Arrangement of Business
The Deputy Chairman of Committees (Baroness Bull) (CB)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Flood Reinsurance (Amendment) Regulations 2025
(2 days, 9 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Hayman of Ullock
That the Grand Committee do consider the Flood Reinsurance (Amendment) Regulations 2025.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Baroness Hayman of Ullock) (Lab)
My Lords, as most noble Lords will know, Flood Re is a reinsurance scheme that provides for accessible and affordable flood insurance for eligible households. It is a joint government and industry initiative launched in 2016, designed to improve the availability and affordability of UK household flood insurance.
For clarity, Flood Re Ltd is the name of the company established to administer the scheme. Since its launch in 2016, it has provided cover for flood insurance to more than 500,000 households that are at risk of flooding right across the UK. Before Flood Re, only 9% of policyholders with a prior flood claim could get flood insurance quotes from two or more insurers, and none could get quotes from five or more insurance companies. Some 99% of households at high risk of flooding can now obtain quotes from 15 or more insurers.
The Flood Re scheme has evolved since its launch back in 2016. When levy 1 was last reviewed in 2022, the regulations were changed to allow for Build Back Better to be included in the scheme, which allows for up to £10,000 to be offered as part of a post-flood claim to install flood-resilient measures at the property, helping to manage down the risk and impact of any future flooding. I am pleased that insurers representing some 77% of the UK household insurance market are now committed to offering Build Back Better to their customers, whether they are Flood Re-ceded policies or not.
The Flood Re scheme is a joint initiative between government and the insurance industry, and we are going further than the previous Administration to invest in flood defences. As part of this Government’s plan for change, a record £2.65 billion has been committed to better protect 52,000 properties by March 2026. Maintenance of existing flood defences will be prioritised, ensuring that a further 14,500 properties will have their expected level of protection maintained or restored. This means that a total of 66,500 properties will benefit from this funding, which will help to secure jobs, deliver growth and protect against economic damage.
I turn to the specifics of the statutory instrument. Flood Re Ltd regularly and continuously monitors the risk and market that it is supporting to ensure that it is in a position to continue to enable affordable flood insurance for those that need it. To do so, it is required to purchase reinsurance, which it does on a three-year basis. Taking into account changes to risk, claims profile and expected increase in the number of household flood insurance policies ceded to it, Flood Re Ltd has projected that its liabilities could increase from £2.1 billion to at least £3.2 billion over the next three years, and this is the level of cover that it now needs to purchase.
In addition, the global reinsurance market has become more challenging since Flood Re Ltd last negotiated its three-year reinsurance cover. Events around the world have impacted on the risk appetite of those providing reinsurance, meaning the market that Flood Re Ltd can purchase from is both more volatile and more expensive than previously. All those factors combined have resulted in Flood Re Ltd proposing this increase to levy 1, so that it can afford to purchase the required reinsurance and continue to provide that access to affordable insurance that we all recognise the need for.
I assure noble Lords that this proposal has been well scrutinised before reaching this Grand Committee for your Lordships’ approval, not only by policy and finance officials in Defra but by our colleagues at HMT. This scrutiny has been informed by advice from the Government Actuary’s Department, which has provided its opinion that the increase to levy 1 is necessary to ensure the viability of the scheme.
I recognise that any increase to costs is unwelcome at any time. The cost of increasing levy 1 is spread across all insurance companies that offer UK household insurance and is proportionately split based on their market share. We can be confident that Flood Re Ltd has done its due diligence in seeking this increase and reassured that it would not be being asked for if it were not needed. By using existing capital, Flood Re is keeping the increase to 18%, while the costs for reinsurance are expected to more than double. The decrease that was put in place three years ago, going from £180 million per year to £135 million per year, demonstrates, I suggest, that Flood Re Ltd is very conscious of its responsibilities in keeping the levy as low as possible.
In summary, this statutory instrument allows for a necessary change to the Flood Re scheme by amending Regulation 8(2)(a) of the Flood Reinsurance (Scheme Funding and Administration) Regulations 2015 to increase the levy 1 placed on UK household insurance providers from £135 million to £160 million from 1 April 2025. I emphasise that the measure in this instrument is necessary to ensure the effectiveness and continuation of the Flood Re scheme and its ability to provide affordable flood cover for the increasing number of homes that are at risk of flooding in the UK. I beg to move.
Baroness McIntosh of Pickering (Con)
My Lords, I thank the Minister and congratulate her on bringing this instrument forward, which I wholeheartedly support. I want to press her on a number of issues arising from it.
In the last Parliament, the Minister had the grace and good sense to support an amendment of mine to what is now the levelling-up Act. It stated that there should be no homes at all built on functional flood plains after 2009. As the Minister will be aware, and as this instrument states, there is no insurance cover for homes built on functional flood plains after 2009.
At the time, I was delighted that Flood Re was set up, with the support of the present Government, by the then Conservative Government. However, the mapping is not as tight as it might be. As we discussed during the passage of the levelling-up Bill, we are dependent on local authorities to home in on the crucial area of zone 3b. If the Minister and her Government are committed, as they seem to be, to continuing to build on functional flood plains, which we recognise are not covered by Flood Re, can she tell the Grand Committee the average cost of insurance for those home owners to insure themselves, particularly where they may have been flooded on one or more occasion since they moved into a home which was built after 2009?
I believe that we should look at this in the context of Flood Re and the housebuilding programme. I know the Minister will probably tell me that I must be patient and wait for the planning and infrastructure Bill to come out—perhaps she could give us a date for when to expect it. That is my first and key point: what insurance cover there is, the cost for individual households and to what extent they might benefit.
Has the department done an impact assessment on the instrument as it stands? Is the Minister able to say what plans the Government have to extend the scheme in a number of ways—first, to cover homes built on flood plains after 2009 going forward, but also to extend it to cover businesses in particular? I am not entirely sure what the position is as regards farms, which are partly a business and partly a residence, but there are other businesses as well—many owner properties—where the business and the home are shared.
When will the Government have a view on what the future of Flood Re should look like when it reaches the end of its natural life? When this instrument was discussed in the other place, my honourable friend Dr Neil Hudson, who speaks for the party there, asked about the frequently flooded allowance, which was introduced by the last Government as a ring-fenced fund of £100 million to protect areas that had been affected by repeated flooding. Is the Minister able to say whether the Government are minded to continue that programme going forward?
I am sure that, when responding, the Minister will say that the Government have improved the resilience of properties and therefore are quite entitled to encourage local authorities to build on functional flood plains. She was, sadly, unable to attend the launch of the report by Westminster Sustainable Business Forum—Policy Connect—in which we looked at flood and coastal erosion risk management policy for the new Government. I do not know whether the Minister has had a chance to look at this, but will her department especially consider our recommendations to ensure the uptake of property flood-resilience measures, some of which come under Build Back Better, to which she referred—but they also go beyond that? Will the Government be minded to allow for the installation of both resistance and resilience measures as part of property flood-resilience schemes funded by the Environment Agency? Will she also review the eligibility criteria and distribution process for the property flood-resilience repair grant scheme to make it more widely accessible and streamlined? Further, will the Government align all property flood-resilience funding resources—including those from the Environment Agency’s property flood-resilience framework, Flood Re’s Build Back Better and Defra’s flood-resilience repair grant—to the same amount, so that all the funding resources would be aligned at £15,000, possibly as part of the forthcoming multiyear spending review? I realise that these are very technical recommendations and that the Minister may not have the answers, but they relate to the instrument and the forthcoming spending review.
Finally, the recommendation that I press to the Minister today would be to normalise the use of property flood resilience in both new and existing properties. Part C of building regulations should be updated to require the installation of basic property flood-resilience measures for properties at risk of flooding and the installation of very basic no-regret measures for all new homes, irrespective of risk.
These recommendations go to the heart of my belief that, if we continue to build properties that are not covered by Flood Re, we owe this to the people who will buy those properties. I find myself not needing a mortgage: I had sold a property, and I was in a position to have bought, and I almost did buy, a property without a mortgage—this is going back to the 2000s. No one would have told me that I could not be insured. I know the Minister will say that they can be insured, but I would be interested to know how affordable it is for these properties not covered by Flood Re and built after 2009 on flood plains. How expensive is that insurance? If the Government are going down this path, we must have more resilient houses built in those areas. That said, I welcome the opportunity to debate the instrument today. I hope it will have a fair wind and be approved.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I thank the Minister for her introduction to this short but important statutory instrument. I was assisting on the Water Bill in 2014-15 when Flood Re was first debated to provide insurance to properties that were uninsurable due to constant flooding, the main insurance companies not being willing to take any of the risks on those homes and dwellings.
