Draft Armed Forces Act 2006 (Continuation) Order 2024

Tuesday 15th October 2024

(1 day, 13 hours ago)

General Committees
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The Committee consisted of the following Members:
Chair: Dame Siobhain McDonagh
† Asser, James (West Ham and Beckton) (Lab)
† Beales, Danny (Uxbridge and South Ruislip) (Lab)
† Blake, Rachel (Cities of London and Westminster) (Lab/Co-op)
† Carns, Al (Minister for Veterans and People)
† Griffiths, Alison (Bognor Regis and Littlehampton) (Con)
† Kitchen, Gen (Wellingborough and Rushden) (Lab)
† Kruger, Danny (East Wiltshire) (Con)
† Maguire, Helen (Epsom and Ewell) (LD)
† Mohindra, Mr Gagan (South West Hertfordshire) (Con)
† Murphy, Luke (Basingstoke) (Lab)
† Nash, Pamela (Motherwell, Wishaw and Carluke) (Lab)
† Obese-Jecty, Ben (Huntingdon) (Con)
† Paffey, Darren (Southampton Itchen) (Lab)
† Race, Steve (Exeter) (Lab)
† Roca, Tim (Macclesfield) (Lab)
† Roome, Ian (North Devon) (LD)
† Snell, Gareth (Stoke-on-Trent Central) (Lab/Co-op)
George James, Committee Clerk
† attended the Committee
The following also attended (Standing Order No. 118(2)):
Hopkins, Rachel (Luton South and South Bedfordshire) (Lab)
First Delegated Legislation Committee
Tuesday 15 October 2024
[Dame Siobhain McDonagh in the Chair]
Draft Armed Forces Act 2006 (Continuation) Order 2024
09:25
Al Carns Portrait The Minister for Veterans and People (Al Carns)
- Hansard - - - Excerpts

I beg to move,

That the Committee has considered the draft Armed Forces Act 2006 (Continuation) Order 2024.

I am pleased to see you in the Chair, Dame Siobhain. The purpose of the draft order is to extend for a further year the legislation governing the armed forces. That reflects a constitutional requirement under the Bill of Rights 1688 that a standing Army, and now by extension the Royal Navy and the Royal Air Force, cannot be maintained without the consent of Parliament.

In our increasingly dangerous and disordered world, I need not remind hon. Members of the importance of our consent today. From the frontline in Ukraine, where there are more than 1,000 casualties a day, to the hundreds of attacks on the UK in cyberspace, our allies, our democracy and our international rules-based system are under daily attack, threatening our physical and economic security and our hard-won freedoms, and undermining national cohesion. In the face of that, the dedicated men and women of our armed forces selflessly and courageously step forward day and night, making great personal sacrifice, to deliver on the Government’s first and most important duty: to keep this nation safe and to protect our citizens.

But it is not just about safety; it is about security and stability. We cannot have prosperity without a safe, secure and stable nation. We cannot be safe at home and strong abroad without our armed forces. They are a critical security, diplomatic and humanitarian national asset. Whether they are exercising with NATO allies, training Ukrainians and getting military aid into their hands, delivering lifesaving food and aid to families in Gaza, or supporting flood victims in Poland, we must collectively renew our consent for that important work every five years by an Act of Parliament.

The draft order will keep the Armed Forces Act 2006 in force for a further year, until December 2025. That will ensure that our armed forces can continue to serve, and it will maintain the provisions that underpin the system of command, justice and discipline. It is a privilege to seek cross-party support from the Committee for the order, and in doing so I pay tribute to those who have served, those who are serving and the wider armed forces community. By defending our country, they give the ultimate in public service.

09:27
Danny Kruger Portrait Danny Kruger (East Wiltshire) (Con)
- Hansard - - - Excerpts

I start by paying tribute to the Minister and welcoming him to his place. The Labour Front Bench, and indeed the whole House, is greatly enhanced by his presence, and I pay tribute to him and to his speech. I look forward to working with him on the important matters in the brief that we share.

