made by the 2023 Act. This change relates to the definition of “community land trust”, which has been inserted into the Leasehold Reform (Ground Rent) Act 2022 by the 2023 Act.
Lastly, the regulations make two miscellaneous adjustments which correct minor errors in statute. The first removes a redundant reference to a section in the 2008 Act which was later repealed by the Housing and Planning Act 2016. The second amends a provision inserted by an SI; this change is intended to ensure consistency across the two pieces of legislation.
Although the changes I have outlined are of minor significance in themselves, they are required to ensure accuracy and consistency across the statute book following the changes made by the 2023 Act. I commend these draft regulations to the Committee.
Baroness Taylor of Stevenage (Lab)
My Lords, I thank the Minister for her introduction to this instrument. I refer to my interests as recorded in the register.
We have been pleased to support the implementation of the regulation of social housing, including the revised consumer standards which will be required of landlords from April. The introduction of Awaab’s law is particularly important, as evidence of the harms of damp and mould continues to accumulate; as is the building safety work since Grenfell, although I think we all agree that it could be going more quickly, and we will continue to raise the issue that buildings under 11 metres are still not addressed. We look forward to further consideration of some of the key ownership issues when we debate the Leasehold and Freehold Reform Bill later this month. We totally support the principle that social tenants should receive and deserve the very highest quality in the homes they live in and the service they receive from their housing provider.
I am sure the Minister will be pleased to know that we recognise that these technical amendments are entirely uncontentious and will therefore not object to or raise lots of issues on them. However, it would be wrong in any discussion related to social housing not to highlight the ongoing funding issues facing councils, with their housing stock, and housing associations. For councils, the increasing burden of regulation—important as we all understand it to be—places an increased financial burden on them. With the capping of rent increases and the fact that in the current cost of living crisis any significant increase in rents would place an unmanageable burden on our tenants, the cost of meeting these additional regulatory burdens is a significant pressure. This is in addition to the costs of decarbonisation and retrofitting. While government contributions to this are welcome, at the current rate of funding it would take many decades to complete the work, well beyond the target for net zero.
Lastly, I take this opportunity to mention, as there has not been a chance anywhere else, the unfathomable decision that emerged from the small print of last week’s Budget—that the Secretary of State has terminated the ability of local authorities to retain 100% of right-to-buy receipts. This returns us to the awful travesty around right-to-buy sales. I take the example of my authority, which had a council stock of around 30,000 social homes, and now has only around 8,000. Some years ago, we were offered the opportunity to buy out our stock from the Government, which you could argue we already owned, but I will leave that argument for another day. We borrowed £240 million to do so, and that loan is being paid off through the housing revenue account. Not only does the removal of the 100% retention of receipts remove the resources we would have had to replace the homes sold under right to buy, but it also eats into the income stream we had to pay off the loan we had to take out to buy back our own homes.
Baroness Thornhill (LD)
My Lords, as the Minister knows, this Act has been well received by all sectors concerned with social housing, and it is supported on our Benches. As she said, this is due largely to the Grenfell tragedy, but also to subsequent high-profile failures of social housing, including the tragic death of young Awaab Ishak. Let us not forget the recent deaths in temporary accommodation, which are truly shocking.
We know that the devil will always be in the detail, and we all hope that the rhetoric accompanying the Act will live up to the reality. The Minister is clearly aware that there have been several consultations since last July, when the Bill was passed, and issues have emerged, which the sector is rightly bringing to the Government’s attention in this process. It appears that the full and cumulative impact of the new changes thus far has been evidentially to expose the wide variation in the quality of provision of social housing by registered providers and councils. This was recently outlined very robustly by the deputy social housing regulator. Is the Minister confident that the new approach to inspections and the C categorisation will allow for a nuanced approach to allow those lagging behind to learn from the best and hopefully catch up, or will it be an adversarial system—a weeding out of the worst? In short, what will the approach to inspections be? I know from experience of Ofsted in schools and the CPA in local government that they can vary.
It is no surprise that there are concerns about the additional costs associated with all the changes, which I am sure the Minister will be aware of. What is in place to ensure that landlords can make progress without financially falling over, as we are seeing with some local authorities? Regrettably, we are already hearing that they are cutting back on development plans to focus on the detail of the new regime, which itself is a separate concern due to the considerable shortage of social housing. I echo the comments of the noble Baroness, Lady Taylor, with which I wholeheartedly agree. In fact, I add that I found that announcement bitterly disappointing because I believed that this Government had genuinely shaped the agenda towards a real understanding that social housing was one of the first bricks we needed to get in place to unblock the logjam and the housing crisis.