This SI is quite simple: it raises the levy that insurance companies can indirectly pass on to their customers from £135 million to £160 million. The £135 million level was set in 2022, when the levy was reduced from £180 million. The Explanatory Memorandum quite rightly states the importance of not having a levy that is higher than it needs to be, but I stress that there is a danger in setting it too low.
Lord Roborough (Con)
My Lords, I, too, thank the Minister for introducing this statutory instrument to ensure that flood reinsurance can continue to operate effectively. For that reason, His Majesty’s most loyal Opposition are pleased to support it. Although the measures are necessary, they raise several questions about the future of the Flood Re scheme and the Government’s broader approach to flood risk and resilience.
The flood reinsurance scheme established under the Water Act 2014 was designed to provide much-needed reinsurance for household insurers facing flood risk, ensuring the availability and affordability of flood insurance for properties at risk of flooding. This initiative, introduced by the previous Conservative Government, remains a crucial safety net for many home owners across the country. It has offered vital support as we face increasing flood events that threaten the stability and safety of homes across Britain.
However, we must recognise that the scale of flooding is rapidly increasing. Recent assessments by the Environment Agency indicate that approximately 6.3 million properties in England are at risk of flooding from rivers, seas or surface water. This is projected to increase to 8 million properties by 2050, reflecting the escalating threat posed by climate change and extreme weather events. This highlights the importance of ensuring that the Flood Re scheme is sufficiently robust to support the growing number of home owners at risk.
The statutory instrument proposes an increase in the total levy from £135 million to £160 million. The Government’s assessment indicates that this rise will likely be passed on to consumers, resulting in an estimated increase of £1.60 per household insurance policy. Although this increase may seem modest on an individual basis, it raises concerns about the cumulative effect on policyholders, especially those already facing higher premiums due to rising costs in other areas. This adjustment reflects the growing challenges the scheme faces in a world where extreme weather events are becoming more frequent and severe.
His Majesty’s Official Opposition acknowledge the necessity of this adjustment, given the financial pressures on reinsurers, driven by factors such as inflation, global natural catastrophe claims and the need to preserve the scheme’s financial resilience. If the rate and risk of household flooding continue to rise, can the British people reasonably expect these annual increases in insurance premiums to become the norm?
I have several other key questions for the Minister today. First, can she confirm whether the Government have consulted with industry stakeholders about the feasibility of expanding the Flood Re insurance scheme, particularly in high-risk areas and to houses built after 2009?
I am most interested in the Minister’s response to my noble friend’s question regarding farmhouses and buildings. Although these are likely to have been sited in less flood-prone locations, the Government have made significant commitments to building 1.5 million new homes in the coming years, a substantial increase on the recent rate of building completions. As my noble friend Lady McIntosh of Pickering highlights, how does the Minister intend to protect these new homes from flood risk, particularly those in high-risk areas? Will the Government commit to ensuring that all new developments are designed with flood resilience in mind?
Could the Minister confirm and explain the role she sees for nature-based solutions in the management of floods at a catchment level in future? Here, I declare my interest, as set out in the register, as the owner of land in a number of river catchments.
Finally, can the Minister inform us what progress is being made in the transition from Flood Re to risk-reflective pricing for household flood insurance when Flood Re expires in 2039? We are approaching midway in the life of Flood Re and it would be desirable to see some progress.
These are questions that go to the heart of the Government’s approach to flood risk, resilience and insurance. While we understand that the increase in the levy is a pragmatic measure in the light of global challenges, we must not overlook the broader implications of a changing climate and the evolving risks that flood-prone households face. With that, I look forward to hearing the Minister’s response to these questions.
Baroness Hayman of Ullock (Lab)
My Lords, I thank noble Lords who have taken part in this debate today. Personally, I was very pleased when Flood Re came in; I thought it was incredibly important legislation. Anyone who has lived in a house that has flooded, like I have, and in communities that flood, will know how very important it was that we had this insurance scheme come into place. I therefore thank noble Lords who have supported this small but extremely important SI today; it is important that the scheme stays viable and continues.
I would like to try to cover most of the questions that have been asked. There has been a desire for government to look at whether the scheme can be extended; that came across clearly from all who took part. Before I go into the particular individual responses and specifics, let me say that although we have no plans to make changes right now, we are continuously keeping all our policies under review, including those relating to flooding insurance. It is important that we discuss, debate and listen to others as we move forward in how we make those decisions around policy changes. If we make any changes to the scheme in future, it would be important that we secure the appropriate reinsurance for that, which would be challenging in the current market. To put it into context, this would mean that the levy we are talking about today would then need to be increased even further.
I know that noble Lords are aware that, currently, leasehold properties with three or fewer units, where the freeholder is living in one of those units, qualify for Flood Re building insurance. The problem with larger blocks not being eligible is that they are considered to be commercial businesses, and that is why they fall outside of the scope of Flood Re.
The Flood Re scheme as it is set up at the moment, and as it will continue to be set up through the statutory instrument in front of us, is funded by the providers of household insurance, not those who underwrite commercial policies. Buildings insurance is the responsibility of the freeholder and kept separate. However, I recognise that there is a problem.
When Main Street in Cockermouth flooded, for the second time in only six years, I held meetings with business insurance companies and high street businesses to look at ways we could move forward, because there are still alternative things that we can do and that the Government can look to support.
Having said all that, and with properties built after 2009 having been referred to—the noble Baroness knows that that is something that I was concerned with—we are planning to explore this further. Minister Hardy, who is the Minister responsible for this area, has asked Flood Re to look into the matter to understand the scale of concern and how industry might respond, to ensure that those living in properties that currently do not come under the scheme could be provided with appropriate insurance cover. Although it is not in front of us today and not something we are actively looking at, we have asked for this to be considered further. In the meantime, contents insurance policies can be applicable, so there is that potential as well.
Baroness McIntosh of Pickering (Con)
The Minister may be coming on to this, in which case I apologise, but do we know what the policy would cost? I visited Cockermouth and Keswick after the floods in 2009—I have suddenly had a nightmare that I did not tell whoever the MP was that I was there, but we will gloss over that. Many of those people could not afford contents insurance, yet they were clearly at risk of flooding. Does the Minister have a figure, or could she provide one in writing?
Baroness Hayman of Ullock (Lab)
I do not have the figure at my fingertips. This is something we are looking at. We have asked business insurance companies and the scheme itself to look at what those costs are, because if we are to consider broadening it then we need to understand the costs. I cannot provide that figure to the noble Baroness today, but it is something that we are considering.
I will move on to some other areas that were mentioned. Planning and the Government’s housebuilding programme was referred to. As noble Lords know, we have committed to building a large number of high-quality, sustainable homes. If noble Lords have not read the National Planning Policy Framework, I strongly urge them to do so. Flooding and the environment are very much part of that document. When I read it, I was pleased that the concerns that Defra had raised had been taken account of and included in the document.
Flood risk is an important consideration in the planning system. The NPPF is clear that:
“Inappropriate development in areas at risk of flooding should be avoided by directing development away from areas at highest risk”—
and that includes flood plains. Where development needs to be in locations where there is a risk of flooding, as alternative sites are not available, local planning authorities and developers should ensure that development is appropriately flood-resilient and resistant and is safe for its users for the development’s lifetime, and will not increase flood risk overall—a really important point that the noble Baroness knows I have talked about quite a lot previously.
On the point made by the noble Lord, Lord Roborough, about nature-based solutions, we are committed to that.
The noble Baroness, Lady McIntosh, asked about farms. We know that agricultural land and businesses can be seriously affected by flooding and coastal erosion; we have seen it too often in recent years. There are two points here: getting your land insured and managing your land—and managing it in order to reduce the risk of flooding and coastal erosion. Farmland has a really important part to play in that aspect.
In the floods investment programme, the amount of funding a project can attract depends on the damages it will avoid and the benefits it will deliver. Agricultural land is an important part of calculating that, and we hope that farmers will take up those opportunities.
