Arrangement of Business
The Deputy Chairman of Committees (Lord Ashton of Hyde) (Non-Afl)
Good afternoon, my Lords. If there is a Division in the Chamber while we are sitting, which I think we expect, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Digital Markets, Competition and Consumers Act 2024 (Consequential Amendments) Regulations 2025
(6 days, 12 hours ago)
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Baroness Gustafsson
That the Grand Committee do consider the Digital Markets, Competition and Consumers Act 2024 (Consequential Amendments) Regulations 2025.
The Minister of State, Department for Business and Trade and Treasury (Baroness Gustafsson) (Lab)
My Lords, this instrument was laid before the House on 18 December 2024 and relates to the Digital Markets, Competition and Consumers Act 2024—the DMCC Act—which received Royal Assent in May 2024. The instrument makes amendments to legislation in consequence of Parts 3 and 4, and Chapter 2 of Part 5, of the Act.
Part 3 updates and strengthens enforcement of consumer protection law. Part 4 updates the legislative framework of consumer protections against unfair trading, introduces substantive new consumer rights in relation to subscriptions contracts and consumer savings schemes, and introduces reforms to alternative dispute resolution. Chapter 2 of Part 5 allows UK regulators to provide investigative assistance to overseas regulators in relation to competition, consumer protection and digital markets.
Many noble Lords contributed to this legislation through their scrutiny of it during its parliamentary passage, but I particularly thank the noble Lord, Lord Tyrie, who made the recommendations that led to the granting of the CMA’s new enforcement powers, and the noble Lord, Lord Offord of Garvel, who took the Bill, as it was then, through this House.
To ensure the provisions of the Act take effect as Parliament intended, it is necessary to make consequential amendments to the enactments listed in the Schedule to the regulations. These are relatively minor changes that do not materially alter policy but are needed to ensure the seamless functioning of consumer protection law and enforcement.
The amendments within the instrument fall into three broad categories. The first extends the application of legislative provisions that permit public authorities to share certain information with consumer enforcers. At present, persons or bodies that gather information using powers under certain statutes may share that information to facilitate consumer enforcement, consumer protection or overseas investigatory assistance, in certain circumstances.
This sharing is permitted by sections of the relevant statutes, which I will refer to as information gateways. These information gateways list the consumer protection legislation in relation to which information may be shared. For example, where Ofcom gathers information using powers in the Telecommunications Act 1984, the information gateway in Section 101 of that Act permits it to share that information with the Competition and Markets Authority for the purpose of enforcement of, among other things, the Consumer Protection from Unfair Trading Regulations 2008.
As I have already said, the DMCC Act introduces a new consumer enforcement framework, new and updated consumer protections, and new provisions on investigative assistance to overseas regulators. It is therefore necessary to add references to these provisions to the information gateways in various statutes. Were these provisions not to be updated, the current approach, whereby public authorities may share information gathered under statutory powers to facilitate consumer enforcement, consumer protection or overseas investigatory assistance, would be unavailable. This would compromise consumer protection, which could lead to consumer harm.
The second group of amendments is to Schedule 5 to the Consumer Rights Act 2015. These amendments ensure the CMA can use relevant investigatory powers in respect of its new direct enforcement powers. This will enable the CMA to monitor compliance with its direct enforcement notices as it currently can in relation to court enforcement orders. For example, at present, the CMA can require a person to provide information for the purposes of ascertaining whether a person is complying with a court enforcement order against them. This enables the CMA to ensure the enforcement orders are being complied with, and therefore that enforcement proceedings are having the desired effect. Under the DMCC Act, the CMA will also be able to use investigatory powers to monitor compliance with certain of its direct enforcement functions.
The DMCC Act introduces a new power for the CMA to give final enforcement notices for failing to respond to an information notice alongside its other direct enforcement powers. The amendments in these regulations are necessary to ensure that the CMA is empowered to monitor compliance with this new power in the same way as in relation to the rest of the court-based and direct enforcement regime.
Finally, this instrument updates references to consumer laws that have been repealed and replaced by the Act with references to the relevant new provisions introduced. These amendments do not materially change the policy or effect of the underlying law; they simply keep the statute book up to date in the usual way. As I hope is clear from my remarks, the intention of these regulations is to update and maintain the frameworks that underpin consumer law and its enforcement to ensure that the DMCC’s consumer reforms can be introduced seamlessly, with no inadvertent detriment to consumers.
I invite noble Lords to support the passage of this instrument. I commend these regulations to the Committee.
Lord Fox (LD)
My Lords, the shocking thing is that it was only in May of last year that we were working on the then DMCC Bill. It feels, frankly, a great deal longer ago; an awful lot has happened and a lot has changed. Some of the substantive aspects of what I will ask the Minister include getting some sense of how the tone has changed in our relationship with digital issues; and a question to get some sense of how the Government see things now, rather than how the previous Government saw things when we initially debated some of these issues.
As the Minister ably and clearly set out, this statutory instrument deals with three areas: consumer protection and law enforcement; unfair commercial practice and consumer rights; and international co-operation. On the latter, the measures facilitate Chapter 2 of Part 5 of the Act, which allows UK regulators to assist overseas regulators in matters related to competition, consumer protection and digital markets. This involves updating information gateways to permit the sharing of relevant information for investigative purposes.
That is really important when we look both to the west and to the east—that is, to the United States and to the European Union—because that bridge between our three data regimes is vital to the commercial future of this country. Although, when we were discussing the then Bill, there was relative harmony between the European Union and the United States in establishing their own data bridge, which underpins many of the issues that this part of the statutory instrument could change, I would suggest that that relationship is at best taut, if not snapped. We have yet to see the consequences of that snapping but, at some point, it will happen. Our relationship is almost literally sitting in the middle: we have an equivalence relationship with the European Union, and our data relationship with the United States rides on the back of the European Union’s data bridge. So a huge political issue is welling up here. I would like the Minister to tell your Lordships that the department is aware of it and is doing work; there is as much diplomatic work as data protection work to be done here because, in the end, it will be crucial to our service industries that we get this right, and calling it is going to be no easy measure. That is my first point.
Secondly, the Minister will be aware that there have been discussions about the Act’s scope—or, indeed, the lack of it. Some issues, such as secondary ticketing and greenwashing, have not been addressed by the Act; that is still seen as a limitation by stakeholders. As the Minister knows, a secondary ticketing review is going on. It would be useful if she could update your Lordships on where we are with that and when we might see some resolution. Also, how might any recommendations of that review find their way into statute, given that the Bill has already passed?
There is a general issue I would like to address before I address a specific one. We have heard a lot in the last week or two about bonfires of quangos. We have also seen a regime change in the CMA. I think it would be helpful for the Minister to set out that we will not see a stepping back by the CMA in doing its job, which is enabled through this Act. In her speech, she made clear the central role of the CMA, but it has to have the support of the Government to go after these sorts of things. We need to know that the Government still support the CMA in these kinds of activities.
One further point is that the noble Baroness, Lady Stowell of Beeston, asked His Majesty’s Government
“when they plan to make regulations under Schedule 7 to the Digital Markets, Competition and Consumers Act 2024 to provide limited exemptions for permissible investment funds associated with foreign powers”,
such as sovereign wealth or public sector pension funds, to invest in UK newspapers and news magazines. This was an important point, which has been debated at length. Section 130 of the DMCC Act introduced Schedule 7, which makes provisions for the purposes of preventing foreign powers from gaining control or influence over newspaper enterprises. There is more that I will not go into, but there is also a debate around particular exemptions that might or might not exist—a state-owned investor exemption and a diversified business exemption.
All of these are still in the wash. The UK Government announced plans to commence parts of the Act, including those related to competition reforms, in December 2024 or January 2025. A technical consultation, which included draft secondary legislation that also debated the threshold points I just mentioned, was launched in mid-2024 to gather feedback before the implementation of these additional statutory instruments. These are expected to be laid before Parliament for scrutiny before entering into force. However, the Library tells us that this has not yet happened, nor has DCMS published a formal response to that consultation. It is high time that we knew where we are on this and that these statutory instruments see the light of day.