Does the Minister accept that there is also a recruitment and retention problem, highlighted and exacerbated by the professionalisation of housing management and maintenance? That is a good aspect of the Act and had cross-party support, but not surprisingly it is having an impact, as some people are jumping before being pushed—probably a good thing in some cases, I am not afraid to say, having had to do the pushing sometimes—or feel that perhaps now is the time to retire rather than go back to the classroom, but it is a very real and relevant issue.
The speed and breadth of the changes cause me to ask how confident the Government are that the sector can and will have the capacity to cope with these genuine changes.
Briefly, on the Awaab’s law changes, I thank the Minister for her detailed letter in response to my question in the Chamber and her generous offer of her time. On a tangential issue, the consultation that has just closed proposed an extension to hazards beyond mould, damp and condensation to include the 29 hazards in the—this is a bit of a mouthful—housing health and safety rating system. This has caused considerable disquiet for the National Housing Federation and the Chartered Institute of Housing, to name but two. They have given convincing reasons why this extension should be reconsidered. Does the Minister agree that it is probably best to see how the sector copes with mould and damp before extending the hazards further?
It seems that there is still much to do to clarify these changes, particularly around the regulator’s use of powers and the approach to inspections. Further clarity is needed on how the regulator will interact with other sector regulators, such as the building safety regulator and the Housing Ombudsman. This will take some getting used to. Such clarification is particularly important for tenants, who will also have an important role to play. In fact, the Act enshrines in law their rights to have a safe and decent home, to make their voices heard and to influence policy so that tenants can shape the homes they live in and the services they receive. I have a pertinent, but perhaps tricky, question. Does the Minister feel that the residents panel—I notice that it is currently recruiting new members, so the current one has not been in action for very long—is a strong, independent and influential voice for tenants or just a sounding board?
Lastly, I look forward to the day when private sector landlords are also subject to the same regime because it is long overdue and much needed.
Baroness Scott of Bybrook (Con)
I thank the noble Baronesses opposite for their support, not only today but when we were taking the Bill through, and their challenge on what could be made better. We took some of those things on board.
The noble Baronesses, Lady Thornhill and Lady Taylor of Stevenage, brought up the pressures on the sector. We totally understand them, which is why we work closely with the sector, but my view is that it is the sector’s responsibility. It is the sector’s stock. It needs to keep that stock up and its tenants deserve the very best. So, we will support the sector, but we will not stop challenging it to ensure that social housing tenants live in safe, good accommodation. That is what has come from the Secretary of State right the way through this process.
On right to buy, all I can say is that there were many pressures on the Budget this year. The percentage did not get extended but, again, we are working with the sector to see how we can make the building of more social houses, particularly by local authorities, affordable into the future. I think that noble Lords will hear more on that.
Moving on to the noble Baroness, Lady Thornhill, am I confident in the approach to inspections and learning from the best? I think learning from the best is the important thing and, yes, I am confident. I talk regularly to the social housing regulator, and it gets it and understands its role. I do not think it will go in heavy to begin with; it will allow the sector to begin to understand this important new regime. However, I think it is important that it can go in quickly if it thinks there is a particular issue to deal with and that it will do regular inspections throughout the sector in future. We will weed out the worst providers, but it is also a matter of helping them to improve and learn from the rest of the sector.
I understand the pressures on the sector, particularly for building new houses, as it has quite rightly had to put more money into making sure that the stock it has is of good quality, so there is possibly less money left for building more houses, but we have a fund of more than £11 million to do that. Housing providers are looking to use that fund continually, and we are supporting them to do that.
Recruitment and retention is out for consultation. We will listen to the sector. This was extremely important to members of the Grenfell community, in particular. They felt that their housing officers were sometimes as important as people working in social care in the council. We listened, and we found a way through that one. We also need to listen to the sector and the regulator as we move forward about the timeliness of implementing this. It is not going to be done overnight, so we will work with the sector after the consultation and listen to what it is saying on that one.
It is the same with Awaab’s law, although I am very passionate about getting Awaab’s law in place as soon as possible. I probably agree with the noble Baroness that perhaps we should start with the timings on damp and mould; that may be something we can look into further. We have only just finished that consultation. I have not seen the responses yet, so I do not want to pre-empt what will come out of that, but we will look, listen and do what we can to get that important part of the Act in place as soon as possible.