An additional financial report will be provided to rural communities to recognise the significant impact of flooding on farms. We are monitoring closely the impacts of flooding caused by storms on the agricultural sector; that work is going on at the moment with the Environment Agency.
Food and Feed (Regulated Products) (Amendment, Revocation, Consequential and Transitional Provision) Regulations 2025
(2 days, 9 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Merron
That the Grand Committee do consider the Food and Feed (Regulated Products) (Amendment, Revocation, Consequential and Transitional Provision) Regulations 2025.
Relevant document: 17th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument).
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
My Lords, these regulations were laid before the House on 29 January. This draft SI uses powers conferred by the Retained EU Law (Revocation and Reform) Act 2023 to propose two reforms to the market authorisation process for regulated food and feed products in Great Britain. The first is the removal of the requirement for certain products to be reauthorised every 10 years, and the second is to allow authorisations to come into effect following ministerial decisions and to then be published in a public register, rather than prescribed by statutory instrument. The reforms are very much related to process.
These reforms are part of this Government’s mission to kick-start economic growth by increasing investment, driving up productivity and tackling regulatory barriers—something that I know noble Lords are concerned with. The UK food industry is worth some £245 billion in consumer spending annually. It is driving innovation, particularly as the UK’s growing engineering biology sector harnesses emerging technology to produce novel foods.
Regulated products are food and feed products that require safety assessment before they can lawfully be sold. The Food Standards Agency and Food Standards Scotland carry out this assessment and provide recommendations to Ministers across Great Britain on the authorisation of products. Innovation and growth across the food sector is increasing demand for authorisations. We need proportionate regulation to support investment, while maintaining safety and consumer trust. This statutory instrument removes requirements that are unnecessary for food safety without compromising it.
On renewals, certain authorised products must currently be reauthorised every 10 years. This SI removes that requirement. Instead, safety reviews will be carried out when necessary. The service will be more efficient if regulators focus on detailed reviews of products that potentially pose risk, instead of reassessing products that have many years of safe use.
The FSA and the FSS have earned public trust through rigorous risk analysis. These reforms build upon regulators’ existing powers to request safety information. They enable an efficient approach, where the regulators respond effectively to emerging risks. I emphasise that, where necessary, approvals can be modified, suspended or revoked. Food safety will continue to be the priority.
Although steady progress is being made, it is fair to say that the FSA and the FSS are not processing as many applications as are coming in. This is causing an increasing backlog, which is of concern. There are 481 current applications; although 97 applications have been completed since 2021, the caseload is growing, not reducing. Of those 481, about 100 are renewals, with almost 500 additional renewals expected in the next three years. This has to be dealt with. While the FSA and the FSS have implemented measures to improve the service within current legislation, it is essential that the service and the system are modernised. Removing automatic assessment for renewal allows a more targeted approach.
I turn to the removal of SIs. The second part of these reforms allows authorisations to come into force following ministerial decisions and to be published in a public register, rather than being prescribed by an SI. This will enable new products to be brought to market more quickly, without, I emphasise, compromising safety. Publishing authorisations together in online registers, rather than in complex legislation, will make finding information on authorised products more accessible than currently. This aligns with other UK regulators’ authorisation processes, such as for veterinary medicines and pesticides.
The FSA and the FSS provide scientific scrutiny through expert staff and independent scientific advisory committees. They provide safety assessments, risk management advice and recommendations for ministerial decisions. This process aligns with internationally recognised principles. The FSA and the FSS will publish risk assessments and authorisations, in line with their commitments to transparency. The statutory obligation to consult will not change, and authorisations will continue to be subject to public scrutiny.
I assure noble Lords that there has been extensive engagement with industry and consumer groups, including through public consultation. The reforms have received substantial support. The Secondary Legislation Scrutiny Committee was reassured by the FSA’s responses to questions raised during scrutiny. I have responded to those primary areas of focus in this opening speech.
These reforms prioritise efficiency and safety, focusing resources on innovative products. I hope noble Lords will feel able to support these reforms, which will create a service which manages risk in a proportionate fashion, without compromising our high food and feed safety standards. I beg to move.
Baroness Coffey (Con)
My Lords, I welcome these regulations, on several grounds. First, as the Minister mentioned, this is a deregulatory approach. There cannot be many regulations deemed to be deregulatory that have 104 pages, but 70 of those pages deal with revocations of existing legislation. That is to be welcomed.
I completely support that this will be a risk-based approach. I am conscious that consultations are ongoing on products being considered by the FSA under this approach. I am conscious that some may be concerned about removing the need for separate secondary legislation, which is a hangover from our days in the European Union, but this is perfectly routine.
I have a couple of questions for the Minister. First, I am conscious that the Food Standards Agency is a non-ministerial department, with the DHSC leading on this in government and in Parliament. Can she confirm whether DHSC Ministers will be making these decisions or whether it will be open to Defra Ministers?
Secondly, an issue that arose during the passage of what is now the precision breeding Act was concern that the devolved Administrations would be reluctant to have any GMO in products sold in their countries. The purpose of the United Kingdom Internal Market Act and the non-discrimination principle was to make sure that, where something had been given the go-ahead in England, say, it could be sold anywhere across the United Kingdom, respectful of the devolved Administrations but nevertheless giving consumers that choice. Will the UK Government fully assert the non-discrimination principle in the sale of future products? As I said, I support these regulations.
Baroness McIntosh of Pickering (Con)
My Lords, I support the comments made by my noble friend and concur entirely. I congratulate the Minister on bringing forward this streamlining and deregulatory process. However, I share some of the concerns put forward by the Secondary Legislation Scrutiny Committee.
My noble friend talked about GMO. I am personally very wary of GMO products: I would like to know if I were eating such a product or if such feedstuff was being fed to an animal that I may go on to eat. Can the Minister assure me that the removal of the renewals process will not lead to any information affecting the suitability of validation methods for GMOs being overlooked? Put simply, can the public and consumers rest assured that the processes that have been followed hitherto will be followed? How can the public be made aware of those processes and know that that is the case?
Baroness Bennett of Manor Castle (GP)
My Lords, in following the noble Baroness, Lady McIntosh, I echo her concerns about the labelling of GMOs, and I look forward to the Minister’s answer on that. I am afraid that I somewhat disagree with the noble Baroness, Lady Coffey, regarding the rights of the nations of these islands. They surely should have the right and ability to say that they want healthier food and the right to set higher standards for food than England may choose to.
Coming to the general point, I find it a little surprising that we have heard considerable celebration about reductions in red tape at a time when there are grave concerns among the public about the safety of our food supply, particularly the impacts of ultra-processed foods, which contain many of the substances that will be covered by these regulations, and in a society that has huge problems with the overall level of public health. Surely it is better to have so-called red tape than for people to become ill as a result of the food that they buy without knowingly putting themselves at risk.
As the Minister set out so clearly—I thank her for that—there are two chief changes here. The first is to remove the requirement for reauthorisation for certain products every 10 years. These are products that have previously been identified as high risk, which is why they are on the list: feed additives, and food and feed containing GMOs or smoke flavourings. We are taking away actions to monitor products that have been regarded as high risk. Secondly, as the noble Baroness, Lady McIntosh, said, we are removing parliamentary scrutiny by not requiring SIs. Building on what she said, will there be an accessible list somewhere that can easily be found by Members of the House and members of the public?
When we do not have the automatic 10-year authorisation, what will happen when an issue arises? I do not think that this has been covered very clearly at all. How will the Government alert the House to that issue? We have seen this happen in many areas before, and I expect that NGOs and researchers in universities would come to an individual Member of the House and they would have to batter away at trying to establish the issue, how big it is and what is happening. However, we and the NGOs have only limited capacity. How will the Government keep us and the public informed about what is happening when this starts to be an issue?
I thank the Secondary Legislation Scrutiny Committee for a very comprehensive piece of work on this SI. It is seven pages of quite detailed scrutiny, which contain a considerable number of expressions of concern. The committee is concerned that the Explanatory Memorandum did not fully explain the mechanisms to detect and monitor the risks in absence of a renewal process, which essentially addresses the issue I just raised about how we know.
