Draft Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024
Draft Unique Identifiers (Application of Company Law) Regulations 2024
(2 days, 9 hours ago)
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The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)
I beg to move,
That the Committee has considered the draft Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024.
The Chair
With this it will be convenient to discuss the draft Unique Identifiers (Application of Company Law) Regulations 2024.
Justin Madders
It is a pleasure to see you in the Chair, Mr Stringer. The registrar regulations were laid before the House in draft on 22 May 2024, and the unique identifiers regulations were laid before the House in draft on 31 October 2024. They form part of a programme to implement the Economic Crime and Corporate Transparency Act 2023.
The 2023 Act is a landmark piece of legislation that delivers the most significant reforms to Companies House in more than 180 years, in order to protect the public from fraud and deliver real benefits to the business community. There has already been much progress since the Act was passed, including the introduction of stricter rules and checks to help Companies House to cleanse the register. The two sets of regulations before us will help to implement perhaps the most important changes to the UK’s company registration framework in the Act, requiring identity verification for those setting up, running and controlling companies. The 2023 Act amended the Companies Act 2006 to establish two ways in which an individual can verify their identity: either directly with Companies House or via an authorised corporate service provider, which I will refer to as an ACSP. The providers must be supervised for anti-money laundering purposes and registered with Companies House.
I will set out specifically what the two instruments do. The draft Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024 set out the legal framework that underpins identity verification. The identity verification procedure will involve an individual delivering specific information to the registrar or to an ACSP, which must include their name, date of birth and any further information specified in the registrar’s rules, which are a form of tertiary legislation.
Given the technical and increasingly evolving mechanisms for identity verification, it would be inappropriate to list every single identity document that must be provided to the registrar or an ASCP, or every single step that an individual must take in the regulations. Instead, the registrar is enabled to specify the requirements in a more suitable form and adapt or tweak the detail quickly where necessary. Companies House has produced a draft version of the registrar’s rules—I hope that they are in the Committee Room for Members to see—which I hope will provide some examples of the kind of information that might be required from applicants. When the registrar or ACSP receives all the correct information from an applicant, they will grant the identity verification application if they are satisfied that the information provided is true. That is the broad legal process for identity verification.
In practice, Companies House will use the gov.uk One Login platform to deliver its identity verification service. One Login is a cross-government verification platform that enables users to have a single login and verified identity for multiple government services. An individual will create an account and can verify their identity using a range of evidence, such as a passport or driving licence, or through knowledge-based verification questions based on their credit record or banking information. The process also includes checks to ensure that the individual matches the picture on their photo ID. For most people completing the purely digital route, the process will take a matter of minutes. Individuals can also complete the process in person at a post office.
If an individual decides to verify via an ACSP, the ACSP must follow the legal procedure established in these regulations and in the registrar’s rules. Companies House will issue guidance to ACSPs to explain how the procedure should be applied in practice and what checks they must perform on the information received. That will ensure that both routes achieve the same level of assurance in identity verification. Once an ACSP verifies an applicant’s identity, it will deliver a verification statement to Companies House to confirm that it has followed the correct procedure. The verification statement will be published alongside the applicant’s appointments on the register to maximise transparency. Alongside this verification statement, ACSPs must give the registrar information about the evidence they relied on to verify an individual’s identity. That means that Companies House will not lose access to crucial identity data if someone uses an ACSP and will also be provided with an assurance that the identity checks have been completed correctly.
The regulations add other checks and balances to the ACSP regime. ACSPs will be required to maintain records relating to the identity verification for seven years from the date they determined the identity verification request. The registrar can suspend and de-authorise an ACSP if they do not consider it to be fit and proper to carry out the functions of an ACSP. Finally, the registrar can perform spot checks on ACSPs and ask them to provide information about their identity verification obligations. All those provisions combined ensure that Companies House has the tools at its disposal to ensure that the ACSP regime is as effective and robust as possible.
I now turn briefly to the second set of regulations, the draft Unique Identifiers (Application of Company Law) Regulations 2024. These are technical and apply provisions on unique identifiers contained in the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024 to other entities. A key mechanism underpinning the operation of identity verification is the use of a unique identifier or personal code, which we use to identify individuals who have had their identity verified, as well as registered ACSPs.