The noble Baroness also brought up the interaction between the Housing Ombudsman, the building safety regulator and the social housing regulator. In the department, I have talked many times with officials about the communication on this because it is a new regime; we want it to work and to work well for the tenants concerned. I think noble Lords will see a lot more communications with tenants about who to go to. Of course, if they have a problem, they should first go to their housing provider. We want to make sure that they do that and, if it is an individual case, go to the ombudsman, and then to the building safety regulator which will be working very closely with the ombudsman to make sure that it is picking up any themes coming out from a particular provider or group of providers. That is the way it will work, but communication to the tenants about this regime is important.
Finally, I turn to the residents’ panel. I have been to the residents’ panel, and I do not think that it is a talking shop at all. It is quite challenging. That is why we are extending them for a further year beyond just one year. What the panel says is very important not just for us as a department but for our partners, including the social housing regulator, the ombudsman and the building safety regulator. It is important to listen to the panel; it certainly tells us what it thinks.
I think that I have covered everything; I will check and, if I have not, I will write as usual. To conclude, these changes will ensure that the statute book remains accurate following the passage of the 2023 Act. This is just a small part of our wider mission to drive up the quality of social housing and ensure that all tenants are treated with fairness and respect.
Energy Bills Discount Scheme (Amendment) Regulations 2024
(8 months, 2 weeks ago)
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Lord Callanan
That the Grand Committee do consider the Energy Bills Discount Scheme (Amendment) Regulations 2024.
Relevant document: 15th Report from the Secondary Legislation Scrutiny Committee
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 7 February 2024. As we are all aware, Russia’s illegal invasion of Ukraine led to an exceptional rise in energy prices. At the time, the Government responded decisively to these unprecedented circumstances by delivering critical support to households and non-domestic energy consumers facing significant increases in their bills.
Through the energy price guarantee and energy bill support scheme, the Government have spent more than £35 billion supporting households. Non-domestic customers will receive about £8 billion through the energy bill relief scheme and the energy bills discount scheme, which I will refer to as the EBDS. The swift action to introduce this legislation protected consumers from these inflated prices, mitigating what would have been more severe effects of this economic pressure had the Government not intervened.
The EBDS provides a discount on energy bills for the 2023-24 financial year for energy customers on non-domestic tariffs. The EBDS provides a further, higher level of support where those on non-domestic tariffs have domestic end-consumers. This is to support customers on heat networks who were not supported by the energy price guarantee that was available to other domestic customers.
Heat network customers were not protected as heat networks normally purchase their energy through commercial contracts, which they then sell on to domestic customers. All eligible heat suppliers with domestic customers were required by the EBDS regulations to apply for this additional level of support and to pass this benefit on to their customers. They were required to do this within 90 days of the scheme being launched or within 90 days of becoming eligible. The support given by this scheme ensured that householders who might have otherwise been exposed to the full wholesale market price were instead protected. This support is estimated to be worth about £180 million in total or an average of £1,200 per customer supported.
I turn to the specific amendment to the EBDS regulations that we are discussing. Under current regulations, if a heat supplier has failed to apply to the scheme within the deadline set by the rules, it can still apply for support. Indeed, we have required heat suppliers still to apply for support in order to ensure that as many households as possible can benefit. However, the current regulations allow suppliers to apply for support even after the scheme ends at the end of this month. This means that a customer would not get their support in a timely manner, and it also means that the Government would be legally required to process and pay for the administration of applications potentially indefinitely, at a large administrative cost to the taxpayer.
Therefore, this amendment instead provides for an end date, after which no further applications can be made. The final date will be specified in rules that will be made and published if this instrument is approved by the House. The deadline we intend to set is 31 March 2024, which aligns with the end of the period of cover of the EBDS. We have publicised this 31 March end date widely across the relevant sector. There would be one exception to this 31 March deadline for heat suppliers that become eligible so close to the deadline that it would be unreasonable to expect them to apply. Those heat suppliers would have until 14 April to apply.
I come to the most important aspect of this scheme: the impact it has on households facing high bills. It is right to introduce this deadline for those customers too, so that they benefit from this scheme when they need it most, not at an undetermined point in the future. It is essential that as many people as possible benefit from this support, and my department has been conducting extensive engagement to encourage applications from all eligible heat suppliers.