The previous Government renewed the Armed Forces Act 2006, including through the Armed Forces Act 2021 and the Armed Forces Act 2006 (Continuation) Order 2023. Of course, we support today’s draft order. As the Minister mentioned, it reflects the constitutional principle that goes back many hundreds of years to the Bill of Rights in the 17th century, when Parliament insisted on its own right to approve the presence of a standing Army. That was in the days when the rest of Europe suffered under absolute monarchy; who knew our Parliament could insist on the rights and liberties of British subjects on its own? I am pleased to be standing in the tradition set all those years ago.

As is customary in these debates, I pay tribute to our armed forces. I have the great privilege of representing East Wiltshire. Thousands of serving personnel are stationed at the camps and garrisons at Tidworth, Netheravon, Bulford, Larkhill, Perham Down and Upavon. I was recently taken up on to Salisbury plain by the commander of the Army’s south-west region, and he showed me with a sweep of his arm where 20,000 British service personnel and their families live. I represent what I call the home of the British Army, despite what it says outside Aldershot.

We have the best people in the world serving in our armed forces. They keep us safe in a world fraught with risk and threats, and we must give them the tools they need. Labour Members will not be surprised to hear me reiterate once again the absolute imperative for a clear pathway for increasing defence spending to 2.5% of GDP by 2030. That is a paramount requirement, and if the Government do not commit to it now or at the Budget in a few weeks, there is a real risk of defence cuts at the worst possible time for our armed forces, when countries around the world are doing the exact opposite—rearming and increasing defence spending in order to prevent escalation and keep their people safe. At oral questions yesterday, Ministers could not even commit that defence training or research and development will have their budgets protected in the upcoming Budget. We should not beat around the bush: cuts in these areas would undermine our armed forces and our security.

Our support for the draft order is total, but we are implacably opposed to any cuts in spending, including by delaying the increases that the Government have—at least in principle—committed to in due course. The real test of our commitment to the armed forces is whether we are prepared to make that spending commitment soon.

None Portrait The Chair
- Hansard -

Members should bob in the normal way if they would like to speak. Do I see anybody from the Liberal Democrats? I call Helen Maguire.

09:30
Helen Maguire Portrait Helen Maguire (Epsom and Ewell) (LD)
- Hansard - - - Excerpts

I want to express my support for the draft order. Ensuring the security of our country must be the foremost priority of any Government and we must take defence seriously and work with allies to protect all of our freedoms.

The Conservative Government’s approach to defence was negligent, leaving our armed forces under-resourced and vulnerable. Reducing troop numbers by 10,000 was reckless and delays in procurement have deprived our armed forces of the tools that they desperately need. Further, service personnel and veterans have been failed with insufficient mental health support, poor housing and inadequate care. Our military personnel deserve better.

Although the draft order is straightforward, its significance cannot be overstated. It allows us to honour our armed forces while also questioning what the Government are doing to ensure that they are well prepared and supported, including providing the necessary resources and procurement, ensuring equipment is adequate and free from health risks, offering sufficient accommodation, supporting their mental health and maintaining an adequate personnel level.

As a former member of the military police, I understand at first hand the importance of discipline in the military. It is discipline that binds every service member, ensures the chain of command functions and enables operational success. That is why the Armed Forces Act 2006 and its annual extensions through orders such as this one are so critical. The Act empowers commanding officers to maintain order and enforce discipline.

We must thank our brave armed forces for their continued work at home and overseas. We support the passage of the draft order and look forward to hearing what advances the Government will make with the strategic defence review.

09:32
Rachel Blake Portrait Rachel Blake (Cities of London and Westminster) (Lab/Co-op)
- Hansard - - - Excerpts

I thank the Minister for bringing the order forward and I welcome him to his place. I am grateful to him for joining me on a visit to see the innovation that is taking place at St Mary’s hospital in my constituency. I particularly welcome the order as we approach Remembrance Sunday and that period of reflection about the service of our armed forces. I also welcome the progress that the Government are already making on housing for veterans. My constituency contains barracks but also some housing that has been left in a terrible state, and I look forward to working on that issue to support veterans.

None Portrait The Chair
- Hansard -

I see no other Members bobbing, so I call the Minister to sum up.

09:32
Al Carns Portrait Al Carns
- Hansard - - - Excerpts

I am grateful for the cross-party collaboration on the draft order and for the support that the Committee has given it.