The first set of regulations we covered will enable allocation of unique identifiers to individuals associated with companies. These regulations give the registrar the power to allocate unique identifiers to ACSPs and individuals associated with other entities, namely limited partnerships, limited liability partnerships, companies authorised to register, unregistered companies, and Scottish qualifying partnerships. Identity verification requirements will eventually apply to other entities registered at Companies House, so it is necessary that we make these regulations relating to unique identifiers to ensure these requirements can operate in practice.
Finally, I want to update the Committee on the timings of identity verification. Companies House published its outline transition plan last October, which confirmed that it aims to start requiring identity verification from autumn of this year. In a few weeks, ACSPs will be able to register and individuals will be able to voluntarily verify their identity with Companies House, giving people lots of time to complete the process before legal requirements actually start.
Greg Smith (Mid Buckinghamshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Stringer.
I will start with the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024. I am pleased to see that the Government are continuing this legislation, which was first proposed in May 2024 by the previous Government. The legislation will assist Companies House to identify individuals, improve efficiency, and reduce fraud.
The Companies Act 2006 required individuals who set up, ran or controlled a company to verify their identity. Individuals may verify their identity through the registrar directly or via an authorised corporate service provider, such as an accountant or solicitor. The aim of the identity verification requirements is to prevent individuals from creating a fictitious identity or from fraudulently using another person’s identity to set up and run a company.
However, prior to the Economic Crime and Corporate Transparency Act 2023, the legal framework required Companies House to accept information from entities and individuals in good faith, with no checks to confirm that someone registered as a director or person with significant control had given their consent or was a real person. This instrument sets out the procedure that must be followed for an individual to have their identity verified or re-verified by either the registrar or an ACSP. For instance, identity verification applications must contain specific information, and this SI confers a power on the registrar to require further types of information and evidence.
The instrument also provides a framework for the suspension and de-authorisation of ACSPs judged by the registrar not to be fit and proper persons, requires ACSPs to keep particular records relating to identity verification checks they complete, and introduces duties for ACSPs to provide updated information to the registrar. The aim is to prevent nefarious agents from acting on behalf of their clients.
Finally, the regulations introduce offences if the ACSP fails to comply with the duty to keep records or provide information to the registrar upon notice. The instrument makes provisions for the allocation and discontinuation of unique identifiers, which will be allocated to all individuals who have had their identity verified and to ACSPs.
I welcome the measures taken by the Government in this SI, which builds on the work of the previous Government. However, given the importance of the legislation, I would like the Minister to provide further clarity on two areas. First, what assessment has he made of how much this measure will reduce administrative costs in Companies House? Secondly, the impact assessment made no mention of the cost for small and medium enterprises, so will the Minister say what assessment he has made in that regard?
I am pleased to see that the Unique Identifiers (Application of Company Law) Regulations 2024 also build on the good work of the previous Government through the Economic Crime and Corporate Transparency Act 2023. This statutory instrument builds on the Registrar (Identity Verification and Authorised Corporate Service Providers) Regulations 2024, by extending the provisions to individuals associated with limited partnerships and limited liability partnerships. It will assist Companies House in identifying individuals, improving efficiency, and reducing fraud.
I have two questions for the Minister on this statutory instrument. First, once again, what assessment has he made of how much it will reduce administrative costs in Companies House? Secondly—and different from the first instrument—no impact assessment was carried out for this statutory instrument, but one was conducted for the first instrument, so will the Minister explain that discrepancy?
Justin Madders
I am pleased to hear that the shadow Minister has already started using the acronym ACSP, which is very encouraging—I am sure it will enter the vernacular shortly.
In terms of the cost to businesses of individual identity verification, it will be free to businesses to log in. It is estimated that on average it will cost £10.50 to verify an individual’s identity and £2.10 to confirm verification for each appointment held. It is estimated in the impact assessment that the annual cost to UK businesses will be about £19.5 million in ongoing operational expenses. It should be said that we believe that this measure will be of benefit to legitimate businesses, enabling them to move forward with confidence that they are who they say they are. Of course, the companies register is estimated to be worth up to £3 billion to the UK economy each year, due to the amount of information that is available free to the public.