We are also mindful of the number of vulnerable domestic customers who live on heat networks. We have taken action to try to ensure that these customers receive the support they need, for example, by working with applicants in the social housing sector to ensure that all those applications are approved.
To be clear, this deadline does not stop customers being able to seek redress where their network has failed to apply. The Energy Ombudsman in Great Britain and the Consumer Council for Northern Ireland can provide support with dispute resolution and require payments to be made to customers. If necessary, customers can also choose to pursue claims through the civil courts.
To conclude, this instrument amends the EBDS regulations so that the duty for heat suppliers to apply for support is a duty to apply in a timely way, ahead of a deadline. This is a responsible step to ensure that we support customers while limiting the administrative burden on the taxpayer as pressures from energy bills, thankfully, ease. I commend these regulations to the Committee, and I beg to move.
Lord Vaux of Harrowden (CB)
My Lords, I remind the Committee of my interests as a generator of small-scale hydroelectricity and as a recipient of feed-in tariff payments.
I do not have any specific comments on the SI, which simply fixes a wrinkle in the various energy support schemes, but I point out the concern raised by the Secondary Legislation Scrutiny Committee that up to 60,000 domestic customers may be missing out on the support available. The Minister has given some examples of what the Government are doing, but it seems that more could be done to ensure that domestic customers do not miss out on this money. How many heat networks are there and have we made attempts to contact all of them to push them into making applications?
I take this opportunity to ask the Minister more generally about progress in dealing with the underlying distortions that made the schemes necessary in the first place. As he said, the support schemes arose because of the substantial increases in energy prices following the Russian invasion of Ukraine. It was entirely understandable and right to support people and businesses under those circumstances, but those schemes did nothing to fix the underlying distortions in the electricity markets that are, in part, the cause of the high pricing.
The key feature is the fact that the price is driven by the marginal pricing of electricity and therefore by the price of gas. That means that the price of electricity from all sources, including renewables, where the generation cost fell during the same period, was driven by the increased gas cost. It meant that people on apparently 100% renewable tariffs saw their electricity prices more than double, even though the cost of renewables had fallen. Quite apart from raising the question of how legitimate those renewable-only tariffs are, this led to some generators earning supernormal profits at the expense of consumers. The support schemes meant that we saw the strange situation of some generators having their excess profits subsidised by the Government. The same was even more true of the gas producers.
I realise that it is more complex than that, as I am sure the Minister will say, especially with the expansion of contracts for difference, but it is generally recognised that electricity prices need to be decoupled from the marginal rate, and especially from gas prices, to remove the distortions and fluctuations that the current situation generates. I asked the Minister about this in an Oral Question on 6 September 2022. He referred then to
“the review of market arrangements, which is looking urgently at that exact situation”.—[Official Report, 6/9/22; col. 91.]
Yet I see that the Government have today launched yet another consultation covering, among other things, exactly the same issue. Launching another consultation does not feel like the urgency that he promised 18 months ago. Can he provide an update on progress and when we might finally see electricity pricing decoupled from the marginal cost of gas generation and the market distortions reduced?
Earl Russell (LD)
My Lords, this statutory instrument sets out to enable the Secretary of State to put down a date after which heat networks may no longer be able to make an application for support under the energy bills discount scheme. The EBDS was established in April 2022 to provide non-domestic energy consumers with a discount on their higher gas and electricity bills. It also gives discounts to domestic consumers on communal heat networks, who, unlike households using a normal mains electricity or gas supply, were not supported under the terms of the energy price guarantee.
Under the terms of the EBDS, qualifying heat suppliers—QHSs—are required to apply for support, which they must then pass on to the domestic customer in the form of energy bill discounts. The Minister in the other place noted:
“Without that support, domestic customers on heat networks would have been exposed to the full impact of high wholesale market prices. The support that we have provided through the EBDS regulations is estimated to be worth £180 million in total, and £1,200 for the average … customer”.—[Official Report, Commons, Fifth Delegated Legislation Committee, 5/3/24; col. 3.]
This is, if you like, the architecture that was set up at pace and at scale to deal with, as the Minister here has said, the consequences of the invasion of Ukraine, its impact on rising energy costs here and the impact of that on the cost of living.
