Arrangement of Business
The Deputy Chairman of Committees (Lord Haskel) (Lab)
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.
Medical Devices and Blood Safety and Quality (Fees Amendment) Regulations 2025
(1 day, 16 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Merron
That the Grand Committee do consider the Medical Devices and Blood Safety and Quality (Fees Amendment) Regulations 2025.
Relevant document: 23rd Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
My Lords, I am grateful for the opportunity to debate these regulations, which I think can fairly be described as routine. The Medicines and Healthcare products Regulatory Agency charges fees for most of its services and, to ensure continued cost recovery, updates its fees every two years. This regularity provides certainty to customers and enables better financial planning. This statutory instrument helps to achieve this by doing three things.
First, it updates the fees that the MHRA charges in relation to its activities in regulating medical devices and blood components for transfusion. These fees were last updated in April 2023. The implementation date for the proposed changes is July 2025 and they will ensure cost recovery until 2027. This will apply UK-wide, with the fees being the same across the United Kingdom. The total cost to those who pay the MHRA’s fees from this instrument is estimated to be £0.7 million per year after inflation.
Secondly, the instrument introduces a fee for a new, optional service: a regulatory advice meeting for medical devices. In addition to publishing guidance and addressing written inquiries, this new service will further support manufacturers in their understanding of the application of the UK’s regulatory framework to their products. I am glad to say that this service was well received in the consultation. It will be mainly for those developing novel and/or complex products where the application of legislation is not as straightforward or easily understood as it might be. We have had many discussions on removing obstacles to getting products to market which support better care for patients. I hope that this will make a contribution in this regard.
Thirdly, the instrument will introduce a new payment easement for small and medium-sized enterprises for the MHRA’s medical device clinical investigation fees. While this easement will not reduce the overall fee, which would require cross-subsidisation, it will enable the fee to be paid in two instalments, providing flexibility and, I hope, supporting the businesses concerned.
It might be helpful if I highlight the important role that the MHRA plays in safeguarding public health and the importance of the agency continuing to be properly funded to deliver its role. The MHRA is a world-leading regulator of medicines, medical devices and blood components for transfusion in the UK. It plays a vital role in protecting and improving public health. It is, I suggest, an engine for UK growth and innovation; it is certainly an indispensable part of the UK health system and plays a major role globally, working with international partners.
The principles for how the MHRA charges fees are set by HM Treasury in its guidance, Managing Public Money. The basic principle is to set statutory fees to recover full costs. This means that the regulated bear the cost of regulation and that the MHRA does not profit from fees or make a loss that would then have to be subsidised by government departments or the UK taxpayer. It is, of course, standard practice for government bodies that operate on a cost-recovery basis to update their fees. It is also standard practice for other regulators, which is the reason why I described this statutory instrument as “routine”.
All fees are set by taking into account various factors that reflect the cost of the activity—for example, the activities involved in delivering a service, the time taken and the number and grade of staff involved. This process is informed by the recording of staff activity, which is the practice of monitoring and recording certain activities performed by the MHRA’s staff to establish how long they take and, so, how much they cost. In addition, also in line with the HM Treasury guidance, the MHRA includes the costs of necessary corporate overheads and system investments. Regular fee uplifts ensure financial sustainability and enable the MHRA to deliver the responsive, efficient service that its customers rightly expect.
It is worth noting that this instrument does not change the MHRA’s fees in relation to medicines regulations. Given the different legal positions in relation to the powers to make regulations about fees relating to medicines, medical devices and blood components for transfusion, two statutory instruments have been used for the MHRA’s fee uplift. A second instrument for human medicines fees has, therefore, already been laid before the UK Parliament and the Northern Ireland Assembly and has already come into force.
In summary, ensuring that the MHRA is sufficiently resourced will help it to deliver its services more reliably and to provide patients, the public and industry with the service that they expect. I beg to move.
Lord Scriven (LD)
My Lords, I thank the Minister for outlining the purpose of these regulations so eloquently and succinctly. It is clear that the change to the fee structure for regulating medical devices and medical products is part of a realm of profound importance both to public health and to the future of healthcare in the UK. As Liberal Democrats, we unequivocally support a robust, efficient and well-resourced Medicines and Healthcare products Regulatory Agency, but it is important that our regulatory bodies possess the financial stability to ensure the safety, quality and efficacy of medical products and blood safety, which touch the lives of millions throughout the year.
I am not going to speak on these regulations at great length; I just want to tease out a couple of issues about which I would like a little more information from the Minister. First, increasing the fees will mean that costs will be covered automatically. What mechanisms are in place to ensure that efficiency and effectiveness are in place, rather than just ballooning costs that it would be assumed the industry would absorb? I am not clear from reading the impact assessment or the regulations exactly how the Government will ensure that the cost really is the cost and is not excessive cost.