Let me provide a bit more detail on some of the points raised, first by the hon. Member for East Wiltshire. As a former serving member of the military, I understand the difficulties in balancing the budget. Over the last 24 years, including the 14 years in which his party were in government, I have been through different exercises that have been cut, chopped and changed because of those difficulties. That is not to say, in any way, shape or form, that we are going to cut training, but decisions are always made within the system to ensure that resources go in the right place at the right time for the required effect.

On the route towards 2.5%, as the Prime Minister has said, we absolutely have committed to that, but we must do it on a balanced trajectory, at the right time—not too early or, indeed, too late. It is about getting the timing exactly right, but there is no doubt that the commitment sits with this Government to move towards 2.5%.

To cover some of the points raised by the hon. Member for Epsom and Ewell, there are some excellent programmes that have been running for some time now, which we will absolutely continue to move forward, on mental health, physical health and housing. We are also looking at different methods to redesign some of our veterans support, and we will publish a veterans strategy next year, which will outline some of those projects.

Finally, let me say in response to my hon. Friend the Member for Cities of London and Westminster that support on housing, as mentioned by the Prime Minister in his conference speech, will absolutely move forward. We are looking at ways of making sure that every veteran across the country has access to housing, and that those who serve get the deal that they deserve.

I thank hon. Members for upholding the constitutional position of our armed forces.

Question put and agreed to.

09:35
Committee rose.

Draft Misuse of Drugs Act 1971 (Amendment) (No. 2) Order 2024

Tuesday 15th October 2024

(1 day, 13 hours ago)

General Committees
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The Committee consisted of the following Members:
Chair: Clive Efford
† Bailey, Mr Calvin (Leyton and Wanstead) (Lab)
† Bedford, Mr Peter (Mid Leicestershire) (Con)
† Bishop, Matt (Forest of Dean) (Lab)
† Bool, Sarah (South Northamptonshire) (Con)
† Botterill, Jade (Ossett and Denby Dale) (Lab)
† Dean, Bobby (Carshalton and Wallington) (LD)
† French, Mr Louie (Old Bexley and Sidcup) (Con)
† Johnson, Dame Diana (Minister for Policing, Fire and Crime Prevention)
† Law, Noah (St Austell and Newquay) (Lab)
† Mather, Keir (Selby) (Lab)
† Murray, Katrina (Cumbernauld and Kirkintilloch) (Lab)
† Osborne, Tristan (Chatham and Aylesford) (Lab)
† Payne, Michael (Gedling) (Lab)
† Powell, Joe (Kensington and Bayswater) (Lab)
† Sewards, Mr Mark (Leeds South West and Morley) (Lab)
Smart, Lisa (Hazel Grove) (LD)
† Vickers, Matt (Stockton West) (Con)
Sanjana Balakrishnan, Committee Clerk
† attended the Committee
Second Delegated Legislation Committee
Tuesday 15 October 2024
[Mr Clive Efford in the Chair]
Draft Misuse of Drugs Act 1971 (Amendment) (No.2) Order 2024
09:25
Diana Johnson Portrait The Minister for Policing, Fire and Crime Prevention (Dame Diana Johnson)
- Hansard - - - Excerpts

I beg to move,

That the Committee has considered the draft Misuse of Drugs Act 1971 (Amendment) (No. 2) Order 2024.

It is a real pleasure to serve under your chairmanship, Mr Efford, especially as this is the first time that I have had the pleasure of addressing this Committee after a 14-year break. I am grateful to the Advisory Council on the Misuse of Drugs, known as the ACMD, for its advice which has informed this draft order.

The draft order was laid before Parliament on 2 September. The purpose of the order is to amend schedule 2 to the Misuse of Drugs Act 1971, the MDA, to control six substances and introduce a generic definition for nitazenes as class A drugs, and to control sixteen substances as class C drugs. The draft order also seeks to add clarity to the control of an existing class B drug, by adding an additional common name and its International Union of Pure and Applied Chemistry name to its entry.