I want to be clear that any comments I make on this statutory instrument are set against a background of welcoming all the measures that the Government put in place, at scale and at pace, to deal with those consequences in response to what was a crisis. That being said, I have some concerns about this instrument and its impacts; I am also concerned about the way in which this scheme was set up, particularly for people on communal heat networks. I also note that this instrument has been noted as being of interest by the Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments.
The Government’s position is an administrative one in wanting to bring this scheme to an end. I fully understand that. The legislation, as originally drafted, means in effect that there is no end date, so, although the scheme will end, people will be able to continue to make applications for ever. That clearly has to end, so I have no disagreement there.
The intended end date is 31 March 2024. As the Minister said, there will be a two-week extension for those people who could not reasonably be expected to make an application because they hit the deadline. From a purely administrative point of view, this all seems fine and reasonable, but, from a customer’s point of view, there are impacts here. The customers we are talking about are those who are vulnerable and living in social housing.
The way in which the system was set up was not brilliant. I do not think that the operators of communal heat networks should have been required to apply in order to get the discounts in the first place. There have also been problems with pass-through to customers living in communal heat networks.
I want to ask a couple of questions before I come to an end. The end date is the end of this month, so it is literally the blink of an eye away. Why the urgency here? The Explanatory Notes say that the Government are still getting 20 applications a month. Is there the possibility of extending this?
I am concerned about what the Government are doing to inform the end-users and beneficiaries of these schemes. My thinking is that one of the reasons why this scheme was set up the way it was is that the Government do not have proper databases on the number of communal heat networks that exist, let alone the people in them. I understand why, in response to a crisis and not having those databases, the Government went down the route they did. However, I feel that this situation is likely to repeated in future. I request that the Minister and his department think again about trying to set up databases, so that the next time we are in this position, the discount on the cost of energy for people living in communal heat networks can come directly to them. That would be one point.
The numbers may not be that great, but there are still 60,000 individuals from vulnerable groups, as both committees have noticed. The cost per individual is likely to be £1,200. These are vulnerable people, and this is a big loss to them.
I note that the Government say that people can still seek redress through the ombudsman and the court system. However, that is quite slow and blunt, and applies only where owners of communal heat networks have made an application and received the funding but not passed it on to the end-user. I could find nothing in the information provided, but does the Minister know how many of those particular cases there are and what action the Government will be taking to support residents in those cases? Clearly, that is a criminal case—I am sorry if I am wrong and happy to be corrected—as the owner of a network has a discount but has failed to pass it on.
That is pretty much it from me. My real concern is that these are vulnerable people, and I encourage the Minister to do everything he can to make sure that they are supported. My real point is about learning, so that, the next time we are in this position, we can make sure that people in these situations get a better deal.
Lord Lennie (Lab)
My Lords, as we have heard, this instrument enables the Secretary of State to set a date after which heat networks can no longer apply for support under the energy bills discount scheme. Under the scheme, qualifying heat suppliers are required—that is the word used—to apply for support, which they then pass on to their domestic customers in the form of energy bill discounts. The Department for Energy Security and Net Zero has said that not all QHSs have applied for EBDS support. Although the scheme itself will end on 31 March, there is currently no effective date for applications to be received. The Minister has set this out—so far, so tidy.
DESNZ has estimated that 3,000 qualifying heat suppliers may not have applied for the EBDS, but we do not actually know, because there was no register of the qualifying heat suppliers. We do not know how many there are or where they are, so we cannot follow them all up. That is one of the problems with the scheme that was set up. However, we estimate that up to 60,000 domestic customers may lose out on support as a result of qualifying heat suppliers not applying for a scheme discount, as required.
As we have heard from the noble Earl, Lord Russell, the noble Lord, Lord Vaux, and the Minister the value of lost discounts is about £1,200 a customer. That loss will disproportionately affect disadvantaged groups, such as the elderly and ethnic minorities—people who have been described as “skint little people”—who are significantly more likely to be on heat networks. Could the Minister set out what specific initiatives have been undertaken to encourage take-up of EBDS bids by heat networks? Have they made inroads into identifying where the qualifying heat suppliers are, so that they can be targeted and encouraged to apply? Which initiatives have been successful, if any, and how recently? Has it been an evolving, slow process?
The proposal in this instrument makes administrative sense, rather than leaving open an estimated total liability of £6 million for not closing the scheme to new applicants. Administrative sense is one side of this equation; the other side is the customers, and it seems less considered from their perspective. The Joint Committee on Statutory Instruments and His Majesty’s Opposition initially expressed concern that an obligation was being placed on intermediaries without any means of enforcing it. It is all very well requiring someone to do something when, if they fail to do it, nothing happens except that the individuals can take them to court or to the ombudsman.