Secondly, it is clear in the impact assessment that most of those who gave feedback to the consultation question were against these fees. How have the Government taken into consideration the reservations, not just of the “no” element but in particular that the fees were seen in some cases to be disproportionately high and to exceed inflation? How has that developed? Why are these costs disproportionately high and why do they exceed inflation?
Finally, it is important to increase the fees to ensure the agency’s work can continue but, critically, the impact assessment demonstrates a lack of concrete detail on how these increased fees will translate into tangible improvements in these MHRA services. Although the rationale for increased fees is often framed around enhancing regulatory efficiency and speed, the document provides insufficient assurances of the measurable commitments as to how the additional revenue will be specifically utilised. There is no clear framework for accountability that demonstrates how these funds will lead to faster approvals or increased safety. How will the department measure such improvements? In particular, what improvements are expected on the back of this fee increase?
These regulations are a serious matter. They impact on the health of our nation and, to some degree, the vibrancy of our life sciences industry, but we must ensure that our regulatory framework is not only robust but forward thinking and truly serves the best interests of every patient in the UK by ensuring that the increased cost will both increase efficiency and, we hope, improve the services that the MHRA provides.
Lord Kamall (Con)
My Lords, I also thank the Minister for introducing these regulations succinctly, as the noble Lord, Lord Scriven, said. Perhaps in common with the Liberal Democrats, we on these Benches—the numerous people on these Benches—do not seek to oppose this statutory instrument. Rather, we just wish to reflect on its purpose and practical implications, and ask a few questions for clarification that I hope the Minister will be able to answer.
As noble Lords have said, this instrument amends three pieces of legislation. We understand that these changes are intended to enable the MHRA to increase the fees to manufacturers, suppliers and other regulated entities involved in the approval of medical devices and blood components. Noble Lords understand that the current model relies primarily on contributions from industry and that the MHRA’s fees were last comprehensively reviewed in April 2023, as the Minister said. Of course, we have seen a rise in operational costs, particularly relating to staff and overheads, so we completely understand that the intention behind these regulations is to bring the MHRA’s income more closely in line with the cost of delivering its services. It is also to place the agency on a more sustainable financial footing, thereby reducing its reliance on central government funding, which I think is something on which we all agree.
As the noble Lord, Lord Scriven, said, the impact assessment accompanying this instrument identified the primary benefit of this additional income—to enable the MHRA to continue fulfilling its responsibilities —but, as was raised by some in the industry and in the other place, it is less clear how these changes will directly benefit patients, healthcare providers or, indeed, medical innovators, in particular those operating in the small and medium-sized business sector. We understand that the Government decided to pause their proposed reforms to the medical device registration fee following concerns raised by stakeholders. That decision is welcome, and I thank the Minister and the Government for that. The paused proposals would have had a disproportionate impact on companies registering a large number of products, particularly due to the proposed fee model linked to the global medical device nomenclature codes. However, the broad uplift in the other fees will still go ahead, and it is in this wider context that we seek some reassurance about these changes.
I shall look at some of the areas on which some clarity would be welcome. First, we recognise the MHRA’s need for stable funding, but we want to make sure it does not create barriers to innovation, in particular for start-ups and SMEs, which, as we know, often operate on much narrower margins and already navigate a complex regulatory environment. What assessment has been made of the cumulative impact of these fee increases on smaller firms? Do we know how these changes compare with the regulatory costs faced by manufacturers in other major markets, such as the EU, the US or Asia? Is the Minister able to give some international context here?
Secondly, the impact assessment confirms that the staffing costs remain the largest cost driver for the MHRA and assumes a 2.2% annual pay increase through to 2027—below the current rate of inflation. Has any thought been given to whether that is a realistic assumption and basis for planning? If the actual costs prove higher than forecast, how will that impact the MHRA’s progress towards the full cost of recovery? Would the agency be forced to scale back its services, or would the taxpayer be expected to cover any shortfall?
Baroness Merron (Lab)
I am most grateful to both noble Lords for their constructive contributions and their support for these measures. I welcome their questions and will do my best to respond to them.
I will first make a few general points that may assist. Noble Lords acknowledged the role of the MHRA, the essential services it offers and the crucial role it plays. It is also understood that it needs financial backing to do that. Therefore, in supporting these regulations, we will enable the MHRA to continue to contribute to the Government’s health mission and to balance its responsibilities to maintain product safety and champion innovation. As the noble Lord, Lord Kamall, said, that is so important to us as a country and an economy, as well as to the National Health Service.