The hon. Gentleman also asked about the cost to Companies House. He will be aware that incorporation fees have been increased in recent times. Indeed, an economic crime levy has also been apportioned to Companies House, to recognise the fact that there are substantial new demands on it, and there are not substantial numbers of new staff that have been recruited to undertake these activities. However, there is no intention to increase the cost to the Treasury; rather, it is expected that these costs will be generally recovered through Companies House activities.
My understanding is that the second set of regulations would not have attracted an impact assessment due to the estimated cost to individual businesses. I will double-check that point for the hon. Gentleman and write to him if that proves to be incorrect, but I think it is normally the case that there is a £5 million floor on impact assessments, and my understanding is that these regulations did not exceed that; therefore, no impact assessment was required. On that note, I thank hon. Members for their time, and I commend the regulations to the Committee.
Question put and agreed to.
DRAFT UNIQUE IDENTTIFIERS (APPLICATION OF COMPANY LAW) REGULATIONS 2024
Resolved,
That the Committee has considered the draft Unique Identifiers (Application of Company Law) Regulations 2024.—(Justin Madders.)
Draft Clean Heat Market Mechanism Regulations 2024
(2 days, 9 hours ago)
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The Committee divided: - Ayes: 12 / Noes: 4 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Miatta Fahnbulleh)
I beg to move,
That the Committee has considered the draft Clean Heat Market Mechanism Regulations 2024.
The regulations were laid before the House on 21 November 2024. It is this Government’s mission to deliver warmer homes that are cheaper to run. Low-carbon heating is key to our efforts to lower emissions. It is also central to how we alleviate fuel poverty. Our goal is to make energy fair and affordable for all by strengthening the nation’s energy security and by reducing our reliance on fossil fuels and international markets that we cannot control. That is at the heart of everything that we are trying to do as a Department.
We have experienced a particularly cold start to 2025 and we can no longer afford to leave consumers facing high energy bills and cold, draughty homes. That is why we are charting a way forward through our warm home plan: a new approach that will result in millions of homes being upgraded and lower energy bills for families across the country. At the same time, it will back British businesses and create new opportunities for jobs and skills in every part of the country.
We are running at this. We have already set in motion the development of new standards for minimum energy efficiency in the private and social rented sectors that will lift 1 million people out of fuel poverty. We have announced changes to planning restrictions—including the removal of the outdated 1 metre rule—that will make it easier for people to install heat pumps. We are expanding our boiler upgrade scheme, almost doubling the budget to £295 million for next year, so that more people can have access to support for installing heat pumps, and we are working with the Ministry of Housing, Communities and Local Government to make sure that we are building future-proof new homes.
Making the transition to cleaner, cheaper heating is one of the most important challenges that we face as a country. We are absolutely determined to make that transition in a way that is ambitious, achievable and, critically, absolutely affordable for consumers. Every household deserves the security of a home that they can afford to heat and we believe heat pumps have a key role to play in that. Heat pumps are, on average, three times more efficient than gas boilers and are powered by electricity that becomes cleaner every year as the share of renewables on the grid grows. Heat pumps can therefore slash the level of energy we use for heating and reduce our reliance on gas. That reliance cannot be overstated: nearly half of the UK’s total natural gas consumption every year is currently used for heating buildings, producing roughly a quarter of total greenhouse gas emissions.
The proposed changes to our energy system will not happen overnight but it is important that we communicate that this is part of a long-term plan, and that we will keep this as a key priority. Nowhere is that more important than the critical work we must do with business as we make this transition. It is essential that the businesses that we work with, throughout the supply chain, know that they can put in the steps they need to build skills, and that they will have incentives and support to deliver this transition, and to do the critical job of helping households benefit from the switch to the cleaner, more efficient heating that we believe heat pumps can provide.
That is why, in addition to direct support for heat pump installations through schemes like the boiler upgrade scheme, the warm homes social fund and the warm homes local grant, we are providing investment in home-grown heat pump production through the heat pump investment accelerator competition. It is also why we are supporting installers through the heat training grant and why we are stimulating further investment in the supply chain by introducing the clean heat market mechanism with this instrument.