Some of the discussion is about what happens in the testing of products if technology and our understanding change. We are in a period of rapid, massive change in our understanding of the operations and the biology of the human body. I have talked in other contexts about microbiotoxicity, where products impact on the human microbiome. That is a sentence that would not have made any sense 10 years ago, which reflects how fast our understanding of human biology has changed. We are just starting to get into understanding the virome—I recently hosted an event on phages—the bacteria and fungi in our body and how they interact with viruses and food. It is a very complicated and fast-moving area.
I have focused on the Food Standards Agency, which has a total of 1,582 members of staff in England, Wales and Northern Ireland. As the Minister has said, it is struggling with the number of applications that it is getting and, essentially, it does not have enough staff. If that is the case and there is this flood of new applications, how can we be reassured that attention will be given to things in that “Already done, don’t really have to think about it” pile, particularly when there are so many other biosecurity risks facing our country?
I declare that my comments have been informed by Beyond GM. It highlights that the Government Chemist, which is part of DSIT and hosted by the Laboratory of the Government Chemist—which is now, curiously, a privatised organisation—
“expressed the view that the renewals process”
needs to make sure that it has
“necessary scientific checks on the currency of validation methods”.
This is not just the biology changing but the understanding of our testing.
Finally, I offer a reflection on what we have seen happen in so many areas of public safety related to chemicals. Teflon is not a food additive, although it is an additive that has been unintentionally put in our food. PFAS were discovered in the 1930s; by the 1970s, companies including DuPont and 3M were aware of the risks and hid them. It was only in the 1990s that regulators and the public started to become aware of them. We have to be aware that we cannot trust giant multinational companies to declare to the Government and identify when a problem first starts to emerge. This has to be done by people acting for public good, not for private profit.
Baroness Walmsley (LD)
My Lords, as the Minister said, this SI does two things. It removes the requirement for 10-yearly renewals of regulated product authorisations and removes the requirement for regulated product authorisations to be prescribed in secondary legislation, instead allowing them to come into effect following a ministerial decision, presumably based on appropriate advice from the FSA.
As is not unusual, and as has been mentioned before, the Secondary Legislation Scrutiny Committee, in its 17th report of this Session, was critical of the Explanatory Memorandum. The efforts of this hard-working committee, which I admire very much, have filled in many of the gaps; however, I feel that it should not have been necessary for it to do this had the department provided a fuller and more helpful explanation of the protections. Is it not for officials to predict the concerns that might arise about new regulations, explain why the Government feel that they have been addressed and put that in the Explanatory Memorandum?
The Government assure us that the changes are intended to simplify the authorisation process and would create
“a more streamlined and effective regulatory regime”.
They cover three regulated product regimes: feed additives; food or feed containing, consisting of or produced from genetically modified organisms; and smoke flavourings. I believe that all these product groups may be subject to new evidence of health or environmental effects—either benefits or dangers—as time goes by. The FSA and the FSS have responded that they
“would continue to assess products at initial application stage to authorise them as safe to be placed on the market, and would maintain their powers to carry out safety reviews of authorised products already on the market at any time if new evidence or risks emerge”.
The words “at any time” are key, because they mean that those organisations do not have to wait 10 years to spot and assess a problem. This is reassuring.
However, as we have heard, Beyond GM was concerned that, in future,
“greater emphasis would be placed on the FSA’s post-market monitoring activities to ensure new evidence and risks are detected before harm occurs”.
I am familiar with the FSA system of horizon scanning in another context. It is thorough, gathering intelligence from international regulators, global networks and its own scientific advisory committee for horizon scanning. It also keeps abreast of analytical methodology and has a well-used incident reporting mechanism. As we speak, revocations of authorisations due to safety concerns reported through this mechanism have generally been actioned outside of the renewal process—in other words, it has not had to wait for 10 years. Can the Minister assure us that the FSA has sufficient resources to keep up this level of horizon scanning and subsequent action? I am clearly not the only Member of this Committee with concerns about this; the same submission from Beyond GM had concerns about it as well, in the light of recent budget cuts and staff shortages.
The FSA responded:
“An evidence-based review system will ensure already authorised products are reviewed based on risk and new evidence, rather than on a fixed timetable”.
This new risk-based system may well be a response to budget cuts, but it could also be justified by the fact that there is no point in wasting precious staff time on reassessing products that have consistently been found to be safe—and I mean “consistently”; one reassessment may not be enough in this field. Can the Minister tell us which of those two options it is? Of course, we might not have needed the Minister’s explanation if the EM had been more helpful.
There were submissions suggesting that GMOs should not have been treated in the same way as other products. The SLSC’s report contains the FSA’s explanation of the additional measures that are in place when GMOs are authorised initially and of how monitoring occurs post market approval. This includes the responsibility of the businesses—the producers, or the people putting the food together—to supply annual reports to the FSA and the FSS about environmental and any other risks that were not predicted at the start of the authorisation. Is the Minister confident that these reports are always sent and are complete? There may be vested interests in not having them complete.
There was a response from the Government Chemist, as we have heard, which was interesting. It considers that the renewals process, which is now being removed, provides important and necessary scientific checks on whether laboratory-based validation methods for GMOs remain current. In other words, it was not about the dangers of GMOs themselves but confidence in the laboratory procedures which assess them. The FSA response says that it will be relying on businesses, which will continue to be required to notify the FSA and the FSS if they have any new information which might affect the suitability of a validation method. Can we rely on businesses to know that and to report any concerns? Given that science is developing so fast in the world of biotechnology, is the Minister confident that we have a regular means of ensuring that we have the best, most up-to-date and accurate methodology, without having to rely on businesses telling us or on this being looked at every 10 years?
Lord Kamall (Con)
My Lords, I welcome the noble Lord, Lord Moraes, to his place. We served together in the European Parliament, of which he was a well-respected member. I thank the Government for sending out so many big guns—I think I count six on the Front Bench in this Room. I will not flatter myself that they are here for me, but I am impressed by how seriously the Government are taking this statutory instrument.
I thank the Government for addressing the concerns of the Secondary Legislation Scrutiny Committee. The noble Baroness, Lady Walmsley, rightly said that questions were not answered, but it is good that the Government were able to address those concerns, and we are grateful for that. Like my noble friends Lady Coffey and Lady McIntosh of Pickering, I think that these Benches generally welcome measures to streamline processes, but I understand potential concerns over the safety and oversight of regulated products. As the saying goes, one person’s safety standards may be another’s red tape. That was something that the noble Baroness, Lady Bennett, alluded to.
We welcome that there was a consultation between April and June 2024. I understand that, while there was broad agreement in principle, there were some concerns and disagreements, which I would like to ask the Minister about today. Before I do that, I shall pick up on the issue of GMOs. Let me clear—I have nothing in principle against GMOs, but for consumers it is important that there is labelling, so that they can make that choice in an informed way. When we were in the European Parliament and negotiating the Transatlantic Trade and Investment Partnership with the US and made the point about labelling GMOs, what was interesting was that the US negotiators would say, “That’s a non-tariff barrier”. If the Government intend to label GMOs, is that an issue that will be brought up in future trade negotiations? The Minister may not be able to answer that immediately, but perhaps she can write to us about it, or ask her colleague who is taking through trade issues at the moment.
The Government claim that these changes will provide businesses with quicker approval times, increasing the return on investment and stimulating innovation. That is of course to be welcomed, but we should always be aware of two things. What happens in the case of negative unintended consequences, and what happens if new evidence comes to light that shows that a product authorised under these terms presents previously unforeseen risks to public health or the environment? That is something that other noble Lords referred to. In a situation where regular renewals are no longer required, can the Minister assure your Lordships if and how products covered by this regulation will be reassessed, if any new data emerges that suggests that they are not as safe as originally thought, especially if these products are already on the market?
I understand that the Food Standards Agency and Food Standards Scotland have the power to conduct evidence-based reviews if new information surfaces, but can the Minister assure us that a less regular review mechanism will not compromise safety? I think that she mentioned the phrase “where necessary”. Can she put more meat on the bone and explain a bit more what that means? What mechanisms are in place to ensure that products remain compliant with safety standards over time? We know that regulation is often outpaced by innovation, so how do the FSA and the FSS plan to stay ahead of new risks or scientific developments with less regular oversight than these renewals once provided?
The second potential concern is that the Government do not appear to have conducted a formal impact assessment of these proposals. Given that these regulations will affect a significant number of products and legislative instruments, could the Minister tell noble Lords whether it is correct that no formal impact assessment was conducted and, if not, why not? Was there an informal impact assessment of any kind, and why was it decided that no formal impact assessment would be needed? Can the Minister assure the public that the full range of potential risks and benefits has been properly assessed?