There is an ominous feeling around this. Look at the Answer that the noble Baroness, Lady Twycross, gave to an Oral Question.
“On the SI to which the noble Baroness referred”—
this is the one that the noble Baroness, Lady Stowell, raised—
“there has been a general election in the interim since the legislation was passed by the previous Government. Ministers recognise the high importance of foreign states not being allowed to influence the policy of UK newspapers, but there should be a balance to encourage investment into the press sector. Therefore, we are carefully considering a response to the consultation. We hope to publish a response very soon”.—[Official Report, 5/3/25; col. 251.]
That is an ominous response given the debate that we had in May last year. I would like the Minister to put it into context.
The Deputy Chairman of Committees (Lord Ashton of Hyde) (Non-Afl)
My Lords, we will resume. By popular request, the noble Lord, Lord Fox, is going to quickly repeat what he said as we adjourned for a Division in the House.
Lord Fox (LD)
Lest you forget, my Lords. The rest of the Minister’s response to the question from the noble Baroness, Lady Stowell, was:
“Ministers recognise the high importance of foreign states not being allowed to influence the policy of UK newspapers, but there should be a balance to encourage investment into the press sector. Therefore, we are carefully considering a response to the consultation. We hope to publish a response very soon and lay the SI shortly after that”.—[Official Report, 5/3/25; col. 251.]
We need to be reassured that this will not see a watering down of the intentions of the original Act.
Viscount Camrose (Con)
My Lords, I thank the Minister for introducing this SI and the noble Lord, Lord Fox, for his characteristically thought-provoking remarks, particularly those on the dynamics of data bridges between the EU and the US, which were very pertinent.
The measures in this SI are intended to facilitate the effective implementation of the DMCC Act 2024. His Majesty’s Opposition do not object to the instrument in principle, given that it implements a Bill introduced under the last Government, but we still welcome the opportunity to scrutinise its provisions carefully to ensure that they deliver the outcomes intended. In that spirit, let us consider the impact of these measures.
This SI makes amendments to existing legislation to facilitate the implementation of the DMCC Act, whose purpose is to enhance consumer protections and improve their enforcement. Part 3 strengthens the powers of regulators to investigate and enforce consumer protection laws and Part 4 introduces stronger safeguards for consumers, particularly regarding unfair commercial practices, subscription contracts and alternative dispute resolution. Chapter 2 of Part 5 enables UK regulators to assist their international counterparts in matters related to competition and consumer protection.
The amendments in this SI update existing consumer law frameworks to align with the changes introduced by the DMCC Act. These provisions enable the necessary disclosure of information for enforcement purposes and ensure consistent application of the statutory provisions across different regulatory contexts. This is particularly important, as the updated consumer protection measures require regulators to access relevant information in order effectively to carry out their functions.
The SI also ensures the continuity of consumer policy during the transition to the new framework. While Part 4 of the Act will replace existing regulations, transitional provisions are in place to allow for the continued protection of consumers’ rights to redress for unfair trading until the new regulations are fully implemented. The instrument also updates the Consumer Rights Act 2015 and the Consumer Protection from Unfair Trading Regulations 2008 to facilitate a smooth transition to the new framework and ensure that consumers’ protections remain intact during this period.
While we on these Benches broadly support the measures, I have a few questions to clarify some important aspects. First, the instrument extends the ability of regulators and public authorities to disclose information to consumer enforcers, enabling them to more effectively investigate and enforce breaches of consumer protection laws. This includes amendments to various Acts, including the Water Resources Act 1991, to allow such disclosures. Can the Minister give an overview of the safeguards in place to ensure that information shared between bodies remains secure and is handled appropriately, particularly with regard to sensitive business or personal information? While information sharing is crucial for effective enforcement, it is equally important that the privacy and confidentiality of individuals and businesses are respected.
Secondly, the instrument seeks to ensure that the protections in Part 4 of the DMCC Act, particularly around subscription contracts, prepayments to savings schemes and unfair commercial practices, are properly enforced. Subscription traps have been a long-standing concern and, while the DMCC Act aims to address this, we must consider whether the proposed changes are sufficient to prevent such practices. How will the Minister ensure that the protections in place will be fully effective in addressing subscription traps? Can she assure us that businesses will be held to account under the new regime in a way that is both transparent and fair?
Finally, this instrument updates various references across the statute book to ensure that outdated provisions are replaced with those in the DMCC Act. This helps maintain the clarity and consistency of the legal framework. However, can the Minister confirm that relevant stakeholders, including regulators and businesses, have been adequately consulted on and prepared for the transition to these new rules, especially where they replace long-standing regulations?
I acknowledge the positive steps taken by this SI, but we must ensure collectively that they meet their three goals: to protect consumers, to promote fair competition and to ensure the right balance between privacy and transparency. I look forward to the Minister’s response and to further assurances that will aid the successful implementation of these important reforms.
Baroness Gustafsson (Lab)
I thank the noble Lord and the noble Viscount for their thoughtful contributions in this debate. I will try to address each of the points raised in turn.
First, the noble Lord, Lord Fox, talked about how much has changed since May 2024 and I really see that, whether it is in terms of innovation and the types of technology that we are using and need to protect consumers from, or global international relations and all the conversations that are happening on that side. If anything, I feel that international co-operation is going to be more important than ever, given these times, in terms both of co-operation on policy and communication about what has worked. I can assure the Committee that the Government will continue to work to ensure that there is effective collaboration with all their international partners in this regard.
The noble Lord also mentioned secondary ticketing and asked whether there has been any progress. I can confirm that on 10 January 2025, the consultation process commenced on the resale of live events tickets, alongside a call for evidence on pricing practices in the live events sector. Coming just off the back of what was a very exciting football event—my husband was particularly excited to see its outcome—we have a really thriving entertainment and sports sector, so making sure that we are protecting consumers in this space is an issue which is close to many of us. The consultation and call for evidence close on 4 April and the Government will consider all responses carefully before setting out their position.
With regard to any changes with the CMA, I can confirm that the Government are fully committed to the CMA and its independence. The reform agenda is really about ensuring that our regulators are delivering a stable and predictable environment that can support growth. We know that independent regulation is at the heart of providing that competition, but a market that our consumers believe and trust in will also support the economy and the growth that the Government are so aligned to. As Sarah Cardell, the CEO of the CMA, highlighted in her recent speech, there is no conflict between going for growth and driving competition. The reform programme will be all about complementing this approach.
The noble Lord, Lord Fox, raised the question of foreign ownership of state media. The Government are of course making sure that we can protect freedom of speech and a free press that is not subject to foreign state interference. I am as not deeply familiar with the consultation that the noble Lord referred to, so we will write to him to find further details and clarification, where we are able to do so, with regard to the Government’s position.
Turning to the questions raised by the noble Viscount, Lord Camrose, he talked about the overview of the protection afforded for information sharing. Protecting that data is a topic that is also close to my heart, so I commend any questions on it. Public authorities are and will continue to be subject to data protection law and other legal protections around confidentiality. Each regulator will have its own processes in place. For example, in the CMA’s recently published rules and guidance governing its new consumer enforcement powers, it sets out how confidential information provided by traders subject to enforcement will be protected.
With regard to subscription traps, another area that has been reviewed as part of this legislation, further detail on the operations of the subscriptions regime will be set out later this year in the regulations. They will be consulted on to ensure a balance between consumer protection and business freedom. There will also be a familiarisation period for businesses, once the regulations are finalised, to make sure that they have time to properly transition to the new framework, as well as any technology systems that will be needed to provide it.