Following the 66th session of the United Nations Commission on Narcotic Drugs, the synthetic opioid 2-methyl-AP-237 was added to schedule 1 of the single convention on narcotic drugs of 1961, to which the UK is a signatory. New synthetic opioids are a substantial current public health threat. They have similar effects to well-known opioids such as morphine and heroin, although some can be more potent. With a high potential for addiction and dependence, lower doses of these substances can lead to the same effects as other opioids. They have an increased risk of accidental overdose, which can lead to life-threatening outcomes.

In its report of 27 March 2024, the ACMD considered the harms of 2-methyl-AP-237 but also provided advice on closely related acyl piperazine opioids. The ACMD noted the likelihood of further increases in their prevalence, as well as the potential health and social harms associated with specific acyl piperazine opioids.

The draft order follows the recommendations from the ACMD and therefore seeks to control four named acyl piperazine opioids and two chemically bridged acyl piperazine derivatives, which includes 2-methyl-AP-237, as class A drugs under the MDA.

Under the MDA, there are a number of nitazenes, another type of synthetic opioid, that are already controlled as class A drugs. However, more needs to be done to reduce the opportunity for criminals to circumvent existing controls by making minor alterations to the chemical structure of existing named nitazenes under control. That is why the draft order implements the ACMD proposal to introduce a generic definition of nitazenes. The intention is to future-proof the legislation by covering known and predicted variants likely to present a significant risk to health. The ACMD has published four updates to address new structurally-related compounds under the definition. As such, the draft order introduces a generic definition for nitazenes as a class A drug under the MDA.

Benzodiazepines are sedatives known for use in various treatments including anxiety, insomnia and epilepsy. In recent years, we have seen an increase in the non-medical use of novel benzodiazepines. They and related compounds have been associated with significant health harms. Since the ACMD’s last report in 2020, further benzodiazepines and related compounds have been identified that are not controlled under the MDA. As such, the ACMD published new recommendations in March 2024. The ACMD recommended 15 compounds for control, none of which are licensed as medicines in the UK. As such, in line with the ACMD advice, the draft order seeks to control 15 benzodiazepines and related compounds as class C drugs under the MDA.

Xylazine is a non-opioid tranquilizer that has been approved for use in veterinary medicine. However, we have seen an increase, both internationally and in the UK, in its illicit use. Xylazine is being used to adulterate illicitly manufactured opioids such as fentanyl to produce a mixture which is known as “tranq” in the USA. Xylazine can dangerously lower an individual’s level of consciousness, especially if combined with other sedatives. So, the draft order seeks to control xylazine as a class C drug under the MDA, as recommended by the ACMD.

The draft order also amends the entry for methoxyphenidine, to add an additional common name and its full international standardised name. This does not affect the existing control of the substance as a class B drug, but adds clarity on exactly which drug is controlled, given that there are multiple common names.

If made, this order will mean that these substances will be subject to control under the MDA. Furthermore, enforcement agencies, such as the police, will have the appropriate powers to further restrict the supply and use of these substances.

While nearly all these substances are likely to be captured by the Psychoactive Substances Act 2016, the control of these substances under the MDA will enable higher penalties for their supply, as well as introducing a possession offence with wider reach. Those who supply or produce a class A drug could face up to life imprisonment, an unlimited fine, or both. For a class C, this could be up to 14 years’ imprisonment, an unlimited fine or both. Those found in unlawful possession face up to seven years in prison for a class A and up to two for a class C, with an unlimited fine, or both.

In addition to this order, a further statutory instrument will be introduced, via the negative resolution procedure. This is to make various amendments to the Misuse of Drugs Regulations 2001, known as the MDR and, if necessary, the Misuse of Drugs (Designation) Order 2015, to schedule and designate the newly controlled drugs, as appropriate. This follows the ACMD advice and will ensure that they will only be available for research or other special purposes under a Home Office licence.

As xylazine has legitimate use as a veterinary medicine, it will be placed in schedule 4, part 1 of the MDR to enable its continued legitimate use.

It is the Government’s intention that these amendments will come into force on the same date as this affirmative order, in early 2025.

The ACMD has provided helpful independent, detailed advice on the harms associated with these substances. We have a responsibility to protect the public against dangerous substances and will continue to act as swiftly as we can to ensure appropriate controls are in place.