How many times has that happened during the course of the scheme? I suspect it is very few times, if any. Can the Minister tell us whether any such initiatives have been taken? Essentially, this is about a vulnerable customer being required to take their landlord to court to get a subsidy for their gas bill. The chances of that happening are fairly remote, but we will no doubt hear from the Minister on that. This means that companies and organisations that have failed to apply for, or pass on, discounts have simply got away with it. Who knows the truth of that? We do not know who they are.
As I indicated, we support the closing of the scheme and the ending date for applications, but we are unhappy with the way the scheme has been allowed to drift into oblivion with no forfeit for those who should have acted on it.
Lord Callanan (Con)
I thank all three noble Lords for their contributions. I am proud to say that, through the scheme, the Government have provided support to hundreds of thousands of households, helping them with financial pressures when they needed it most. The Government remain fully aware of the continued challenges posed by cost of living pressures, including the impact of energy bills. We are providing extensive financial support to households, including a package of support to assist households with the rising cost of living—this will total over £104 billion, or £3,700 per household on average, between 2022 and 2025. All three noble Lords recognised the extensive package of support that was put in place.
I totally understand the points made by the noble Earl, Lord Russell, and the noble Lord, Lord Lennie, on the heat network sector. The noble Earl is right that our database is not as good as it could be in terms of what heat networks are available. It is perfectly possible at the moment for anybody to build a block of flats and, in effect, set up a heat network; they do not necessarily have to tell the Government about it. However, if noble Lords remember, we recognised that in the Energy Act, where we took powers to regulate the heat network sector. That is why we are introducing new consumer regulations for heat networks and, from next year, we will have new consumer protections in place, provided through the Energy Act. That will give Ofgem powers to investigate and intervene in networks where prices for consumers appear to be unfair, or if prices are significantly higher than comparable heating systems. They are, in effect, natural monopolies, and therefore it is right that consumer protections exist. Those regulations will also seek to introduce back-billing rules, which exist already to protect gas and electricity customers.
The noble Lord, Lord Vaux, raised an important point about reaching as many customers as possible. It is indeed a priority for my department to ensure that as many customers as possible access the support available to them. So far, 12,000 applications have been approved under the scheme, which means that hundreds of thousands of domestic customers have been supported. We think that that figure of 12,000 represents the vast majority of qualified heat suppliers. We know that a scheme that was very much developed in haste in response to the energy crisis—as noble Lords will remember—was never going to be perfect. On top of that, we will strive to make sure that as many people as possible are reached by the scheme— but we think that it has reached the vast majority of eligible customers. We are targeting communications at heat suppliers with vulnerable customers, including housing associations and local authorities, and we will continue to do so.
The noble Lord, Lord Vaux, raised an important question—not at all related to this statutory instrument—about the distortions of gas and electricity pricing, and the protections provided to customers as part of that. It is fair to say that this is a big issue that we are concerned about. Ultimately, the answer to the noble Lord’s question is that, as the amount of gas on the network declines and the amount of gas used to generate power declines, prices will stabilise and there will be a steady decoupling. There are no immediate solutions to that. Perhaps it would be more sensible for me to write to the noble Lord with more detail on the considerations that have gone into this, because a lot of work has gone on, including a lot of studying of the market to see how we can improve it. I recognise that many people consider that they are getting renewable electricity through their suppliers, but the price that they receive for it reflects the cost of gas in the system, because it is a centralised market. I recognise that people see that as anomalous, and we are looking closely at this.
As I said, we recognise that customers on heat networks are not currently protected by the same set of protections as other customers, so in future they will be protected by Ofgem via the regulations that I mentioned earlier. The noble Earl, Lord Russell, raised concerns about the impact on vulnerable customers on communal networks. Careful consideration has been given to equality when amending these regulations. We are fully aware that heat networks are more likely than other comparable heat sources to serve vulnerable and elderly customers, which is why we have carried out a number of activities to try to ensure that they receive the support to which they are entitled. We continue to engage with stakeholders such as the Heat Trust to learn about any issues with the customer journey, such as on the pass-through, and any other heat networks struggling with their applications so that we can continue to provide them with support.