Since taking office, we have taken steps to engage with and listen to all parts of industry about the overall approach that we need to take on this policy. We are committed to continuing those conversations in the months and years ahead, including in relation to the clean heat market mechanism. We are proposing a reformed scheme that will provide the UK’s heating industry with the stability, clarity and policy direction to build a strong and resilient heat pump market that will benefit from the transition as we sprint towards low-carbon heating. The changes that we have made to the previous Government’s proposal for the mechanism will ensure that manufacturers have the time they need to scale up the supply chain and expand sales without penalising consumers. We will also need manufacturers to have the incentives and clarity to drive the innovation we need in the market, so that we can ensure we are delivering heat pumps that are cheaper and that respond to changes in the market.
The scheme will require boiler manufacturers to achieve the sale and installation of a proportion of heat pumps relative to their gas and oil boiler sales or the equivalent credits from other heat pump manufacturers. For the first year of the scheme, starting on 1 April this year, this is set at 6% of relevant boiler sales. As set out in the consultation response published in November, we have also decided to reduce the payment in lieu for any missing heat pump credits to £500 for the first year from the £3,000 previously proposed. We have also aligned the periods over which boiler sales and heat pump installations will generate obligations and credits, respectively, providing manufacturers with more time to prepare.
We are confident that between 2025 and 2026, the market can achieve the volume of heat pump deployment that the scheme is targeting, building on the substantial growth in sales seen in 2024. We are committed to working with industry to do the vital work of boosting demand for heat pumps and ensuring that it is as easy and painless as possible for consumers to go on this journey with us.
We are committed to ensuring that the transition to clean, affordable heating works for homes and businesses. That means having consumers firmly in our mind’s eye as we develop policy in this area and ensuring that we are working in lockstep with industry. That will be at the heart of our approach in the warm home plan. The statutory instrument is just one part of our overall strategy for delivering homes that are warm and cheaper to run, but it is an important part of how we deliver warmer homes with lower energy bills. It signals our ambition to tackle fuel poverty, which is still experienced by far too many people in this country, as we make that vital sprint, as we must, to clean power by 2030.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
It is a pleasure to serve under your chairmanship yet again, Mr Vickers.
The clean heat market mechanism imposes Government targets on the manufacturers of gas boilers. It tells them that they have to sell a certain amount of heat pumps each year and imposes fines for every gas boiler they sell above their quota. Inevitably, the fines will be passed on to the consumer. Far from having consumers in their mind’s eye, the Government have already shown flagrant disregard for consumers in a host of areas: including their grocery tax, which will cost families £56 a year; their family holiday tax, which will cost up to £300 a year; their eye-wateringly expensive energy policies; and their misguided national insurance hike, which the Bank of England warns will raise prices and lower wages—a double whammy hitting people’s pockets.
Now they are asking us to support the Secretary of State for Energy Security and Net Zero, who clearly has no interest in the cost of living in this country, having unfettered power to interfere with the price of people’s boilers. Last year, when we were in government, the then Secretary of State was clear that we would not introduce a policy that punishes people who choose not to install a heat pump. The current Secretary of State has an ideological obsession with going further and faster than any other country. Handing him the powers to push up the cost of installing new gas boilers in this country is a recipe for piling extra costs on to consumers. Because people usually have to replace their boilers at short notice, that will come at a time when families are least expecting it and can probably least afford it. The British people will once again be forced to pick up the bill for this Government’s ideological approach to net zero.
Around 1% of people in this country have a heat pump. Many who have chosen to install them are happy with them. If people want to spend their money to electrify their heating, it is not the Government’s job to prevent them from doing so, but the Government should not punish people if they do not want, or cannot afford, to make that switch.
We were happy to give families a helping hand, which is why we increased the grant available through the boiler upgrade scheme by 50% to £7,500, making it one of the most generous schemes in Europe. Applications actually increased by 75% as a result. It is simply not sustainable, however, to impose ever larger taxes to force consumers to switch to technologies if they do not want to do so.