I hope Members will approve this draft order and support the Government’s position to ensure that all 22 substances, as well as those caught by the generic definition for nitazenes, be subject to strict controls. I therefore commend the order to the Committee.

09:33
Matt Vickers Portrait Matt Vickers (Stockton West) (Con)
- Hansard - - - Excerpts

It is a pleasure to serve under your chairmanship, Mr Efford. I thank the Minister for her comments and statements. I also thank the ACMD and its chair, Professor Owen Bowden-Jones, for their continued work in providing advice to the Government in this critical area of focus.

In May, the previous Government accepted all five recommendations set out in the ACMD’s March 2024 report, and I welcome the new Government’s continued commitment to accept the recommendations set out in the report. The measures set out in this order will build upon the previous Government’s work to mitigate the very real threat of synthetic opioids across the UK, after previously banning 15 new synthetic opioid drugs.

The conclusions of the Advisory Council’s March 2024 report made clear the substantial risk that the Taliban’s ban on growing opium poppy for heroin production in Afghanistan may result in an increase in the appearance of new synthetic opioids. The March report adds that specifically listing currently identified compounds for control is the simpler approach, but risks being overtaken in the future by the development of further variants.

The House of Lords Secondary Legislation Committee noted that the Home Office would

“need to remain agile in amending the definition to capture new variants.”

What steps are being taken to ensure that the Government remain vigilant to ensure that any variants beyond the scope of this amendment are spotted, and further amendments are made accordingly? Is the Minister confident that the Department and the ACMD are equipped to act in a timely manner to make further necessary amendments?

Of course, other drugs are also affected by the order. Xylazine—also known as “tranq”—is increasingly being used with opioids and being involved in overdose deaths in the United States, and is seen as an emerging threat. The previous Government welcomed and accepted the ACMD’s recommendations, and I welcome the fact that the incumbent Government are continuing to categorise xylazine as a class C drug. To that end, can the Minister provide reassurance that the Department will robustly monitor the impact of categorising xylazine as a class C drug and take any further precautions accordingly to ensure that the Government do their duty in reducing the tragic number of drug-associated deaths?

Lastly, what reflection does the Minister have on the ability to sentence for drugs misuse in the context of the Government’s decision to release low-level offenders early?

09:36
Diana Johnson Portrait Dame Diana Johnson
- Hansard - - - Excerpts

I am grateful for the shadow Minister’s comments, particularly on the situation in Afghanistan; we need to remain very mindful of that. I will now respond to his questions.

It is absolutely right that we remain vigilant, and I am confident that the ACMD has the resources to do so. It has the power to access whatever information it needs about new variants coming into circulation. That is really important. In today’s proceedings we are very much taking a belt-and-braces approach, to make sure that we are ahead of the game wherever possible. I am confident that the ACMD will allow us to do that; we may well be back here in future if it provides further advice.

On xylazine, I take the point that we should keep an eye on how the legislation is working. As I said, it is a medicine that is used in veterinary science, and we need to make sure that it is still being used in the same way and that there are no problems with that. We also need to be mindful whether it is also being used in different ways. So, we absolutely remain vigilant. This is an area that I am particularly interested in and I will continue to look at these things as often as I can.

The hon. Gentleman referred to how the order could have issues around law enforcement and prisons. It is worth referring to the impact assessment and economic note that have been produced. Clearly, the law enforcement response is expected to be reasonably managed within existing resources; that is set out in the impact assessment. That is due to the relatively low levels of detection of these substances compared with other controlled substances, and the likelihood that such drugs are often possessed and trafficked with other substances already controlled under the Misuse of Drugs Act 1971. The police and other law enforcement agencies are operationally independent, as the shadow Minister knows, but we do expect them to prioritise resources in tackling crime, including drug-related crime, with a focus on those offences that cause the most harm.

I think we all agree that these are dangerous substances with potential to cause significant harm to individuals and society. It is right that all the substances that we have discussed today are put under strict controls under the 1971 Act. I therefore commend the order to the Committee.

Question put and agreed to.

09:39
Committee rose.