The successful passage of these regulations will help to ensure the smooth commencement of Part 3, and Chapter 1 of Part 4, on 6 April 2025. I am hugely grateful for the support across the Committee on the Digital Markets, Competition and Consumers Act 2024 (Consequential Amendments) Regulations 2025. I commend these regulations to the Committee.
National Minimum Wage (Amendment) Regulations 2025
(6 days, 12 hours ago)
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Baroness Gustafsson
That the Grand Committee do consider the National Minimum Wage (Amendment) Regulations 2025.
The Minister of State, Department for Business and Trade and Treasury (Baroness Gustafsson) (Lab)
My Lords, the purpose of these regulations, which were laid before the House on 4 February, is to enact the annual increases to the national living wage and national minimum wage rates. After the parliamentary passage of these regulations, minimum wage rates will go up on Tuesday 1 April 2025. The headline national living wage will increase by 6.7%, from £11.44 to £12.21 an hour, a real-terms pay rise that will benefit and protect millions of workers. This year, the national minimum wage rate for those aged 18 to 20 will increase by £1.40 from £8.60 an hour to £10.00. This is a record increase, worth 16.3% on an hourly basis, and it is also a significant step towards achieving the Government’s ambition to extend the top rate, currently mandatory for those aged 21 and over, to all adults.
We look forward to hearing additional detail on this point from the Low Pay Commission once it has completed its consultation on the trajectory and pace of this equalisation. In the meantime, we will also deliver substantial increases to the statutory minimum wage rates for younger workers and apprentices. The hourly minimum wage rate for workers aged above school-leaving age but under 18 will increase from £6.40 to £7.55, an increase mirrored for the apprentice rate, which is payable to apprentices aged under 19 or others in the first year of their apprenticeship. Finally, we will also increase the daily accommodation offset rate from £9.99 to £10.66.
At this point, I want to extend my thanks to the Low Pay Commission. The new rates are based on the recommendations made by the LPC, which has demonstrated, as ever, its diligence, thoroughness and adaptability. On behalf of the Government, I thank the noble Baroness, Lady Stroud, and her fellow commissioners, as well as all the officials involved at the commission for their continued hard work, particularly in a year where they responded to an updated remit after this Government took office. The Government are also grateful to the bodies that promote and enforce the minimum wage across the UK. In addition to ACAS, which ensures employment disputes are resolved as promptly as possible, enforcement and compliance officials at HMRC ensure that the rates we are enacting today will have a real-world effect, educating workers and employers, upholding the law and ensuring that any money due is repaid to the workers who have earned it. Indeed, since the minimum wage was introduced, HMRC and its predecessor bodies have overseen the repayment of more than £186 million to 1.5 million workers and the issuing of more than £100 million in financial penalties.
The Government are committed to building on this and bolstering the enforcement of employment rights through the creation of the fair work agency, which will include, among other areas, enforcement of the national minimum wage. The new body will provide better support for employers to comply with the law, but it will also have powers to take tough action against the minority who deliberately flout it.
In the meantime, the Government will continue to fund minimum wage enforcement through HMRC, and we will also publish a new naming list in due course of those businesses that have failed to pay their workers the minimum wage, showing that there are consequences for employers who flout the law.
This year’s uplift to the national living wage will deliver a gross pay rise of £1,400 for a full-time worker on the rate, while a full-time worker aged between 18 and 20 will see a gross rise of £2,500. It is worth emphasising that the 2025 national living wage is expected to have the highest real value in the history of the UK’s minimum wage, 78% higher than the main adult rate when the national minimum wage was first introduced in 1999. The national minimum wage rate for 18 to 20 year-olds will be equal to 82% of the national living wage in 2025, similar to the relative value when the national minimum wage was first introduced in 1999, and compared to 75% in 2024. In all, we estimate that more than 3 million workers will benefit directly from the increases, with the potential for millions more to receive an indirect pay rise as employers preserve pay differentials.
This year’s uprating is a crucial step towards delivering our manifesto commitment to a genuine living wage for all adult workers. This is a Government who are ambitious in their agenda for working people and serious about taking the necessary steps to deliver on it. We are delivering this through a direct, real-terms pay increase for millions of workers. We have also brought forward our landmark Employment Rights Bill, and we continue to work across the board alongside trade unions, employers and other stakeholders both to deliver on the plan to make work pay and to realise the biggest upgrade of workers’ rights in a generation.
Accordingly, the Government will issue in the coming weeks a new remit to the Low Pay Commission, asking it to recommend minimum wage rates to apply from April 2026. I commend this instrument to the Committee.
Lord Sikka (Lab)
My Lords, I welcome the increase in the national minimum wage, although most of its real value has already been eroded by hikes in the price of energy, water, housing, transport, internet, food, council tax and much more. I shall speak to two particular concerns.
First, I am concerned about the denial of the headline minimum wage rate to workers below the age of 21. The under-21s do not pay lower rates of income tax and national insurance, nor do they pay a lower price for housing, food, shoes, clothes, transport, medicines, internet, and other goods and services. However, they are condemned by law to receive a lower wage. The under-21s are paid a lower wage rate but the product of their labour does not sell at a lower price. This enables many an employer to profiteer. The denial of the full minimum wage has relegalised exploitation.
Over the years, the typical government response has been that low wages preserve employment opportunities for young workers, yet I meet young people who are working longer hours and holding down multiple jobs simply to collect a decent wage and to make ends meet. This cannot be good for their health; indeed, it will create pressures somewhere else. Young people on low wages are trapped in low-paid jobs. I have met many who would like to undertake part-time education in order to further their opportunities but cannot because they simply do not have the resources. I therefore urge the Government to abolish the lower rates of the minimum wage and to alleviate poverty.
Secondly, I am concerned about the enforcement of the statutory minimum wage. The annual reports published by HMRC show a steady parade of companies that fail to pay the required wage. Last year, 524 employers were named for failing to pay £16 million in wages to 172,000 workers. Over the years, the culprits have included companies such as Argos, easyJet, Estée Lauder, Greggs, Marks & Spencer, Moss Bros, WHSmith and many others. None of these offenders ever forgets to pay the agreed wage rate to their executives but, somehow, they always forget to pay their workers a statutory minimum wage.
Although the recovery of unpaid wages is highly commendable, the persistence of non-payment suggests that there are systemic problems and that the penalties are not high enough. The International Labour Organization’s Convention No. 81, signed by the UK, recommends at least one inspector per 10,000 workers to monitor compliance with workers’ rights. The UK has less than 0.4% of the benchmark requirement, and employers can expect an inspection once every 500 years. Can the Minister explain why the Government are not meeting the ILO requirements? There are potential fines of up to 200% of the underpayment of the minimum wage, and a maximum of £20,000 per worker, but I could not find anyone who has actually faced this maximum penalty. Can the Minister say when the maximum penalty was last levied?
The persistence of offences suggests that penalties are simply not effective. I urge the Minister to consider a minimum penalty, which should be equivalent to the remuneration of the entire board of directors, and at least 50% of it must be paid by directors personally. This would deal with the business scale problem and incentivise directors to pay the minimum wage. It would also improve their memory.
Lord Jones (Lab)
My Lords, it is instructive to follow the noble Lord, Lord Sikka, who has a professorial exactitude that excites considerable interest in someone such as me. I thank the Minister for the precision, cogency and persuasiveness of her introduction. I rise on the principle that the Executive should be challenged and questioned. That is what a Parliament is for, and the Westminster Parliament will always acknowledge the need to challenge the Executive.
I greatly welcome the regulations. Anyone who offers a 6% or more increase must be acknowledged and thanked. I must say that the complexity of the regulations is considerable, and the weight of the document is evidence of that. Each year these regulations present themselves, but the data changes. I am grateful for the helpfulness of the Explanatory Memorandum. I know that a lot of work goes into the presentation of it and the regulations by the Minister’s departmental officials.
Can the Minister indicate how many people in Wales are on the national minimum wage? Is there a figure for the number of apprentices in Wales on the national minimum wage?