That is even more dangerous given that the Labour party’s plans will make electricity much more expensive and, therefore, electrified heating much less desirable. The Electrification of Heat demonstration project report, published last month, found that the average installed cost of a high-temperature heat pump was more than £17,000. Even with the £7,500 Government grant, that means the cost of installing a heat pump is about three times that of installing a new gas boiler. That is before considering the extra hidden costs that go along with heat pumps, such as more insulation, replacing radiators, underfloor heating and more. Furthermore, let us not forget that many properties are not, and never will be, right for a heat pump. The same report found that even 34% of homes recommended for heat pumps as part of the trial were found, in the end, not to be suitable.
If the cost of gas boilers is pushed up, those families who have no choice or who live in unsuitable homes such as older properties or blocks of flats will face an unavoidable and unjustified price hike. In government, we exempted households who were not suitable for heat pumps from ever having to rip out their gas boiler. If the briefings to the newspaper are correct, of course, we welcome the Secretary State’s decision to scrap the 2035 boiler ban, but it is plain to see that the Government are simply replacing a boiler ban with a boiler tax. This draft SI will give the Secretary of State the power to increase the cost of new gas boilers, making things harder for people, even those whose homes cannot be made suitable without extra work costing tens of thousands of pounds.
During the election campaign, the Minister and her colleagues promised the British people £300 off their energy bills, a promise that we hear no Labour MP repeating at the moment. As soon as they got into Government, they snatched the winter fuel payment away from millions of pensioners in poverty, taxed family farmers and taxed the North sea oil and gas sector. Now, they are taxing people’s boilers, too. The evidence is increasingly clear that the Government’s rush to decarbonise the electricity grid by 2030 will increase the cost of electricity in this country, so that all those who have been told to move over to heat pumps—in fact, all our constituents—will face higher electricity bills as a result.
Last week, the Secretary of State said that we will only tackle climate change by working with other countries. But there is no sense in making our own people poorer and enforcing hardship on them in the name of reaching net zero, because no other country will want to follow our lead. Only by increasing prosperity and living standards will we convince the world’s largest polluters to cut their emissions. Once Ministers have snuck this power on to the statute book, they will be free to ramp up the fines dramatically in the years ahead in order to meet the Secretary of State’s targets. In fact, if they are to meet their legally binding climate targets, they will have no choice but to ratchet up the fines and to inflict more hardship on the British people.
Ministers should ask people why they do not want heat pumps, not force people to have one by making gas boilers increasingly unaffordable. The Conservatives believe that consumers get the best products when they drive the market through choice. As the Secretary of State has said, an overly centralised approach to net zero targets will slow down the take-up of new technology, requiring ever larger subsidies and ever stricter punishments to force consumers to buy the products that Ministers in Whitehall have decided are right for them.
That is why we have said that the carbon budget system needs a rethink. It is sending us down an increasingly prescriptive path, where Government tell businesses that they must sell a certain amount of a certain product by a certain date. It is central planning by the back door, and it is leading to perverse incentives, where Ministers are presented with endless submissions that say, “We must implement this policy”, not because it lowers costs for consumers or businesses, but because it will help us to meet our carbon budgets. That is wrong. I am afraid it is why Ministers are before us today to push through a policy that they know will make life harder and more expensive for people across this country.
When we were in government, we pushed back on that policy because we were not willing to pile extra costs on consumers to force them to adapt to and adopt technologies that they did not want. We said that free markets were a much better route to cheaper products and better technology, which actually improve people’s lives. If the Government want households to install heat pumps, they should let the manufacturers make the case to their consumers to convince them that they are worth while and that the power of the market brings prices down naturally without endless Government intervention. In this area more than any other, we need to put living standards before ideology, but I am afraid that with this Government, whether it is their family farm tax, their rush to shut down the North sea or their attack on educational standards, ideology seems always to come first. That is why we cannot support the introduction of the boiler tax.
Miatta Fahnbulleh
When the Conservative party was in government, it was willing to see sky-high energy bills. The reality in this country today is that, quite frankly, many people cannot afford the cost of energy. That is the reality that the Conservatives were happy to deal with, but it is not a reality that we believe is either tenable or acceptable, and it is one that we are determined to change. That is why we are making the sprint to clean power and are determined to deliver a warm home plan that can deliver cheaper and warmer homes for consumers across the country.