Lord Lennie (Lab)
In the unlikely event that a customer takes a heat network to a court or ombudsman before the scheme closes, I presume that that application could continue beyond 31 March if it is not resolved by then and that the payment could duly be made.
Lord Callanan (Con)
That is indeed the case. The application would continue beyond 31 March. Even after the scheme has ended, the responsibility of the supplier during the application of the scheme continues to be legally valid and therefore it is possible to take retrospective action against a heat supplier that has not fulfilled its legal obligations.
National Minimum Wage (Amendment) (No. 2) Regulations 2024
(8 months, 2 weeks ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Offord of Garvel
That the Grand Committee do consider the National Minimum Wage (Amendment) (No. 2) Regulations 2024.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Scotland Office (Lord Offord of Garvel) (Con)
My Lords, the purpose of these regulations, which were laid before the House on 31 January, is to raise the national living wage and the national minimum wage rates on 1 April 2024.
The Government will increase the national living wage for workers aged 21 years and over by 9.8%, to £11.44 an hour. This record cash increase of £1.02 per hour means that we will hit this Government’s long-term target for the national living wage to equal two-thirds of median earnings for those aged 21 and over in 2024. With this national living wage uplift, this Government are also delivering their long-held ambition to extend the national living wage to workers aged 21 and over, as we reduce the age threshold from 23 and over this April, meaning that those aged 21 or 22 will see a £1.26 cash increase in their hourly pay.
This is a historic moment, as we are ending low hourly pay for those on the national living wage in the UK. The UK was the first country in the world to set such an ambition, and we are now proud to achieve it. A full-time worker on the national living wage will see their gross annual earnings rise by over £1,800 per annum. In total, the average earnings of a full-time worker on the national living wage will have increased by over £8,600 since it was announced in 2015. That is double the rate of inflation.
The Government will also increase wages for young people under the age of 21. For those aged 18 to 20, the national minimum wage rate will increase to £8.60, which is an increase of 15%. For those aged under 18, the national minimum wage will increase to £6.40 an hour, which is an increase of 21%. The minimum hourly wage for an apprentice under the age of 19, or in the first year of their apprenticeship, will increase to £6.40 an hour, an increase of 21%. The accommodation off-set will also see an increase to £9.99.
The new rate increases are based on recommendations from the Low Pay Commission, following its extensive consultation with stakeholders and consideration of the current economic data and circumstances. The Low Pay Commission is an independent expert body made up of employer and worker representatives and independent commissioners. This year has seen some challenging economic circumstances for both workers and employers, including high inflation. When the Low Pay Commission recommended the new rates for the minimum wage, it took into account many of these economic circumstances, including how affordable the rate increases are for businesses and the current state of the economy. By accepting these recommendations from the Low Pay Commission, the Government are striking the right balance between the needs of workers and the affordability to business, while also ensuring that we deliver on our long-term commitments on the national living wage.
The Government would like to place on record their thanks to the Low Pay Commission, its previous chair Bryan Sanderson and the commissioners for their commitment to gathering thorough evidence and providing these recommendations. I also welcome the noble Baroness, Lady Stroud, to her role as the new chair of the Low Pay Commission.
We expect that this increase to the minimum wage will put more money in the pockets of around 3 million of the lowest-paid people in every corner of the country. The new rates are due to come into force on 1 April 2024. In the meantime, any worker who is concerned that they are not being paid the correct wage should check their payslip and speak with their employer. If the problem is not resolved, they can contact ACAS or complain to HMRC.
Since 2015, the Government have more than doubled the budget for compliance and enforcement to £27.8 million in 2022-23. HMRC enforces the national living wage and national minimum wage on behalf of my department. I thank HMRC for its ongoing work with employers and workers to ensure that all workers receive the pay they are due and help give businesses the right resources to stay national minimum wage compliant.
I remind the Grand Committee that, on 1 April, regulations will also come into force to ensure that so-called live-in domestic workers are paid at least the relevant minimum wage rate, providing protection from exploitative low pay. This will help protect these workers, giving them a new right to the entitlement to the national living and minimum wage for the first time. These regulations, alongside the regulations debated today, will aim to reward the lowest-paid workers in every sector and in every part of the country for their contribution to our economy.
This Government are aware of the cost of living pressures and will continue to closely monitor all the impacts of increases to the national living wage and national minimum wage rates on workers and businesses alike. We will continue to carefully monitor economic developments as the NLW target is implemented. The Government will shortly publish this year’s remit to the Low Pay Commission and ask it to provide recommendations for the rates, which will apply from April 2025.