Finally, as noble Lords may know, I spent 14 years in the European Parliament—not as long as my friend, the noble Lord, Lord Moraes. I was often frustrated by EU regulations, because they were more often than not based on the precautionary principle, or the over-precautionary principle, rather than the innovation principle. It is important that we get the balance between innovation and precaution right—I welcome that. I am not necessarily against divergence between UK and EU regulations, especially when it allows innovation, but could the Minister tell your Lordships what conversations the Government have had with EU counterparts and colleagues in Northern Ireland about the potential impact of these regulations on the Windsor Framework?
Overall, while these Benches welcome the regulations, I hope that the concerns expressed during the consultation, and today by other noble Lords, can be addressed by the Minister.
Baroness Merron (Lab)
My Lords, I thank noble Lords for their valuable and considered contributions to the debate today. I re-emphasise the main point I made in my opening comments: removing automatic renewal processes and statutory instrument requirements will not lower food safety or standards. I am grateful for the support from the noble Baroness, Lady Coffey, and for her bringing to bear her experience across relevant departments, as well as from the noble Baroness, Lady McIntosh, and the noble Lord, Lord Kamall.
I have heard a number of concerns, including from the noble Baronesses, Lady Bennett and Lady Walmsley. I understand the points made, and I hope that I can reassure them further from my opening comments. I am very happy to follow up where I have not got the ability, time or wherewithal to answer the questions.
The noble Baroness, Lady Coffey, asked about ministerial decision-making and the assertion of the non-discrimination principle. These reforms do not change what is in place to maintain the functioning of the internal market Act. Differences in approach will continue to be managed through the relevant common frameworks. I reassure not only the noble Baroness but other noble Lords that the FSA and the FSS are strongly committed to achieving a four-nation consensus, in line with our commitment to the food and feed safety and hygiene common framework. Decisions by Ministers in England—which will be from the Department of Health and Social Care, to the point brought up by the noble Baroness—as well as Scotland and Wales, will still be required for authorisations in their respective nations.
The noble Baroness, Lady McIntosh, asked about processes that will be followed with the removal of the renewals process. This SI does not change current GMO labelling requirements, which I know was another matter of concern to other noble Lords. Products that contain or consist of GMOs must be clearly labelled as defined in current legislation. Nothing will change in that regard. Following the reforms, businesses will continue to be required to notify the FSA and the FSS, if they have any new information which might affect the suitability of a validated laboratory-based method for the identification, detection and qualification of GMOs, something that the noble Baroness, Lady Bennett, was also concerned with.
To the point about the SLSC, it is suggested that the House may wish to consider the steps proposed to maintain parliamentary oversight. However, proportionate processes are in place for sufficient scrutiny of authorisation decisions, such as public consultation and the publication of safety assessments and authorisations. It is an important point that the authorisation process remains open and transparent. The SLSC recognised that this aligned with the processes used by other UK regulators.
Baroness McIntosh of Pickering (Con)
I do not wish to labour the point too much, but when a statutory instrument is presented to this Committee, we have the opportunity as parliamentarians to look at it. How will we be informed of the renewals if they are on a register? Do we have to ask someone to notify us? How do we know? At the moment, it is automatic; in future, it will not be.
Baroness Merron (Lab)
I understand the point the noble Baroness is making. I will turn to the point about the availability of information, which was also the point that the noble Baroness, Lady Walmsley, made. However, details of applications and authorisations will actually be more publicly available than they are currently. I hope that will be helpful. Of course, as we know, Ministers must provide reasoning if they disagree with FSA and FSS advice when they are making their decisions. In order for the public and anybody—including Parliament—to scrutinise regulated product applications and authorisations, all those tools and resources will be available.
The noble Baroness, Lady Walmsley, suggested a reporting mechanism. I am happy to look at that and will take into account what she said. But I say to noble Lords—and I know they know this—that statutory instruments are not the only way in which to hold matters to account, nor are they always the best way to ensure transparency and openness. We are seeking to be more transparent and ensure that we make this an easier place for industry, the public and others to work in—which most noble Lords welcomed.
Baroness Bennett of Manor Castle (GP)
There may be a legal obligation on companies to act, but we have seen again and again that, with the profits versus the costs of them identifying a problem and being prepared to go public and go to the Government about it, the legal requirement is not much of a safeguard.
Baroness Merron (Lab)
I understand that. It is why these reforms build on existing powers, whereby the FSA and FSS can request information for the review. It is of course in the interests of businesses to proactively provide it. As I mentioned in my opening remarks, where necessary, approvals can be modified, suspended or even revoked if a safety concern has been identified. That will not change.
To return to the point I was making previously, when, or if, new safety evidence emerges, it will inform whether authorised products are safe to remain on the market at any time, instead of—this is the reason for this statutory instrument—working to arbitrarily fixed renewal timetables, which burden industry and the public sector with comprehensive reviews for all products, whether they are needed or not, even when there is no evidence to suggest that one is needed. The evidence shows that this move is generally in the desired direction to be working.
The noble Baroness, Lady Walmsley, asked whether more should have been done in the Explanatory Memorandum to point out issues. As I listened to her, I wished that we could all predict what needs to be answered. Importantly, the FSA responded to all the questions raised by the SLSC, which was reassured by the responses. I hope that noble Lords agree that the FSA has been most helpful there.
On the question asked by the noble Baroness about sufficient resources and systems, it is anticipated that a relatively small number of authorisations will require a review on the basis of safety, as compared to the large number of renewals currently processed. I would expect that to be very manageable.
The noble Baroness also asked whether reports are always sent, whether they are always complete and whether that would give confidence. An evidence-based review system will ensure that already-authorised products are reviewed based on risk and new evidence rather than, as I said, on a fixed timetable. Reports are indeed provided and completed, but this change will make that even more doable and meaningful, and that is the reason for the change.
As I said earlier to the noble Baroness, Lady Walmsley, who made a suggestion about Written Statements being made, I will certainly take that away and reflect on it—as I will do for all of the points that were raised. With that, I thank noble Lords for their interest in and scrutiny of this SI.
Neonatal Care Leave and Miscellaneous Amendments Regulations 2025
(2 days, 9 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Jones of Whitchurch
That the Grand Committee do consider the Neonatal Care Leave and Miscellaneous Amendments Regulations 2025.
Relevant document: 16th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, I am delighted to bring these regulations, which were laid before the House on 2 January, forward under the Neonatal Care (Leave and Pay) Act 2023, which originated as a Private Member’s Bill during the previous Parliament. I pay tribute to Stuart McDonald—the former Member for Cumbernauld, Kilsyth and Kirkintilloch East—and the noble Baroness, Lady Wyld, for successfully steering that Private Member’s Bill through the various stages in both Houses to secure Royal Assent in 2023. The Act establishes new statutory entitlements to neonatal care leave and neonatal care pay for employed parents if their child starts to receive neonatal care within 28 days after birth and goes on to spend seven or more continuous days in care. These regulations are another step towards the implementation of neonatal care leave and pay in April this year, and they are the first to be brought before the Committee under the powers of the Act.
Currently, there is no statutory entitlement for parents of children who require neonatal care. Until now, parents in this difficult situation have had to rely on using other existing rights, such as maternity leave or annual leave, in order to be there to care for their baby and to support their partner. This approach has caused additional stress for parents. Some mothers have reported that they had to leave work because they were not ready to return at the end of their maternity leave. Because paternity leave is limited to two weeks, some fathers and partners have to rely on statutory unpaid parental leave or the compassion of their employers in order to take time off work.
Around 40,000 babies spend over one week in neonatal care each year. Once neonatal care leave and pay comes into force in April 2025, we estimate that around 60,000 parents will be eligible and that around 34,000 parents will take up paid neonatal care leave each year.
What do the SIs do? Neonatal care leave will enable eligible parents to take a minimum of one week and a maximum of 12 weeks of leave, in line with the number of weeks for which their baby receives neonatal care, on top of their other parental leave entitlements. Neonatal care leave will be a day 1 right for employees.