I will address some points that are quite frankly wrong. First, there will be no compulsion to impose heat pumps. Our job as a Government is to work with industry to make them as attractive a proposition for consumers as we can. We will not force people to adopt them, but we believe that heat pumps are three times more efficient than gas boilers and will be an attractive proposition for consumers. We saw demand for our boiler upgrade scheme reach record levels in 2024, because consumers are starting to realise what we know from the evidence base: that this proposition absolutely works for their pocket and for their homes. Our job is to ensure that not just wealthy households but every single household across the country can benefit from it.
To debunk the second point made by the hon. Member for West Aberdeenshire and Kincardine, this is absolutely not a tax. There is no requirement for industry to impose costs on consumers. We have worked very hard with industry to reform the proposal put forward by the Conservative party, which industry absolutely hated, to get to a proposition that we believe will do the job of incentivising the market for heat pumps, as everyone recognises we need to do, while protecting consumers.
Finally, we have to get to the right solution for every household in the end. We are not ideological about this. We care about getting consumers warmer homes and lower energy bills, and we will find a range of solutions that mean that where heat pumps work—we think that they will work in the majority of households, including in rural households—we will make it as easy as possible for consumers to adopt them. Where there is a need for alternative technologies, we are keeping those technologies under review so we can ensure the right solution for every single household.
The status quo is not tenable, nor should the Conservative party be proud of it. Quite frankly, it is a status quo that we are absolutely disgusted to have inherited. Our job is to take the country on the journey that we need, which is why we will not resile from driving forward with our clean power mission. In the end, we have to take ourselves off the rollercoaster of international fossil fuel markets over which we have no control. That is why we will drive forward our warm home plan. Heat pumps and the clean heat market mechanism will be a key part of that. I commend the draft regulations to the Committee.
Tom Collins (Worcester) (Lab)
It is a pleasure to serve under your chairship, Mr Vickers. I am quite frankly staggered by the criticism from the Opposition. I remind Conservative Members that they had a policy of exactly the same architecture in recent years, with targets set at a level that produced a textbook example of unintended consequences. I will not accept any attempt from them to rewrite history on the matter.
I welcome the ambition in the draft regulations and in our mission for dependable, affordable and clean energy. In particular, I welcome the fresh approach from this Government of partnership with industry, understanding markets and putting people first. As the representative of a constituency that is home to one of our large domestic heating technology manufacturers, which produces boilers, heat pumps and other technologies for heating, I welcome the renewed targets that come with these regulations alongside and as a result of the Government’s fresh, constructive approach. I welcome that approach, because there is much more to be done in the transition for heating.
This is just one point in that journey. I would like to see us exploring an approach to air source heat pumps, alongside other technologies, and I am confident that we are now in the best possible place to navigate the way forward. I therefore thank the Minister for the approach that she has demonstrated with industry and with the market, and I ask whether she is prepared to continue in the same spirit of partnership, openness and innovation that she has begun.
Miatta Fahnbulleh
I thank my hon. Friend the Member for Worcester. We absolutely will approach it in that way. We know that we cannot do this on our own, and that we must work in collaboration with industry—that is what has got us to this point.
My hon. Friend is completely right to point out the flip-flopping from the Conservatives. Let me quote what the hon. Member for West Aberdeenshire and Kincardine said about the clean heat market mechanism when he was in government:
“The Government back the dynamism of industry to meet the needs of British consumers, which is why we are taking a market-based approach that puts industry at the heart of leading a transformation of the UK heating market, while keeping consumers in the driving seat with choice. Through the planned low-carbon heat scheme—the clean heat market mechanism—we will provide the UK’s world-leading heating appliance industry with a policy framework that provides the confidence and incentive to invest in low-carbon appliances. That will make heat pumps a more attractive and simpler choice for growing numbers of British households.”––[Official Report, Energy Public Bill Committee, 6 June 2023; c. 145.]
That was when the hon. Member was enlightened.
Miatta Fahnbulleh
What happened to that guy, indeed. It is a shame to see the Conservative party flip-flopping rather than doing what it knows is right for the country and right for consumers.
Question put.