Lord Leong (Lab)
My Lords, we are pleased to welcome this instrument and thank the Minister for introducing these regulations. As he referred to, they implement the recommendation from the Low Pay Commission to lower the age of eligibility for the national living wage from 23 years old to 21 years old. We also welcome the inflation-related annual increases in the national minimum wage and in the apprentice hourly rates for those aged under 21.
However, even after the increases enabled by this instrument come into effect on 1 April this year, under-18s will earn just £6.40 per hour, while 18 to 20 year-olds will earn only £8.60 per hour. Unfortunately, as young people know, most shops, landlords and services do not offer lower prices for customers aged under 21. Ironically, many of these businesses actually employ people under 21 on the national minimum wage. What further sanctions will apply to businesses that do not pay the national minimum wage?
If we are privileged to be elected, the next Labour Government will use its New Deal for Working People to eradicate in-work poverty by tackling the structural causes of inequality. We are committed to raising the national living wage to ensure that it is adequate and addresses the rise in the cost of living and inflation. Having a national minimum wage that does not reflect the actual cost of living particularly impacts people who do not have family who can support them; care leavers are one severely affected group.
Some of the most disadvantaged and economically insecure young people in the country, even if they try to do the right thing and work hard, can find themselves unable to meet basic costs. As most noble Lords know, the previous Labour Government proudly introduced the national minimum wage. The next Labour Government would make sure that the national living wage actually lives up to its name. We would ensure that a genuine national living wage is applied to every adult worker and is properly enforced, because we know that giving working people more money in their pocket means that more money will be spent in their community and in the everyday economy, nourishing their neighbourhoods and creating more and better-paid jobs locally.
Without hesitation, we support these regulations. I look forward to the Minister’s response to my question about sanctions.
Lord Offord of Garvel (Con)
I thank the noble Lord for his contributions to today’s debate. As I said, these updated regulations will reward low-paid workers right across the country for their contribution to our economy.
I will deal with some of the points made, especially in relation to our young people. As was discussed in the Chamber recently, it is crucial that we get young people into work immediately after they come out of school. If at that point in their early careers, they do not have the skills to make that wage, we must not lock them out. The graduated scheme to allow them to come in at the lower rate and move up as they get to 21 is similar to what any of us who have been in work experienced. When we started out and were relatively unskilled, we were on a lower wage rate, and then we graduated to the national minimum wage aged 21. That is a perfectly reasonable graduation scheme for our young people. We know the impact on their lives of not getting into work immediately—it can create a lifetime wage scar—so it is very important that we do not lock them out of the market at the most formative period of their working life.
On sanctions, HMRC administers the scheme. We very actively monitor who is not paying the right rate. Every year, we do a very public name and shame on those companies—sometimes some well-known names are named—which we know has a major impact on behaviour. There are sanctions that can be applied by HMRC directly to companies that do not comply.
It is absolutely fair to congratulate the previous Labour Government on introducing the minimum wage. The noble Lord referred to a possible change of Government, but a note of caution is that we must take businesses with us on this journey. There are 5.5 million companies in the UK, of which 99% are SMEs. That is why the Low Pay Commission is so crucial to this debate: it sets what is considered to be a fair rate. Bearing in mind that the burden will fall on businesses—this will cost £3 billion over the next five years—we need to get the right rate.
I will make one more point on that. Prior to this Government being in place, our lowest-paid cohort had a higher percentage of their annual income coming from benefits. Today, a higher percentage comes from earnings, so we have been successful in moving that cohort into work. I emphasise that a full-time worker on the national living wage is earning £8,600 more today than in 2015. That will be an increase of 70% by 1 April this year. As inflation has been 35% in that time, this cohort has had a double increase in their wages. We are now in a position to say that with the national living wage being set at two-thirds of median earnings, that cohort has been taken out of low pay, which is defined as being below two-thirds of median earnings. There are now 1.5 million people on the national living wage who are no longer in that category.
We are proud of the Government’s record of delivery. We have achieved our target of the national living wage reaching two-thirds of median earnings for all workers aged 21 and over. I again extend my thanks to the Low Pay Commission, which is very important. Its independent and expert advice means we can ensure that the right balance is struck between the needs of workers, affordability for business and the wider impact on the economy. We look forward to receiving its recommendations for the 2025 rates, which will be published later this year.