The MHRA is not alone in how it is funded. Most regulators levy charges for their work, and—in response to the question about international comparisons—it is also accepted international practice for healthcare product regulation to follow this trajectory; for example, the European Medicines Agency and the US FDA also charge fees. I certainly feel that the cost recovery approach, which neither noble Lord questioned as a fundamental, ensures that services are paid for by those who use them rather than by the taxpayer—namely, patients.
The noble Lord, Lord Kamall, raised some questions about small and medium-sized enterprises. While I understand that increases in costs can place more relative strain on SMEs compared with larger companies, the MHRA has existing SME payment waivers and easements, and the instrument creates a new SME payment easement for some fees for the medical device clinical investigation service. We have sought to be responsive in this regard.
On supporting innovation and maintaining the UK’s attractiveness as a place to develop and launch medical products, I certainly want to see the UK as the go-to country for that. It does this in several ways— for example, by providing scientific advice and stream- lining regulatory processes to help reduce costs and the time to market. This is a high priority within our Government.
The noble Lord, Lord Scriven, raised questions relating to where costs have exceeded inflation, why this is and what the Government are doing about it. All fees are set to recover costs and it is the case that some services were found to be underrecovering more than others, so this is putting it back in the right place. It is not related directly to inflation but to the real costs and, in some areas, there are concerns about that.
Lord Scriven (LD)
Maybe I was not clear in my questioning. It is not about where it goes but this: if there is an automatic assumption that industry will cover the cost, what mechanisms are in place to make sure that there is efficiency, rather than a bloated approach where people think that, as costs will be recovered, they can do whatever they wish? That was the question, particularly regarding the inflation issue.
Baroness Merron (Lab)
That is understood. I am going to come on to that, because I think it is important. Of course, with any uplift in fee, I would expect that to be the case, but I have a particular response as I continue. The uplifts we are speaking about today ensure ongoing, reliable delivery. They are necessary for the continued delivery of initiatives that promote growth and innovation. We are not just standing still; we are looking to the future. To the noble Lord’s point, industry has been clear that it supports these fee uplifts as long as they are accompanied by reliable performance.
Although noble Lords have not specifically raised this, I add that the MHRA recognises that there have been some delays in some of its regulatory services of late and these delays were felt by those who pay fees. I am pleased to say that, from 31 March this year, all backlogs were cleared that relate to its statutory functions. Throughout its work to eliminate these backlogs, the MHRA put patients first and prioritised licence applications according to public health need, including those needed to avoid medicine shortages. Importantly, the MHRA is working to ensure that this continues, so that we have predictable, optimised and sustainable services across all the functions.
I can assure the noble Lord, Lord Scriven, that the MHRA is taking steps to improve its performance and efficiency, not least because it does not wish to get into the situation of a backlog again. This includes a modernised RegulatoryConnect IT system and improved agency structures and processes. On accountability, it will also publish performance targets and report against them online and in its annual report and accounts. There are also mechanisms in place for monitoring the impact of these changes. Ministers, including me, meet the MHRA regularly and the MHRA and the department monitor the impact via stakeholder feedback and ongoing performance and finance reporting. I assure the noble Lord, because I know it is a particular interest, that we have key performance indicators in place to monitor the delivery of these services.
I return to the point about small and medium-sized enterprises that the noble Lord, Lord Kamall, raised. In most cases, SMEs are dependent on grants from the NIHR and others, so there is no cost to them as a company when they submit an application to the MHRA. The noble Lord also asked about the assessment of increased fees on SMEs. Benchmarking fees compared to those of other regulators is somewhat difficult, to be quite honest, because of the difference in the way that the regulators operate and their different funding models. For example, a different model is where the regulator is subsidised, which is not the case here. With regard to employer national insurance contributions, the noble Lord is correct that the MHRA is subject to the increases in employer national insurance contributions. The agency believes that these fees will cover the costs of the increase in NI contributions. If there are any shortfalls, efficiency savings will have to be used to manage them appropriately.
Lord Scriven (LD)
If fees equal cost, I am not clear how calculations have been made that say that the NIC increases have not been put into that cost to be part of the fee increase, because it is a known cost. I am not clear why that suddenly becomes a potential cost reduction or inefficiency gain within the service.
Baroness Merron (Lab)
I may not have been as clear as I would like to have been. I will try again. The national insurance contributions increase is an increased cost and that will have been factored into the new fees that are being put forward. The gentle challenge from the noble Lord, Lord Kamall, was about whether the MHRA could manage it. I am saying that if there were any difficulty in management, it would not be a case of putting up the fees further; it would be a case of managing efficiency costs within the MHRA.
Lord Scriven (LD)
Just for clarity, is the NIC cost known and has it been included in these fee increases? It is an important point. I do not want to push the Minister in terms of the actual figures, but I assume that the NIC figure is known and has been included in this fee increase. Therefore, there would be no need for the agency to deal with any difference, because it is a known figure and will be in the fee structure.