Statutory neonatal care pay, like other family-related pay rights, will be available to employees who also meet continuity of service and minimum earnings tests. Eligible employees must have worked for their employer for at least 26 weeks ending with the relevant week and must earn, on average, at least £125 per week before tax. If eligible, the parent will be able to claim a flat rate of £187.18 per week in the 2025-26 financial year, or 90% of their average earnings, whichever amount is lower.
Employers will administer the statutory payment on behalf of the Government. Small employers will be able to recover 103% of their statutory payment from the Exchequer, while larger employers can recover 92% of payments, and will therefore incur wage-like costs equivalent to 8% of the statutory payments they make. A similar arrangement applies for all other existing statutory parental payments.
Together, these regulations will provide protection and support for parents at an incredibly challenging time. These entitlements provide a floor, and employers can and should go further if they are able to.
We have consulted extensively with stakeholders, including charities and business representative organisations, to ensure that these regulations balance the needs of parents and businesses. These groups agreed that the proposed reforms would provide substantial benefits to businesses, including retaining the skills and knowledge of their current employees.
I will now explain a few points of detail in the regulations. These have been developed through consultation, including with the Department of Health and Social Care and NHS professionals.
We have designed a definition for neonatal care that encapsulates the different ways in which babies receive it, going beyond the walls of hospitals and including outreach care. This could include care that takes place within the family home, provided it meets the relevant criteria.
We have included outreach care in the eligibility criteria to capture the many ways in which babies receive care, and also to prevent a postcode lottery, where parents of children who receive the same clinical treatment may qualify in one area, as they receive treatment in hospital, but not in another, as they receive treatment at home through an outreach care programme.
To ensure that as many parents as possible are eligible, the definition of “parent” in the regulations encompasses adoptive parents, foster-to-adopt parents and intended parents in surrogacy arrangements. Those who meet this definition would also be required to have responsibility for the upbringing of the child and be caring for the child at the time of taking their leave and pay.
Having a baby in neonatal care is a difficult experience for any parent, whether the baby is admitted for one day or for many months. However, this entitlement will focus on parents of babies who experience prolonged stays in neonatal care, as they will be in most need of additional support. The qualifying period of neonatal care, as set out in the Act, will be a minimum of seven continuous days beginning on the day after the one on which the care starts. Starting the clock at 00.01 am—one minute past midnight—of the day after the child is admitted creates a consistent approach that does not vary from baby to baby.
Baroness Wyld (Con)
My Lords, I rise to support these statutory instruments wholeheartedly, and thank the Minister for setting them out so comprehensively and clearly. It was a great privilege to sponsor the Neonatal Care (Leave and Pay) Bill in this House. I am most grateful to Minister Justin Madders in the other place for writing to let me know that these SIs would be introduced.
The definition of neonatal care that the Government have arrived at is very good. Clearly, a lot of meticulous work went into that. At the end of last year, I finished serving on the Preterm Birth Committee, so brilliantly chaired by the noble Lord, Lord Patel. I reflect that, as with this Bill, it is so important that policy developments are rooted in the experience of families, as the Minister set out. As she said, these families are going through the most difficult situation.
I shall try to keep my remarks brief, but I wanted to put on the record my thanks to all the organisations and campaigners—and particularly the parents who told me their stories, and who have come back now and said what an impact this change will have. I thank Bliss for its briefings and for keeping up the pace on this. I reflect that, when the parents have come and campaigned, they have never asked for the world. They appreciate that, as the Minister said, one has to balance the needs of employers and employees, which is why the consultation with stakeholders that she referred to was so important.
This has been one of the best examples of cross-party working. When I came to this House, I never thought that I would work with the SNP, but it was a real pleasure so to do with Stuart McDonald in the other place in the last Parliament. I am proud that it was a Conservative Government that backed this Bill, but I also want to be generous of spirit and pay tribute to the Labour Party. When it was in opposition, it was incredibly helpful in getting this through. It was designed in close consultation with employers. As the Minister said, we always said that we hoped that employers would go further where and when they could. I just reflect that, as we go into future discussions about employee relations, dialogue is absolutely essential to ensuring that we can produce outcomes that everybody can get behind.
The Minister will be aware that groups of families will not be able to access this pay because of their different employment statuses. Can she say something about what the department is doing to look at what we might do in the future on that? She talked about making sure that HMRC is prepared, which will obviously involve raising awareness of these regulations and this change. Bliss and others have done a great job, but there is more we can do to make sure that parents know they are entitled to this—just to ease that anxiety.
This provision should make a real difference to many families—and families have told me that it would have done, if it had been there when they went through this. I hope that a lot of families will be spared some of the stress and worry that comes at the most difficult time. I thank the Minister once again for bringing these instruments before the Committee.
Lord Sharpe of Epsom (Con)
My Lords, I thank the Minister for her comprehensive introduction of these regulations. We on this side of the Committee support the introduction of these statutory instruments. As my noble friend Lady Wyld mentioned, the Conservative Party made a clear and firm commitment in its 2019 manifesto to introduce neonatal care, and it would be very remiss not to join the Minister in praising my noble friend Lady Wyld for her sponsorship of this Bill through the House of Lords. Her commitment was instrumental in delivering the Act, and she deserves enormous praise for that.
It is with a measure of cautious optimism that we now find ourselves in a position to support these measures—so long as we continue to build on the sensible and pragmatic improvements to workers’ rights that we, as Conservatives, introduced during our time in government. It was under our stewardship that we introduced shared parental leave, which affords families greater choice and flexibility. We also instituted carers’ leave, which granted employees valuable time off to care for their loved ones. Furthermore, we championed flexible working arrangements, giving both employers and employees the autonomy to determine working practices that best suit their needs.
As a result of these reforms, Britain now boasts one of the most generous systems of maternity and paternity leave anywhere in the world, ensuring that families are afforded the opportunity to spend vital uninterrupted time with their newborns. These advancements were not made in isolation; they were achieved, as my noble friend Lady Wyld said, through active dialogue and consultation with businesses and employees alike. That is how changes of this type should always be introduced; the Government may wish to take note.
I turn to the effects of this instrument, which aims to support employed parents of children born on or after 6 April 2025 whose babies require at least seven days of neonatal care within 28 days of birth. This measure is clearly a step forward, offering up to 12 weeks of paid leave for parents—one week for each week a child spends in neonatal care. The Official Opposition support this but there are questions to consider. How will the Government ensure that businesses, particularly small and medium-sized enterprises, manage these measures? Will the Government provide sufficient guidance and support to help employers navigate these changes smoothly? I notice that the Explanatory Memorandum says that guidance will be published before the regulations come into effect, but can the Minister reassure us that the guidance will be publicised widely and made available to employees? That may go some way to ameliorating the one-off cost of just over £4 million that the Minister pointed out would be an effect of these measures.
Additionally, although the Government have provided the statutory payment of £187.18 per week—or 90% of average earnings, whichever is lower—do they think this amount will be sufficient for parents to fully support themselves and their families during these challenging times? As my noble friend Lady Wyld pointed out, we hope that employees go further if they can, but, as she and I have said, we need to bring businesses with us.
There are several important questions regarding the scope and accessibility of these regulations. Although the provisions are designed to be inclusive, allowing parents in surrogacy arrangements and adoptive parents to take leave, what steps will the Government take to ensure that employers are fully aware of these provisions? How will they guarantee that leave is genuinely accessible to all those entitled to it, regardless of their work history or specific circumstances? Additionally, although businesses will be able to reclaim a portion of the statutory payment from HMRC, how will this process work in practice? Will the Government provide adequate support to help employers navigate the process smoothly, ensuring that there are no delays or confusion?
It is equally important to ensure that there is public awareness. The Government have indicated the development of a communications and stakeholder engagement plan to inform parents, employers and the public about these changes, but how will that work in practice? How will the Government ensure that the information reaches all parents, particularly those who may be unaware of their entitlement to neonatal care leave or pay? Can the Minister guarantee that the plan will be robust enough to reach every eligible family?
We support these measures but we must continue to scrutinise their practical implementation. Neonatal care leave and pay represent a significant step forward in supporting families during one of the most challenging periods of their lives. However, as with any new entitlement, the devil may well be in the details. How will the Government evaluate the success of these regulations over the first few years? Will there be a formal review mechanism to assess whether the scheme is meeting the needs of parents and businesses? It would also be most instructive to know how many parents are using this entitlement—whether it is the 60,000 estimated, or more, or less.