There is a need to consider the context to these regulations. The Explanatory Memorandum says that the legislation went forward and got parliamentary approval in 1998. I was present in the other place Her Majesty’s Government made those proposals, and I recollect the intensity of the determination of Prime Minister Blair and Chancellor of the Exchequer Brown. But we also experienced the angry and persistent opposition to these proposals in the other place. There was a considerable amount of anger, but now everyone would agree, I think, that it was a measure of social justice that was overdue, bearing in mind that unemployment was considerably high in the 1980s—indeed, there was mass unemployment. The memory of those tumultuous times enabled the Opposition of the day to include a national minimum wage in their manifesto and, when elected in 1997, to proceed to organise legislation.
I would like to point to paragraph 5.2 of the Explanatory Memorandum. In reading it, I acknowledge that this is a noble objective. It says:
“The Government has set a policy aim to deliver a genuine living wage for every adult worker, and the increases to the rates this year are intended to make progress towards that, both by increasing the headline NLW rate and narrowing the gap between the 18-20 NMW rate and the full adult rate”.
That has to be really good news and it deserves commendation. It is also worthwhile indicating that in paragraph 9.2 there is a reference to employers:
“These costs to employers represent a transfer to low-paid workers, and include the estimated cost on employers in the public sector. Over 3 million workers are estimated to receive a direct pay rise due to the increase to the NMW and NLW in April 2025”.
These regulations must be welcomed, and the Minister commended for her introduction.
Lord Fox (LD)
My Lords, we have heard two spirited supporters of this statutory instrument. I will add my spirits to the support of these regulations.
As the noble Lord, Lord Sikka, observed, many millions of workers have suffered a severe fallback in their living conditions as a result of a variety of measures, not least inflation, energy costs and the like. This has happened to a great degree over the past few years. Therefore, to some degree, this instrument is getting them back to a place they have slipped from. It is debatable whether it is protecting millions of workers, as the noble Baroness said, or helping ameliorate some of the problems they have. On that basis, we should be welcoming it.
In her speech, the Minister talked about the fair work agency, which will be enforcing this. It would be useful for us to find out what will be different. What will the fair work agency be doing that has not been done before? Quite clearly, this provision has been on the statute before and, as the noble Lord, Lord Sikka, pointed out, there have been many businesses that do not uphold it. How will the fair work agency be any different? What will it be doing to achieve that?
We have to put this into context. The noble Lord, Lord Jones, spoke about the aim to create a genuine living wage for everyone. To do that, we have to have businesses that are profitable and workers that have the skills to earn those wages. This measure cannot be taken in isolation. For business, there is not just this instrument, which I think most good businesses will welcome. Most good businesses are paying more than these wages already, but the cumulative effect on our businesses is already rolling up. It is the perception of that roll up that is causing the problems for the Chancellor at the moment, with very low growth and investment falling back.
I think we all welcome this measure but then we have the employers’ national insurance contribution, which we do not welcome. The noble Lord, Lord Sharpe, and I will be in the same camp on this. There is then the non-domestic rate rises for businesses in the retail, hospitality and leisure sector, which are the businesses most likely to be paying the minimum wage. They will have a huge increase in their rates, notwithstanding the small variations that can happen. The loss of the Covid reliefs will leave them paying two or three times the non-domestic rate that they are currently pay. These are the businesses that will be laying off workers because they cannot afford to pay them even the current minimum wage. There is a big discontinuity in government policy at this point.
Finally, the noble Baroness mentioned the Employment Rights Bill. There are good and bad things in that Bill; there are puts and takes. Contrary to what the noble Lord, Lord Jones, said, only four pages of these documents are the statutory instrument. The rest is an Explanatory Memorandum, which is an example of what we want from those and from impact assessments. It is a comprehensive and well-prepared document. I hope the noble Baroness will pass that on to all her colleagues.
On page 13, the impact assessment says that the aim—the Government’s preferred option—has been to minimise “administrative and compliance costs”. When we come to the Employment Rights Bill, the minimising of administration and compliance costs should be their preferred option for those rights. The little work I have already done on that Bill indicates that it is complicating things and making things harder for businesses to comply. Even where we agree with the measures in that Bill, the legalistic approach through which they will be brought about will not meet the Government’s objective, which, quite rightly, was applied to this legislation.
Lord Sharpe of Epsom (Con)
My Lords, I thank all previous speakers in this shortish but interesting debate. I will not go through the whole preamble; I note that the National Minimum Wage (Amendment) Regulations 2025 will result in an increase in the national living wage and the national minimum wage, as the Minister has outlined comprehensively. I was also going to heap praise on the impact assessment, which is an exemplar. I am slightly ashamed that I never managed to produce one like that, but I will learn my lesson for the future.
I will develop the themes mentioned by the noble Lord, Lord Fox. We obviously welcome these changes, but we approach them with a degree of caution and have several concerns, most of which are centred on the effect that they are likely to have on small and medium-sized enterprises. As usual, it looks to us as if they will bear the brunt of the increased labour costs. Indeed, it does not look that way just to us; according to the Government’s impact assessment, SMEs will account for 56% of the total monetised increase in labour costs, despite representing only 37% of the employment share. This is a disproportionate impact on SMEs and could have significant consequences, particularly, as the noble Lord, Lord Fox, has noted, given that many such businesses are already struggling with a number of combined pressures.
These are challenging business conditions, as the impact assessment specifically notes:
“Meanwhile, there is some evidence of challenging business conditions for SMEs specifically. Around 42.7% and 36.8% of micro and small businesses, respectively reported having less than three months of cash reserves in September 2024 (compared to 19.2% for large businesses)”.
That is a concerning picture of their cash. As the noble Lord noted, they will also have to wear increasing costs of employment because of national insurance contributions, and two to three times under the non-domestic rates Bill—particularly the hospitality industry, which is suffering disproportionately from some recent employment legislation.
I also concur with many of the things that the noble Lord, Lord Fox, said about the forthcoming Employment Rights Bill. As far as I can recall, the Government’s impact assessment for that Bill, which I think was published last week, said that UK businesses will pay an additional £5 billion as a consequence of that Bill but that it “could have” a potential “positive impact on growth”. That is not exactly a ringing endorsement from the Government’s own impact assessment when it comes to that legislation, which I am sure we will all scrutinise.
The CBI has raised concerns about the ability of businesses to absorb all these increases without affecting their bottom line. As it points out, while the national living wage has been effective in supporting low-income workers, it also adds pressures to businesses at a time when productivity growth is stagnant. This pressure, it argues, makes it difficult for firms to invest in the technology and innovation needed to improve productivity and deliver sustainable wage rises in the longer term.
The British Chambers of Commerce has warned that these changes could lead to price hikes, cuts in workplace training and difficulties with recruitment. Given the challenging economic backdrop, it is also vital that we carefully consider how these wage increases will affect SMEs and the economy as a whole.
Wage compression—I think the Minister called it pay differentials—must also be taken into account. As wages at the lower end of the spectrum rise, the gap between these wages and those of higher skilled workers may narrow. That would obviously create distortions in the labour market, which could reduce the incentive to pursue skilled professions or university degrees.
We have to ask whether the Government have considered the full economic impact of all these increases on businesses. How will they continue to support businesses in absorbing increased labour costs without jeopardising their ability to grow, invest and create jobs—and, of course, grow the economy?
The noble Lord, Lord Jones, touched on an extremely interesting point about apprentices. It is not necessarily directly connected to this, but have the Government investigated the effective price increase in employing them, which I think was announced in the Budget, to see what effect that has had on the numbers of people being offered and taking apprenticeships?