Draft Insurance and Reinsurance Undertakings (Prudential Requirements) (Amendment and Miscellaneous Provisions) Regulations 2024

Tuesday 15th October 2024

(1 day, 13 hours ago)

General Committees
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The Committee consisted of the following Members:
Chair: Peter Dowd
† Brandreth, Aphra (Chester South and Eddisbury) (Con)
† Cocking, Lewis (Broxbourne) (Con)
† Collier, Jacob (Burton and Uttoxeter) (Lab)
† Cooper, Daisy (St Albans) (LD)
† Davies, Paul (Colne Valley) (Lab)
† Dollimore, Helena (Hastings and Rye) (Lab/Co-op)
† Ellis, Maya (Ribble Valley) (Lab)
† Ferguson, Mark (Gateshead Central and Whickham) (Lab)
† Francis, Daniel (Bexleyheath and Crayford) (Lab)
Gibson, Sarah (Chippenham) (LD)
† Hurley, Patrick (Southport) (Lab)
† Joseph, Sojan (Ashford) (Lab)
† Mak, Alan (Havant) (Con)
† Siddiq, Tulip (Economic Secretary to the Treasury)
† Simmonds, David (Ruislip, Northwood and Pinner) (Con)
† Strathern, Alistair (Hitchin) (Lab)
† Wakeford, Christian (Bury South) (Lab)
Chloe Smith, Committee Clerk
† attended the Committee
Third Delegated Legislation Committee
Tuesday 15 October 2024
[Peter Dowd in the Chair]
Draft Insurance and Reinsurance Undertakings (Prudential Requirements) (Amendment and Miscellaneous Provisions) Regulations 2024
16:30
Tulip Siddiq Portrait The Economic Secretary to the Treasury (Tulip Siddiq)
- Hansard - - - Excerpts

I beg to move,

That the Committee has considered the draft Insurance and Reinsurance Undertakings (Prudential Requirements) (Amendment and Miscellaneous Provisions) Regulations 2024.

It is a pleasure to serve under your chairmanship, Mr Dowd. The UK’s financial services sector is central to driving growth in the wider UK economy. The Government have committed to reinvigorating the UK’s capital markets, driving innovation and investment in the economy, and enabling the growth and scale-up of innovative green technologies. To that end, we are taking action to address barriers to both the supply of and demand for UK productive investments.

This statutory instrument forms part of a package of reforms to the assimilated EU law that governs the rules that maintain the safety and soundness of UK insurance firms, known as Solvency II. The reforms address demand-side barriers by reducing insurers’ regulatory capital requirements, releasing billions into firms’ balance sheets and incentivising insurers to invest in the UK. These legislative reforms were announced in November 2022 and came into force on 31 December 2023 and 30 June 2024. This statutory instrument makes necessary provision to maintain the reforms and the wider regulatory regime on the revocation of the relevant assimilated EU law on 31 December 2024.

In summary, this statutory instrument preserves a significant cut in the regulatory capital buffer known as the risk margin, maintains the regulatory requirements on insurance groups and undertakings in Gibraltar, and makes further amendments required as a result of changes to the Financial Services and Markets Act 2000 and other legislation.

I will now turn to the detail of what the regulations do. They restate provisions on the calculation of the capital buffer known as the risk margin that would otherwise be repealed at the end of this year. They also affirm the Prudential Regulation Authority’s power to make rules permitting insurers to adopt proportionate approaches to determine the risk margin. The regulations provide that UK supervisory arrangements for Gibraltarian firms will continue unchanged until the broader Gibraltar authorisation regime, legislated for in the Financial Services Act 2021, comes into force.

The regulations empower the PRA to publish results for individual firms within scope of the PRA’s life insurance stress tests, which are generally the largest firms in the life sector. That is in addition to the sector-level results that the PRA has been publishing since 2019. This safeguard provides additional transparency to the market around the resilience of life insurers. It mirrors the approach taken for the results of stress tests for banks.

Finally, the regulations make a number of technical amendments to existing legislation, including the Financial Services and Markets Act 2000, to support implementation of the Government’s package of Solvency II reforms. For example, the regulations amend the definition of both insurance and reinsurance, undertaking to remove references to assimilated EU law. They also remove the definitions of third-country insurance undertaking and third-country reinsurance undertaking, which are not relevant now that the UK is not part of the EU.