As I have asked a couple of times, how will the Government ensure that businesses, especially smaller ones, can manage the additional burden of these regulations? Will the statutory pay rate be sufficient for families already facing financial pressures? How will the public and employers be fully informed to ensure that the provisions are accessed effectively? Most importantly, can the Minister comment on the support that may be available to parents in Northern Ireland, as I believe these measures apply only to the mainland?
I look forward to hearing the Government’s responses to these questions and to ensuring that these regulations are implemented in a way that truly benefits the parents and children who need them most.
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful for the support across the Committee for these regulations. Again, I thank the noble Baroness, Lady Wyld, who rightly paid tribute to the parents and campaigners; I absolutely echo that point. Without that pressure, which all Governments have received, these measures simply would not have come forward. We are very grateful for the campaigners and the parents behind all of this. The noble Baroness also mentioned cross-party working. Private Members’ Bills are often a good illustration of that; I know this from the ones I have been involved in.
The noble Baroness, Lady Wyld, asked about the people who might be excluded. That is a good question and goes some way to answering the point made by the noble Lord, Lord Sharpe. We are just setting a minimum standard here, of course. This is a minimum standard, but we encourage employers to go above and beyond it. Many do so already and recognise the benefits that this brings to their businesses. We will keep this whole issue under review; the charities and campaigners will require that of us, I think, going back to the point made by the noble Lord, Lord Sharpe. We will want to see how the rollout goes but this is a good start. As with many regulations, we want to embed this measure before we do any further evaluation of it.
The noble Lord, Lord Sharpe, asked about making sure that we have a smooth implementation so that everybody knows what is going on. My officials are working with HMRC to develop and publish guidance on GOV.UK, which will explain the requirements of the legislation. In developing this guidance, we are undertaking user testing to ensure that it is fit for purpose. Ahead of implementation, my officials have been engaging with stakeholders—including employer groups, payroll providers, IT software developers and ACAS charities—and ensuring that we have posters in neonatal wards to advertise the benefits; I hope that that will make sure that the word spreads as widely as it possibly can.
I am grateful to the noble Lord for talking about some of the other measures and family-friendly policies that the previous Government introduced. I was pleased to hear about those; I hope that it bodes well for the debates that we are going to have on the Employment Rights Bill when we come to it in due course.
In the meantime, the provisions outlined in these SIs will provide for new parents with babies in neonatal care the ability to benefit from additional time off as a day 1 right. We should not lose sight of how important that is. Currently, many working families across the UK are having to return to work while their babies are sick and receiving care. As I said before, some mothers are also having to leave work because they are simply not ready to return to work. These measures aim to address some of the difficulties that thousands of parents face when their babies are in neonatal care or afterwards. They are a huge step forward.
We hope that the change in the law will also send a signal of encouragement to employers about the significance of recognising the struggles that parents go through when their very young child is unwell and of the need to provide them with appropriate support in all ways—not just with leave and pay but in other forms of support as well. Of course, I acknowledge that many employers are already providing that support to parents, but there is more that they can do; we all have an education role to play in all of that, I think.
In the meantime, I again thank noble Lords for all their comments.
Statutory Neonatal Care Pay (General) Regulations 2025
(2 days, 9 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Jones of Whitchurch
That the Grand Committee do consider the Statutory Neonatal Care Pay (General) Regulations 2025.
Relevant document: 16th Report from the Secondary Legislation Scrutiny Committee
Industrial Training Levy (Construction Industry Training Board) Order 2025
(2 days, 9 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Smith of Malvern
That the Grand Committee do consider the Industrial Training Levy (Construction Industry Training Board) Order 2025.
Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee
The Minister of State, Department for Education (Baroness Smith of Malvern) (Lab)
My Lords, I thank the Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments for the scrutiny they have provided to this order. This statutory instrument, laid in draft on 5 February, will allow the Construction Industry Training Board to raise one more year of levy on the construction sector to fund training. In particular, I welcome the £40 million from levy funds that the CITB is investing in homebuilding skills hubs to support the Government in reaching our 1.5 million homebuilding target.
The CITB’s latest figures state that the construction sector contributes £186 billion to our economy and employs 2.1 million workers—unquestionably a significant part of the UK economy. However, the sector’s reliance on subcontracting and self-employment means that investment in workforce skills is too frequently left to others to prioritise. This levy order reflects the key role that industry plays alongside government in making its workforce safe, competent and increasingly productive.
Established in 1964 with a remit across England, Scotland and Wales, the CITB’s legal purpose is to encourage the provision of construction training. It is a purpose that, some 60 years on, the independent 2023 ITB review found is still needed, due to what the lead reviewer, Mark Farmer, identified as “ongoing market failure”. His report accepts that the current ITB model, a statutory levy system for construction employers, remains the best way to fund such training. The CITB also remains a key partner with government and is an important player in our plan for change. It will work closely with Skills England when it emerges from the passage of legislation through these Houses.
Over the last three years, the CITB has used levy funding to support almost 69,000 apprentices, given grants to over 44,000 businesses and delivered masterclass courses in areas including roofing and bricklaying. This order is the vehicle to bring in just under £224 million of focused funding from the construction sector for the CITB to deliver training and skills activity to support our missions. I trust that noble Lords will continue to support this approach of levy funding training within the construction industry.
Before I outline the details of the SI, I will address the duration of this order. The primary legislation permits a one-year levy order without consensus, the process of consulting with industry, as long as certain criteria are met. The CITB wanted to give industry time to consider the impact of the ITB review before debating its support for three years of levy payments through the usual consensus process. With the delayed ITB review publication truncating the available time before current levy income runs out, the CITB provided me with levy proposals for one financial year. With the ITB review now published, the CITB will start consensus next week on proposals for a 2026 three-year levy order and will listen and respond to industry views in earnest on that.
I turn to the details of the SI. This one-year order retains the levy assessment rates prescribed by the three-year 2022 order: 0.35% of the earnings paid by employers to directly employed workers and 1.25% of the contract payments paid to indirectly employed workers. The levy order exemption threshold means that employers with an annual wage bill of below £135,000 are exempt from paying any levy at all. The CITB estimates that 69% of in-scope employers fall into that category. The levy order reduction threshold provides a 50% reduction for employers who pay a wage bill between £135,000 and £449,999. A further 15% of employers are in scope of this provision and would pay reduced contributions.
Both thresholds have been increased from the 2022 order to prevent employers who have increased employee wages exceeding the limit and facing new or increased levy rates. Employers who are exempt or pay reduced levy rates are still eligible to claim CITB support. The large volume of eligible employers is counterbalanced by the amount of levy paid by larger employers, enabling the few to support the many for the wider benefit of the construction industry.
In lieu of the typical consensus process, the CITB sought views on the one-year proposal from its 14 prescribed organisations, sector federations representing around 30% of all levy-paying employers and the nation councils for England, Scotland and Wales. The vast majority were supportive, and subsequent industry engagement via CITB comms channels and engagement with trade media has not attracted any dissent over a one-year approach. With the ITB review and the CITB’s strategic plan now published, industry is in a much stronger position to enter consensus for the 2026 proposals and make informed decisions.
In conclusion, I have confidence that your Lordships’ Committee will have suitably scrutinised the impact assessment that was laid with the levy documentation; this articulates how the CITB proposes to spend the levy raised by this order. This spend is focused on activities that support the Government’s ambitions to deliver on the plan for change, especially in commitments to build 1.5 million homes in this Parliament and to drive growth for the good of the nation. This order will enable the CITB to continue carrying out these vital training responsibilities. I beg to move.
Lord Storey (LD)
My Lords, I always remember how the late Lord Andrew Stunell, who was a spokesperson at one stage for the construction industry, used to rage at us about the huge shortages in every branch of construction. He said, “Just imagine, if we were able to fill these vacancies, how we would be able really to boost the economy and opportunities for young people”.
With an estimated 250,000 extra construction workers needed between now and 2028, it is vital to look at a wide range of ways in which to increase the number of new entrants to the recruitment pool, creating a more diverse workforce. One problem is the mismatch between supply and demand; individuals find it hard to find the right route into a role in construction, and it can be economically challenging for employers to invest in apprenticeships and new entrants.