We recognise that these regulations are a welcome step towards improving the living standards of low-paid workers. His Majesty’s Official Opposition remain cautious, however, about their potential economic impact, particularly combined with all the other issues that we have highlighted. We support the principle of fair pay for workers but are concerned that the disproportionate burden placed on SMEs and larger businesses in sectors that are already struggling to make ends meet will have unintended consequences. I appreciate that these are general questions, but it would be good to hear some answers as to how the Government are planning to support businesses through these transitions. Much like the noble Lord, Lord Fox, I would also be interested to hear some more details on the fair work agency, if the noble Baroness is able to share them.
Baroness Gustafsson (Lab)
My Lords, I am grateful for the support across the Committee for these regulations and thank noble Lords for their valuable contributions to this debate. I will highlight some of the points raised. My noble friend Lord Sikka asked, rightly, given that these are times when our everyday costs are increasing, whether the real value of a lot of these wage rises has already been eroded.
Baroness Gustafsson (Lab)
My noble friend Lord Sikka asked about the real value of the minimum wage already being eroded. The 2025 national living wage is expected to have the highest real-terms value in the history of the UK’s minimum wage. In real terms, the national living wage in 2025 is expected to be about 4% higher than the 2024 rate and 78% higher than the main adult rate when the national minimum wage was introduced in 1999. I hope that goes some way to relieving some of those cost of living pressures.
On 18 to 20 year-olds being denied the full rate but still having the same living costs, we recognise that people in that band are more vulnerable to unemployment and that any impacts on employment costs or incentives to remain in training or education must be monitored very carefully as we proceed. We have asked the LPC to make progress on extending the national living wage to more adults than ever before by continuing to narrow the gap between the 18 to 20 minimum wage rate and the national living wage on a year-by-year path towards achieving a single adult rate, and we are delivering on that pledge.
There was a question around enforcement and the naming and shaming of those that do not comply with the minimum wage. The current system of employment rights is fragmented and ineffective and can be confusing for workers and employers alike, which can deliver bad outcomes for workers and the majority of businesses which want to do right by their staff. We are establishing the fair work agency to deliver a much-needed upgrade to the enforcement of workers’ rights. This is about bringing together the existing state enforcement functions in a single place which individuals and businesses can go to for help. Bringing together currently separate state enforcement functions will mean less duplication and better use of public money.
My noble friend’s last question was about penalties and enforcement. HMRC investigates breaches of the national minimum wage legislation. If it finds a breach, it orders the employer to repay the workers and also pay a penalty to the Government of up to 200% of the arrears owed to the workers. My noble friend asked about the last time and the circumstances in which that level of penalty was enforced. I confess I do not know the answer, but I will write to follow up with that information.
My noble friend Lord Jones raised questions around the complexity of regulations. Regulations can often be complex. They are by necessity complicated because they often deal with complicated issues that require balance on both sides. We have extensive guidance on them. Simplification can tend to make regulations easier to read but less precise and more open to avoidance, so it is a delicate balancing act that we are trying to navigate here. As mentioned earlier, we are grateful to ACAS for its work and encourage any employer or worker to contact it directly for guidance and assistance, which is often available.
My noble friend Lord Jones also asked a question about the number of workers on the national minimum wage and the number of apprentices in Wales. Roughly 150,000 workers in Wales are on the national minimum wage; for completeness, it is about 200,000 workers in Scotland and 160,000 workers in Northern Ireland. We remain committed to ensuring that apprentice wages support the attraction of talented individuals to apprenticeships and remain fair for employers. High-quality apprenticeships are often key to unlocking a more skilled and productive economy. On the apprenticeships statistics that were requested, I am happy to write to follow up on some of those specifics.
I turn now to the question from the noble Lord, Lord Fox, around the differences in the FWA as compared to previous enforcement agencies. The fair work agency will be a strong, recognisable single brand so that individuals know where to head to for help. It will have a more ambitious remit that goes further than the previous single enforcement body proposal. It will be about taking on and enforcing domestic agency rules, the national minimum wage, licensing standards for gangmasters and certain aspects of the Modern Slavery Act 2015. It will also take on additional rights, such as holiday pay and statutory sick pay, and there will be flexibility to bring in additional legislation as new challenges emerge,
The Deputy Chairman of Committees (Lord Ashton of Hyde) (Non-Afl)
My Lords, there is a Division in the House. We will adjourn for 10 minutes.
Baroness Gustafsson (Lab)
Before the Division, I was about to turn to the observations of the noble Lord, Lord Sharpe, the first of which was about the impact on SMEs and businesses. I remind noble Lords that we have accepted in full the recommendations of the Low Pay Commission. We are confident that these increases will help millions of families across the country without placing excessive burdens on businesses. The remit of the LPC asks it to take into account the impact on businesses, including SMEs, competitiveness, the labour market and the wider economy. The LPC draws on extensive labour market and pay analysis and stakeholder evidence when recommending rates.
Regarding support for businesses as they adjust to these new rates, the 2025 national minimum wage and NLW rates were announced in the Autumn Budget 2024, more than five months before the rates came into effect. These timelines are consistent with previous years, providing businesses with the maximum adjustment time. Similar to previous years, the Government will undertake an extensive communications campaign to increase awareness and understanding of the changes to the rates coming into effect from 1 April 2025 and to ensure that businesses and workers are prepared. The communication campaign is expected to include targeted activities specifically to support SMEs. The Government also publish extensive guidance online to support businesses in understanding the legislation and the steps required to comply.
This Government are proud to be delivering the biggest upgrade to the rights of working people in decades. An ambitious minimum wage, backed by robust enforcement, will always be a cornerstone of a Labour Government’s employment rights framework, and we are grateful for cross-party support on this vital measure. As noted, the Government’s impact assessment, which was published alongside this legislation, estimates a direct pay rise for more than 3 million people, covering all the nations and regions of the UK and every sector of employment. It is worth repeating that a full-time worker on the national living wage will receive a gross annual pay rise on 1 April of £1,400, while an 18 to 20 year-old working full time on the national minimum wage will benefit to the tune of £2,500 a year.
I reiterate the Government’s thanks to the noble Baroness, Lady Stroud, and the Low Pay Commission. Once a new remit is issued to the LPC, we will look forward to hearing its next recommendations later this year as we continue our path towards a genuine living wage for all adults. I commend these regulations to the Committee.
Lord Fox (LD)
May I just take the Minister back to before the Division, when we were starting to talk about the fair work agency? Either she has nothing more to tell us or it somehow got lost in the wash. Her response was somewhat thematic but really short on process. It is not clear to me how the fair work agency will be juxtaposed with other enforcement activities. In her answer to the noble Lord, Lord Sikka, the Minister talked about the role of HMRC. Will HMRC no longer have that role? If not, will the fair work agency have access to the data that HMRC has in order to make its prosecutions? That is just one of the outstanding queries about how this new agency will operate in the context of enforcing this important change.
Baroness Gustafsson (Lab)
I thank the noble Lord. I talked about the additional rights and enforcing the wider roles and rules of the domestic agency, but on how that will be impacted operationally, as well as the interface with HMRC, I will write to the noble Lord, Lord Fox, with some details on exactly how that will be undertaken.
Lord Sikka (Lab)
My Lords, perhaps I, too, could have one more bite. I referred to the penalty situation. The one we have at the moment enables directors to gain because the chances of all companies being inspected are very low. If they get away with it, they are quids in because the bottom line means that they will get a higher bonus and remuneration. If they are caught, there will be a penalty on the company, and they do not bear any personal penalties. Will the Government change that and make sure that directors personally pay at least half the penalty, as I suggested?
Baroness Gustafsson (Lab)
There is a lot of conversation about enforcement. We talked about the 200%. There is currently no legislation about directors’ personal accountability, but I am more than happy to follow up with the noble Lord on the specifics of what that would look like.
Immigration (Biometric Information etc.) (Amendment) Regulations 2025
(6 days, 12 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Lord Hanson of Flint
That the Grand Committee do consider the Immigration (Biometric Information etc.) (Amendment) Regulations 2025.