Other parts of the regulations make changes that are consequential to the proper functioning of the reformed regime, including for the necessary retention of the risk margin and Gibraltar regulations that I have already noted.

The regulations may sound quite technical, but they are an essential component to complete reforms to the prudential regulatory regime for insurers by the end of this year. The hon. Member for Havant, who sat on the Government side when we went through the entire Financial Services and Markets Act, will be well briefed on what we are doing. I hope the Committee will join me in supporting the regulations and I commend them to the House.

16:34
Alan Mak Portrait Alan Mak (Havant) (Con)
- Hansard - - - Excerpts

It is a pleasure to serve under your chairmanship, Mr Dowd. I am pleased to inform the Committee that we intend to support today’s statutory instrument, because it continues the essential reforms to Solvency II started by the previous Conservative Government, as the Minister said, of which I was a member.

The financial services industry employs more than 2 million people in the UK. While two thirds of the workforce operates outside of the south-east, financial services have made London the world’s largest international financial centre. Prudential regulation ensures that insurance firms act safely and reduces the chance of them getting into financial difficulty. It is therefore vital that Solvency II, the framework governing the prudential regulation of insurance firms, reflects the unique structural features of the UK insurance sector. The financial services sector must have the right architecture to provide the best possible security for investors and sufficient capital for businesses.

Following close engagement with industry, the Conservative Government developed detailed plans to reform Solvency II. These reforms were designed to ensure a vibrant and prosperous insurance sector, striking a careful balance between boosting growth and maintaining high standards of policyholder protection. They help ensure the safety and soundness of firms, requiring insurers to hold enough capital to withstand a one in 200-year shock, and could help spur a vibrant, innovative and internationally competitive insurance sector, unlocking £100 billion of productive investment to grow the economy over the next 10 years.

We on the Conservative Benches welcome the Government’s decision to continue our plans to reform Solvency II; we therefore support this statutory instrument and will not divide the Committee.

16:36
Daisy Cooper Portrait Daisy Cooper (St Albans) (LD)
- Hansard - - - Excerpts

It is a pleasure to serve under your chairmanship, Mr Dowd. We Liberal Democrats agree in principle that Solvency II had to be reformed in the UK to encourage more productive investment. Our EU counterparts clearly felt the same, reforming Solvency II in their jurisdiction as well.

Were it up to us, we might have placed a greater emphasis on dynamic alignment with the EU, to make it easier to do business across borders and to prevent the creation of additional red tape that could come from the extra reporting costs that may face firms. Additionally, we might have placed a greater emphasis on encouraging specific tax investments as well—for example, in green infrastructure. None the less, we are where we are. We welcome the fact that the reforms should lead to, in theory, more productive investment.

One issue I would flag to the Minister is that it is currently not clear whether the new regime will end up being more risky than the new EU regime, partly because a lot will depend on how the respective rules are implemented but also because different types of insurance are bought in the EU and the UK. I would be grateful if the Minister could reassure us that there are plans in place, or that they would consider putting plans in place, to review the risk that may emerge from this in years to come.

16:37
Tulip Siddiq Portrait Tulip Siddiq
- Hansard - - - Excerpts

I associate myself with the comments of the hon. Member for Havant on the ambition and resilience of our financial services sector. I agree that we should be very proud of it.

In response to the point made by the hon. Member for St Albans, I will keep an eye on and will review the risk she mentions. She will be pleased to know that this Government are resetting the relationship with the EU, by not ramping up divisive rhetoric with our closest trading partners. We are making sure we have a productive relationship with them. I will keep an eye on the risk she mentions.

I thank both hon. Members for sharing our ambition in Solvency II. I know that the reforms are technical in nature, but they are an important step in our shared hope, across the Chamber, to reform the UK’s insurance sector. We all want to generate growth and investment in our country and I hope the Committee will support me in supporting these reforms. We want to have a smooth transition to the reformed Solvency II regime by the end of this year.

Question put and agreed to.

16:39
Committee rose.