Better pathways need to be created into the industry. Construction needs to grow apprenticeship starts, which are the main source of industry recruitment at entry level. In addition, around 30% of further education learners need to be able to progress to an apprenticeship or job in construction by assuring employers that they have the skills and experience they need.
Another problem is retention. Better retention of trainees and current workers in construction can significantly reduce skill shortages. Nearly 60,000 new entrants leave the industry each year. We need to retain the current workforce—many leave due to preventable reasons, such as poor workforce culture or limited career progression. Developing a training and skills system to meet the current and future needs, with CITB working with Skills England, will, I hope, start to reverse the problems we face. We very much welcome the levy.
Baroness Barran (Con)
My Lords, I rise to speak on this draft order, which, as the Minister set out, directly impacts the future development of the construction sector’s workforce. As we heard from the Minister, the CITB has been responsible, for the past 60 years or so, for ensuring that the sector has the skilled, diverse and competent workforce that it needs to meet both current and future challenges.
However, as we heard, following the 2023 review of the industrial training boards led by Mark Farmer and published in January 2025, it is clear that we need some radical changes to the way that we address the structural skills shortages in the construction sector. So we are left with a one-year SI, which of course is far from ideal from the perspective of the sector, but we accept that it gives time to work out an alternative approach. I hope the Minister will be relieved to hear that I think there is little to debate in relation to this SI, which I imagine will mark the end of an era, but it gives us an opportunity to hear from the Government about how they plan to deliver on the recommendations of the Farmer review.
I thank Mark Farmer, on behalf of these Benches, for his leadership of the review and his approach to analysing the challenges that the sector faces. His review does not mince its words, if that is the right phrase, by underlining the extent of the challenge facing the sector and the need for radical change in the way that skills are developed.
We welcome his focus on the need for a “competent, productive and resilient” industry, with the capacity to deliver on the nation’s critical infrastructure projects while ensuring high standards of quality and safety, and
“a ruthless focus on addressing the future workforce capacity, capability and resiliency challenges set out in this review”.
His recommendations are clear in terms of merging the ITBs into a single workforce planning and development body for construction and construction engineering, supported by a statutory levy. The shortages in the workforce that employers face are shown starkly by the combination of wages rising far faster than the national average while productivity has fallen. In the words of his review, these are
“crucial lead indicators of the industry’s future trajectory and represent a direct challenge to the effectiveness of the ITBs over the last 15-20 years”.
The review highlights the continued reliance on labour intensity but, sadly, appears to conclude—if I have understood correctly—that there are still too few incentives for individual businesses to markedly review that reliance through capital deployment or production model reforms. Of course, one unintended consequence of the increases in employers’ national insurance contributions might be more capital investment, but surely this is a clear call to the Government to create exactly the incentives that are currently lacking if the productivity of the sector is going to see the kind of step-change improvement that it needs. I would be grateful if the Minister could comment on that.
The review also argues for
“a pivot in levy spend with a more forced redistribution for maximum industry impact”—
I love that; it is so direct. The review argues for
“more efficient industry drawdown and mobilisation of both ITB levy and apprenticeship levy”.
How can the Minister reassure the Committee that this will happen in practice and within the next year?
That leads me to the Government’s response to the review, which is where I began to worry. I reassure the Committee that, although my speech is longer than I had planned, it will not cover all 40 or so pages of the Government’s response. I absolutely know and believe that the Minister is very focused and cares a great deal about delivering on this area, but some of the responses left me very uneasy, and I would be grateful for her reassurance on this.
As the Minister said in her opening remarks, recommendation 1.1 is that the ITB model should be retained in terms of its “basic statutory mandate”, but it goes on to say that
“its strategic priorities, core capabilities and activity require wholesale transformation. This all needs to be ruthlessly focused on addressing the fundamental workforce resilience challenges facing the construction and engineering construction industries”.
The DfE response is:
“Meeting the skills needs of the next decade is central to delivering the government’s missions across all regions and nations. This government is committed to ensuring we have the highly trained and more productive workforce needed to deliver the national, regional and local skills needs of the next decade, aligned with the new Industrial Strategy and government infrastructure and built environment commitments. In this context, we agree that there is still a case to maintain the Industry Training Boards (ITB) in their basic form. The construction and engineering construction sectors recognise both ITBs service and that training levels would be negatively affected without the ITB model and are broadly convinced of each organisation’s value”.
I do not know what the Minister thinks, but that does not feel to me like the “ruthlessly focused” tone of the recommendation.
Recommendation 1.3 of the review is:
“Proposals to implement the recommendations set out below should be developed quickly with agreed milestones to be monitored by DfE. If DfE”—
I emphasise that—
“is unsatisfied with progress it should reconsider the viability of the ITB model”.
The department’s response says:
“Department for Education (DfE) officials will update ministers on progress as part of the implementation plan, with a view to commenting on the ongoing viability of the ITB model. This assessment of progress will be undertaken in conjunction with wider reform of the skills landscape, focussing on the introduction of Skills England and the Growth and Skills Levy (in England)”.
I had a couple of other examples, but I think my point rests.
I would be grateful if the Minister could address the question raised by the Secondary Legislation Scrutiny Committee in its remarks on the SI in its report. It said that,
“for the future period, agreement with the industry will be sought when there is little clarity about how the CITB will operate and, therefore, what the levy will be funding”.
Finally, in its briefing for this debate, the CITB explains that £143 million—over 12%—of the funds raised from the levy over the life of the Parliament will be spent on
“running the business, including grant and levy administration”.
I work out that this is about £28 million a year. I wondered how that compared with the projected budget for Skills England and what the Minister thinks about this as a level of running costs. Can this money, together with that of the Engineering Construction Industry Training Board, be put to use in addressing the urgency and importance of the recommendations in the Farmer review?
As the noble Baroness rightly said, the construction industry is vital for the future of our nation, and it is essential that we take an effective approach to its workforce needs. As the Official Opposition, we support the Government to ensure that the levy works effectively for the next year and hope very much that our concerns about the DfE’s response to the Farmer review prove to be unfounded, and that a year from now we will have a clear and compelling plan for the future of the sector and its workforce.
Baroness Smith of Malvern (Lab)
I thank noble Lords who have attended today for their contributions to this debate—we are of quality rather than quantity. I will endeavour to cover all of the questions raised; where I fail to, I will follow up in writing.
The theme of both noble Lords’ contributions relates to our shared understanding of the challenge for the construction sector to be able to meet current requirements for construction skills and the construction skills necessary to deliver the Government’s plan for change, particularly to build the 1.5 million new homes that we have committed to. I wholly understand noble Lords’ concerns that we need to do more to fill the considerable gaps that exist there. That is why a much wider range of activity will be necessary, such as the important work that the CITB is doing, including the £40 million contribution to housebuilding hubs that I identified in my opening speech, which will make a considerable contribution to construction skills. A much broader approach is going to be necessary from the Government as well.
Such an approach will encompass, as the noble Lord, Lord Storey, said, how we support our further education colleges to deliver the specific skills necessary, how we develop a broader and more flexible offer in the growth and skills levy than has been available up to this point, and how we ensure that the construction industry is making the most of the diversity of those who might be available to contribute to construction skills. The CITB’s analysis shows that just 7.4% of UK construction workers are from an ethnic-minority background and that only 15% of the workforce are female. We can see that there is much more work that the CITB and the industry need to do to ensure that we are developing a construction workforce that reflects the whole of our society and not just part of it. That in itself will enable us to go further in ensuring that people are coming into the industry.
In particular, the CITB in its homebuilding hubs will support individuals to become employment-ready and site-ready. It will support all people wishing to enter the sector, including underrepresented groups, women, and those from black, Asian and other minority-ethnic backgrounds. The Into Work grant supports progression to employment from FE provision. The noble Lord, Lord Storey, identified what is sometimes a leaky pipeline from training into work. There, employers can receive £1,500 if they support work experience and then recruit someone from an FE construction course. That funding makes local employment opportunities in SMEs more viable for employers. In addition, the CITB is funding the training of industry construction ambassadors on fairness, inclusion and respect, to drive improvements in human resources practices and site experience.
The CITB is already undertaking a range of activity. As part of the Government’s skills strategy, there is more that we will want to look at in relation to that pipeline, to support for employers and to the knowledge of employers, in order to take on those who have done training in the construction industry in our colleges so that they can take their place in the industry and maximise the contribution being made.