Relevant document: 16th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
My Lords, this legislation represents part of the Government’s ambition to use new technologies to significantly improve public services. There are four principal functions that will enable us to fulfil our commitments to transition from physical to digital documentation and to make full use of the biometric information that we collect during visa applications and at the border. If noble Lords will allow me, I shall outline what those changes are.
These regulations will allow: first, a new power at the border to enrol and retain biometric information from people arriving in the UK; secondly, for visa applications, measures to support the transition from physical biometric immigration documents to digital immigration status in the form of an eVisa for everyone who applies for a visa to come to the UK, including visitors; and, thirdly, the extension of the standard fingerprint retention period beyond 15 years for people who abscond from immigration bail and become uncontactable. Lastly, the instrument prevents abuse of the statelessness route.
I will take each of those changes in turn, starting with the changes at the border. The legislation will introduce crucial new border powers to expand the circumstances in which we can enrol biometric information from everyone at the UK border and retain it for non-British citizens. Biometric information plays a crucial role in our immigration system. It is an effective and efficient way of checking and confirming the identities of all arrivals to the UK, as well as the immigration status of foreign nationals who come into or live in the UK. This instrument will enhance current Border Force powers to refuse or cancel permission to enter the UK, and will empower officers to take robust action against non-British or non-Irish citizens who deliberately evade the requirement to provide their biometric information on arrival.
We are continually striving to improve how people cross the UK border, ensuring that we maximise passenger flow while maintaining security. We want to utilise biometric information further to trial new identity-verification and facial comparison technologies, known as contactless travel, in order both to build a border that can efficiently withstand future pressures and to ensure that our border remains secure. I know that noble Lords will share in that objective.
Contactless travel could enable a person to enter the UK without the need to routinely produce their passport at the border. Instead, we would compare the facial image of a person arriving in the UK with the biometric information that we hold from either their UK passport or their immigration application. Coupled with this, our universal permission to travel will prevent those without authorisation boarding a flight, ship or train to the UK; of course, everyone arriving in the UK will still need to travel with their passport and be prepared to present it at the border.
We are not alone in trialling new facial comparison capabilities. Other countries, such as the USA and Australia, are looking at introducing biometrically enabled automated border systems to improve passenger flow and maintain security. This instrument will ensure that we do not fall behind.
Our plan for contactless travel’s future use at the UK border is ambitious. However, as noble Lords would expect, we will take a cautious approach to the introduction of new border technology. These regulations do not commit the Government to introducing any new technology, so we can take the time to ensure that we get this system right. Our first step will be initially to test contactless travel on British citizens only, and we will move to further implementation only if this is a success. Our ambition is to start this trial by the end of this year, and we plan to announce further details shortly.
Looking now to the rollout of eVisas, the Government are pursuing an ambitious digital programme to modernise public services, including our visa system. These changes enable the UK to deliver a fair and firm immigration system that not only works in the national interest but is in line with the modern digital age. Businesses and customers alike expect a prompt and user-friendly experience in their transactions. I hope this instrument will enhance their experience by further supporting the transition from physical to online evidence of immigration status in the form of eVisas. Over time, physical and paper-based products and services will be replaced with accessible, straightforward digital products and services. Our overall aim is to ensure that people will have a secure and seamless digital journey when they interact with the UK’s immigration system. To support this, we stopped issuing biometric residence permits and cards on 1 November 2024.
Noble Lords will know that an eVisa is an online record of a person’s immigration permission in the UK and any conditions that might apply. It can be viewed by logging into the “view and prove” service using a UK Visas and Immigration account. As of 27 February 2025, more than 4 million people had created a UKVI account to access their eVisa, with a daily increase in this number as many more create accounts. Our aim is to ensure that the rollout of eVisas will improve foreign nationals’ experience of our border system, because eVisas are secure and cannot be stolen, lost, or tampered with, unlike physical documents. The fact that they can be accessed at almost any time and anywhere will give people with a valid immigration status in the UK an easy way to evidence their status and identity.
With the transition from physical cards to eVisas, the requirement for holders of physical immigration documents with settled status to apply for a replacement at least every 10 years has been eliminated. This is because an eVisa does not expire in the same way that a physical document would. This digital approach to our border and immigration system will streamline processes for people making applications or updating their details.
However, we acknowledge that a person’s personal information may change over time. In particular, facial images change as people age, so this instrument allows us to require eVisa holders to update their facial photographs at least once every 10 years. This mirrors the requirement we have for UK passports. I noticed from discussions of this that my passport is nine and a half years old now and coming to the end of its useful life, and I will have to update my passport shortly, as I would with an eVisa. It also mirrors what happens with driving licences. Having up-to-date images on eVisas will enable third parties, such as employers, to conduct their checks easily. Where an eVisa holder fails to update their photo within the required time, this instrument enables us to restrict their ability to share their status for verification. I emphasise that these sanctions will apply only to those who refuse to comply with the requirements, not those who are unable to.
We are particularly committed to preventing undue burdens on older people. We have drawn from the Windrush generation’s experiences. As older people are less likely to need to prove their immigration status in the UK, we will not require people aged over 70 to update their facial image or create a UKVI account. We will, however, encourage them to do so for their own convenience should they so wish.
Finally, we are now focusing on the change to our biometric retention approach for immigration absconders. The regulations clarify government powers to use and retain biometric information obtained from persons who abscond from immigration bail and avoid contact with the Home Office or the police beyond the standard 15-year retention period. This change will ensure that the person can be identified if they are encountered on a later occasion.
I will also briefly mention the statelessness route. This legislation closes a previous gap that enabled some people to avoid providing their biometrics. We now set out provisions that will ensure that we can capture biometric information from people who apply to stay in the UK as a stateless person. People who fail to enrol their biometrics as required without a reasonable excuse may have their application rejected or refused.
These changes are a fair and efficient way to maintain robust border control. I thank noble Lords for their attention and support in advancing these measures. This measure passed the House of Commons recently. Together, we are building a digitally driven immigration and border system that is fair and fit for the future. I beg to move.
Lord Davies of Gower (Con)
My Lords, I begin by acknowledging the significance of these regulations in the context of the Government’s broader efforts to modernise the immigration and border control systems. The introduction of biometric data collection, along with the transition towards a contactless border system, represents a significant step forward in ensuring the security and efficiency of our borders. Although His Majesty’s Official Opposition do not object to the instrument in principle, we believe that it is essential to scrutinise its provisions carefully to ensure that they deliver the intended outcomes.
Let us consider the impact of these measures. The regulations, as outlined, facilitate the collection of biometric data from all entry clearance applicants, with a specific requirement for facial images to be updated every 10 years. Additionally, the retention period for certain biometric data has been extended, and new sanctions have been introduced for non-compliance. The aim, of course, is to ensure that the system remains accurate, secure and consistent, and I believe it is imperative that we continue to assess how effectively these measures meet their stated objectives.
The Government’s shift towards contactless border control is a key aspect of these regulations. Through allowing biometric checks upon arrival at the UK border, the legislation seeks to streamline the border process, reduce queuing times and improve identity verification. The use of biometric data at eGates and primary control points is intended to facilitate smoother passenger flows. Although the intentions behind these measures are clear, we must consider their practical implications.
His Majesty’s Official Opposition acknowledge the necessity of biometric data retention as a key aspect of modernising border control. However, it is important to note that there are several concerns, particularly regarding the adequacy of the measures in fully realising the vision of a contactless border system, so there is particular interest in the practical challenges of implementing such a system.
Questions have been raised about whether the current data retention period and infrastructure are sufficient to handle the demands of a fully digitalised border. The increased reliance on biometric data also raises important questions about the system’s progression and effectiveness as it evolves. As we continue to expand the use of biometric information, it is crucial that the infrastructure that is in place can support the necessary technological advancements without introducing new vulnerabilities.
Additionally, there is a call for greater clarity on enforcement mechanisms. The growing importance of biometric data in identity verification processes necessitates robust compliance measures. Concerns have been raised about whether the current sanctions for non-compliance are adequate to address potential risks, such as fraudulent activity or failure to adhere to biometric requirements. These are important considerations, and it is vital that any enforcement measures are proportionate, fair and effective in securing compliance.
I have several key questions for the Minister. First, how do these measures address concerns regarding the progression of infrastructure and enforcement as biometric data becomes a central element of the border control process? Furthermore, given the move towards a fully contactless border system, how will these advancements integrate into our existing security frameworks to ensure that security, privacy and compliance are maintained? On biometric data retention, does the Minister believe that the 15-year retention period is adequate to support a robust and sustainable database that aligns with the Government’s vision for a contactless border system? Can he clarify the timeline for testing contactless travel for British citizens, including the duration and expected sample size of the trial? Additionally, what steps are being taken to integrate biometric data with other data sources to enhance security and improve efficiency at the border? How feasible is this integration within the current system?
Lord Hanson of Flint (Lab)
I am grateful to the noble Lord, Lord Davies of Gower, for his contribution and broad support for the regulations. I assure him that the purpose of these regulations and the direction of travel—which, again, the previous Government supported—is to ensure, first, that we have effective border control, secondly, that we make it fit for the modern age and, thirdly, that we do so in a way that helps support the individual to maintain their privacy while having biometric information for UK and other citizens in the longer term to ensure that we can control our borders effectively.
These regulations form part of the wider commitment to harness new emerging technologies radically to improve our public services and border processes. This is part of the evolution of how we manage our border. We are bringing forward legislation today to allow us to transform existing identity verification capabilities. This will ensure that our border remains secure and will enhance our ability to identify imposters, people traffickers and others who try to undertake criminal acts at our border.
The enhanced facial recognition capability provided through these regulations will also allow us further to develop new identity verification technologies, including to trial contactless travel at the UK border. It is an ongoing process. Capturing and maintaining biometric information will support border control and the crucial investigative work of police and law enforcement agencies that keep the UK safe.
The noble Lord mentioned sanctions for non-compliance with the requirements. The changes are intended to encourage status holders to update their biographical information and facial image on their UKVI account at least once every 10 years, as I mentioned, without requiring them to make an application to replace their immigration document. That is to make it simpler and easier for individuals to ensure that their status is correct. They will be told about the steps they need to undertake to enable them to generate a share code. In most circumstances this will simply require them to upload new facial images, which should take no longer than a few minutes to complete.
The new sanction is introduced to reflect the move to eVisas. That will allow the Secretary of State to prevent the user creating a share code to enable third-party checks of their status until they comply with the requirements of the regulations. In a sense, this will put a stop to that level of potential fraud; it will also reduce the need to impose more stringent sanctions, such as civil penalties or immigration sanctions. Again, I hope that is part of the process to ensure that this system works effectively.
As I mentioned at the beginning, we are beginning to trial this system for British citizens. It will develop in due course, but I hope that I have been able to answer the noble Lord’s questions. If he has any further points, I will certainly take interventions, but if not, I commend these regulations to the Grand Committee.
Online Procedure Rules (Specified Proceedings) Regulations 2025
(6 days, 12 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Lord Ponsonby of Shulbrede
That the Grand Committee do consider the Online Procedure Rules (Specified Proceedings) Regulations 2025.
Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Ponsonby of Shulbrede) (Lab)
My Lords, this instrument will specify proceedings for which the Online Procedure Rule Committee can make rules. The OPRC, established under the Judicial Review and Courts Act 2022, aims to modernise the civil, family and tribunal jurisdictions by developing rules governing the practice and procedure for specific types of online court and tribunal proceedings. These rules are intended to be simple, accessible and fair. They will streamline online processes and enhance the overall efficiency of the system. The OPRC cannot make any online procedure rules until the proceedings are specified in regulations.
I shall explain the proceedings for which this SI will allow the OPRC to make rules. In the civil jurisdiction, the OPRC will be able to make online procedure rules for property proceedings. The Ministry of Justice and HM Courts and Tribunal Service are working closely with MHCLG to ensure that the justice system is fully prepared for the implementation of the Renters’ Rights Bill. As part of this, HMCTS will digitise the court process for landlords to regain possession of their property, introducing a digital service for both landlords and tenants. Procedure rules will be required to allow use of this service. Parliamentary approval of the statutory instrument will enable the OPRC to make these rules. The digital service, and the rules, will reflect the renters’ rights measures as and when they are brought into force. The introduction of the digital service, and the rules which underpin it, are not, however, tied to the timelines for bringing the measures in the Renters’ Rights Bill into force. The OPRC will also be able to make online procedure rules for property proceedings in the First-tier and Upper Tribunal. This will allow certain cases currently dealt with by the Property Chamber or the Lands Chamber to be included in online procedure rules as and when HMCTS introduces digital systems that mean that those cases are managed online.
In the family jurisdiction, the OPRC will be able to make rules for financial remedies. This will include contested financial remedies and financial consent orders, for example, following a divorce. Online procedure rules for these proceedings will be designed to support the existing online services provided by HMCTS, which are currently governed by practice directions made by the Family Procedure Rule Committee.
The extent of this instrument is UK-wide. Its territorial application is England and Wales in respect of civil and family proceedings and UK-wide in respect of tribunal proceedings.
We believe that the digitisation of court and tribunal processes requires the development of procedure rules that are suitable for the digital age. They must be concise and straightforward to understand. They must support HMCTS and the judiciary to deliver online processes and keep adapting to advances in technology. These aims will be met by the transfer of these specified proceedings to the OPRC, a cross-jurisdictional rule committee whose members include experts in the law and in the development of user-focused digital services. I beg to move.
Lord Marks of Henley-on-Thames (LD)
My Lords, I am grateful to the Minister for his helpful introduction to these proposed regulations. We on these Benches support the introduction of digital procedures, certainly where they can be introduced without any adverse impact on the fairness, transparency and user-friendliness of the procedures as a whole. We agree that digital procedures have the potential to streamline court proceedings, cut delay and costs and, to use the Minister’s words, produce a straightforward and concise procedure that will be more accessible. We supported the introduction of online procedures when the Judicial Review and Courts Act was debated in the House in 2022.
We also welcome the introduction of the Online Procedure Rules Committee. It can only be helpful to have a specialist committee to establish rules for online procedures across several fields. There will be scope for cross-fertilisation between different areas utilising the various digital skills that are available for the development of sets of rules in different fields, and that can only be of considerable advantage.
Lord Ponsonby of Shulbrede (Lab)
I thank the noble Lord for his support. I am able to give him the assurances that he is looking for. He is right to say that the OPRC will continue to make rules as the use of digitisation in the court system continues to develop. The point that he made about cross-fertilisation between different areas and different jurisdictions was a good one; the committee will continue to work on that basis.
The noble Lord sought assurance on access to the courts for people who are adversely affected in whatever way. I am happy to give him that assurance, whether it be through paper or through other ways of supporting people to access the court system. This is an issue that I absolutely recognise through my former work in the court system.
I hope that, through my earlier introduction, I have been able to demonstrate the fundamental aim of this instrument, which is primarily to grant the OPRC rule-making powers in civil proceedings in England and Wales relating to property, family proceedings in England and Wales relating to financial remedies and First-tier Tribunal and Upper Tribunal proceedings relating to property. This instrument will define those proceedings, enabling the OPRC to achieve its objective to advance the modernisation of the civil, family and tribunal justice systems.
Civil Proceedings and Magistrates’ Courts Fees (Amendment) Order 2025
(6 days, 12 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Lord Ponsonby of Shulbrede
That the Grand Committee do consider the Civil Proceedings and Magistrates’ Courts Fees (Amendment) Order 2025.
Relevant document: 18th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Ponsonby of Shulbrede) (Lab)
My Lords, this draft instrument makes a technical amendment to three court and tribunal fees to ensure that they can continue to be charged at their current level by His Majesty’s Courts & Tribunals Service. This forms part of a wider set of amendments to 27 fees whose latest estimated costs have fallen below their current value. The 24 fees not included in this affirmative instrument will be reduced by a negative SI, which will be laid before Parliament shortly.
No one will be required to pay a higher fee as a result of the changes made by this affirmative instrument. Rather, it simply changes the legislative power under which the three fees in question are set without amending the amount charged to HMCTS users. The amendments will protect at least £3.5 million in income a year to help ensure that the courts and tribunals remain efficiently and effectively resourced, reducing the overall cost to the taxpayer. A properly funded and functioning HMCTS is critical to upholding the Lord Chancellor’s statutory duty to protect access to justice.
Fees act as an essential source of income for the funding of the courts and the tribunals, with over 300 fees charged for a variety of administrative and judicial services provided by HMCTS. In line with the principles in HM Treasury’s Managing Public Money, most court fees are set to recover no more than the underlying estimate of what it costs HMCTS to run the corresponding service. Others are set deliberately below the cost of the service to ensure that access to justice is protected, such as in proceedings concerning domestic abuse.
A minority of HMCTS fees are set under what is known as the “enhanced” power via Section 180 of the Anti-social Behaviour, Crime and Policing Act 2014. Enhanced fees can lawfully over-recover their underpinning cost to cross-subsidise HMCTS services for which low or no fees are payable.
Following a substantial review of my department’s costing methodology in relation to court processes, the newly estimated costs of 27 fees were found to have fallen below previous estimates. The revised costing methodology is an improved, more nuanced model that relies on data sources that were not available to the previous methodology. The powers under which the 27 fees are currently set allow them to recover a maximum of their underlying cost. This means that the 27 fees must either be reduced to their estimated cost or kept as they are but restated under the 2014 Act in order to become enhanced fees.
In line with the Treasury principles, it is prudent for the 2014 Act to be used sparingly in setting fees that over-recover their cost. My department’s position is therefore that the enhanced power should be reserved for fees that can generate substantial levels of income to cross-subsidise under-recovering parts of HMCTS, provided that doing so has a minimal impact on access to justice. This is why the majority of the 27 fees in question will be reduced in line with their newly estimated cost by an upcoming negative instrument, with only three enhanced by this affirmative instrument.
I shall now refer to each of the three fees in turn, with a view to explaining the service to which they are attached and why my department deems it appropriate that each is enhanced for the purpose of cross-subsidisation. The first is the 50p fee charged for a council tax liability order. This is payable by local authorities to legally demand payment of council tax arrears. HMCTS receives high volumes of CTLO applications each year which raise significant levels of income to support the running costs of courts and tribunals. In 2022-23, 2.1 million CTLOs were made, resulting in £1.1 million in fee income. Enhancing the fee will not only ensure that this crucial income is retained but remove the cost to the taxpayer of adjusting the fee in line with its regularly fluctuating cost.
The second fee is charged at £22 for a warrant of entry. These warrants are mostly applied for by utility companies to gain legal access to private premises. Similarly to CTLOs, high volumes of these warrants are made each year, generating £7.2 million alone in fee income for HMCTS in 2022-23. Reducing the fee to cost would place a significant pressure on my department at a particularly challenging financial time.
The third fee relates to ships or goods which have been seized in the event of a breach and are then sold off at auction. The Admiralty Court charges several fees which are payable upon sale of a vessel or goods, but the amount payable varies depending on the value of the ship. The fee relevant to this instrument is that charged for ships valued over £100,000. Unlike the flat CTLO and warrant of entry fees, this fee is £1 for every £100 of the ship’s value up to £100,000 and increases by a further 50p for every £100 of the ship’s value above £100,000, with a minimum fee of £205. Although this fee does not attract as many applications as those for a CTLO or warrant of entry, it still provides an important source of income for HMCTS. This is because some ships are sold for several million pounds, meaning that even low levels of annual volumes can result in notable overall income generated.
I reiterate that this instrument merely maintains the status quo by not increasing the value of any of the three fees it restates under the 2014 Act. As a result, there is no anticipated impact on users of the courts and tribunals specifically deriving from this instrument. The negligible bearing this SI will have on HMCTS users was echoed in the responses to the 2023 consultation, undertaken by the previous Government, regarding a series of updates made to court and tribunal fees. Included within this consultation was a proposal to enhance the CTLO fee. The other two fees in question had not yet been identified as over-recovering at the time of the consultation. Of those who responded to this proposal, 63% had no view and no further comments to share, while 17% of respondents agreed with the proposal, stating that enhancing the fee would not negatively impact users given that its current value of 50p would be retained. The two respondents who disagreed had incorrectly assumed that the fee was being increased.
I reassure Members that the number of variations between costs and fee values that are corrected through this instrument and the accompanying negative SI is considered higher than usual. This is because of the revisions brought about through my department’s updated costing methodology. Although the costs underpinning HMCTS fees will be reviewed annually, I do not anticipate the need to amend this many fees year on year, thanks to the improvements made by the new methodology.
The three fees in question are charged in England and Wales only. This instrument will therefore create no effect on the court fees charged in Scotland and Northern Ireland.
This instrument can be seen as a corrective SI which simply delivers minor updates to the statute book for continuity purposes. As such, it does not bring about any practical changes to those affected by court and tribunal fees, and in fact ensures that the fees payable by the relevant court users remain the same. I believe that the amendments affected by this SI and its accompanying negative instrument represent the most pragmatic approach in keeping my department’s fees legislation up to date. I beg to move.
Lord Marks of Henley-on-Thames (LD)
My Lords, once again I am grateful to the Minister for his introduction to this instrument. It is difficult to say much about this amendment order in that, as he pointed out, it does not alter the existing fees at all, as far as I can see. Also, the possibility of enhanced fees is restated in relation to the fees covered by the order, there already having been that possibility in legislation.
Having read the Explanatory Memorandum and listened to the Minister’s introduction, it appears that the level would have gone down on the introduction of what I think he called the new methodology, which I thought was an attractive word in relation to this instrument. In the interests of transparency, it would be interesting if he could say how much lower the fees would have been on the introduction of the new methodology had this instrument not been brought into effect.
In general, we are of the view that the level of court fees should be assessed by reference to the recovery of the costs of administration, rather than being treated as a kind of profit centre for either the department or the Courts & Tribunals Service. Therefore, we do not see it as sensible to set fees at a level that produces a substantial profit for the administration, although I can see an argument for the cross-subsidisation that the Minister mentioned where there are other areas that are loss-making for the Courts & Tribunals Service which are covered by some excess income on some of these very high-volume fees. I do not suppose that anybody will be too worried about the commission-type fee for the sale of goods and shipping.
We simply state that, in general, there should be a good reason for enhanced fees, which I think is a principle that the department accepts. We accept that some fees will exceed the costs of administration, but that needs to be justified. We do not see the fees charged by courts as an appropriate way of raising extra funds for the public purse.
Lord Ponsonby of Shulbrede (Lab)
I thank the noble Lord for his comments, and I agree with the way he set out the objectives of raising fees. It is not the objective to make a profit on them. The vast bulk of fees are set at a level to recover their administrative cost. However, occasionally there are these enhanced fees. For reasons which the noble Lord will understand, there is some limited extent of cross-subsidisation for certain fees which are set much lower or at zero. But the general principle is that the fees should cover the cost of the application itself.
The noble Lord asked what the fees would be if this order was not in place. In the case of the council tax liability order, the fee is being maintained at 50p, but it would go down to 23p if this SI was not put in place. In the case of the warrants of entry, it is currently being maintained at £22 but would go down to £12.09, for the same reason. It is more difficult for me to give the equivalent value for the sale of ships or goods because it is a different calculation and I cannot give a single number to give a comparison. However, I hope that answers the noble Lord’s questions. I commend this order to the Committee.