Baroness Merron (Lab)
Perhaps it would be best on this occasion if I review what the noble Lord has said and what I have said and write to him to clarify anything that is not quite clear.
In conclusion, I thank noble Lords for their contributions and for their support for the MHRA to ensure that it has the resources that it needs to continue delivering reliable services and can deliver its important public health role.
Motion agreed.
Human Medicines (Amendments Relating to Hub and Spoke Dispensing etc.) Regulations 2025
(1 day, 16 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Merron
That the Grand Committee do consider the Human Medicines (Amendments Relating to Hub and Spoke Dispensing etc.) Regulations 2025.
Relevant document: 25th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department of Health and Social Care (Baroness Merron) (Lab)
My Lords, as I know we all acknowledge, community pharmacies play a vital role in our healthcare system by ensuring that patients have access to medicines and acting as an easily accessible “front door” to the NHS. They dispense around 1.1 billion NHS medicines every single year.
Traditionally, all dispensing processes have been done in a single pharmacy or by a dispensing doctor. In hub-and-spoke dispensing, routine tasks such as sourcing, preparing, assembling and labelling medicines are carried out at a central “hub”, which is separate from the “spoke” pharmacy where the prescription is received. Hubs often make use of automated processes to realise economies of scale and to increase efficiencies. Such arrangements already exist in the UK, but the Medicines Act 1968 restricts their use to community pharmacies that are part of the same legal entity. Not all pharmacy businesses are able to invest in their own hub-and-spoke model, as compared with the larger pharmacy chains.
The Government are committed to supporting the community pharmacy sector and to cutting the red tape that frustrates it. The proposed changes have been a long time coming. If approved today, as I hope they will be, they will allow all pharmacies, including small independents, and dispensing doctors to utilise hub-and-spoke arrangements if they choose to do so.
Staff in hub-and-spoke arrangements report a calmer, more focused environment—I think we would all welcome that. In hubs, there are fewer disruptions and the use of automation reduces the risk of dispensing errors. At spokes, staff have more time for complex cases and patient care, making better use of their skills—something that the Government aim to support. The legislative changes we are debating will help all pharmacies and dispensing doctors realise these benefits, instead of limiting them to a few.
Turning to the details of the SI, we propose to amend the Human Medicines Regulations 2012 and the Medicines Act 1968, using the powers in the Medicines and Medical Devices Act 2021. The proposed changes to the Medicines Act 1968 adjust the definitions of “wholesale dealing” and “retail sale”, and remove the legal restrictions that prevent hub-and-spoke dispensing between different legal entities. The amendments go beyond simply removing the barrier that currently limits hub-and-spoke dispensing to pharmacies within the same legal entity. Noble Lords will, I hope, be pleased to know that the amendments include additional elements to ensure the safe and effective implementation of the policy by putting in place provisions to ensure accountability, governance and transparency for patients.
The proposed changes to the Human Medicines Regulations 2012 create a new model of hub-and-spoke dispensing, establishing a framework for the sharing of patient information between the hub and the spoke, and set criteria for the newly permitted arrangements. These criteria are: that both a hub and a spoke must be pharmacies registered with the pharmacy regulator, unless a spoke is a dispensing doctor practice; that there must be written arrangements between any hub and spoke, which must include a comprehensive statement in relation to their responsibilities, to ensure that each party is clear about the processes and activities for which they are responsible; that the medicine label includes only the name and address of the spoke, so that patients know who to ask any questions about their medicines; and that the spoke must conspicuously display a notice on its premises and online in relation to the dispensing arrangements.
The changes also establish an information gateway. This achieves several purposes, such as the conditions for lawful sharing of the relevant patient data between the different legal entities that operate these arrangements.
On the timescale, it is proposed that all legislative amendments come into force in the October this year across the UK. This will allow time for secondary legislation to be amended, as appropriate, across all four nations, and give the pharmacy sector time to explore the relevance and possibilities of the new hub-and-spoke arrangements to its businesses.
I hope that I have been able to set out what we are proposing and the rationale behind it. I look forward to what will, I am sure, be an informed and constructive debate. I beg to move.
Viscount Stansgate (Lab)
My Lords, I broadly support these regulations. I hope that my noble friend the Minister will not mind my intervening briefly to ask a couple of questions; I have no wish to detain the Committee.
Obviously, I understand that community pharmacies have been playing an increasingly expanded clinical role in treating minor illnesses and improving medicines’ safety and optimisation. To improve the efficiency of dispensing, these regulations will help support community pharmacies in taking on a more clinical role. The purpose of these regulations, which is to free up smaller pharmacies and enable them to undertake hub-and-spoke models, is, I am sure, a good one. First, does my noble friend the Minister have any idea of how welcome this will be to smaller pharmacies? Is it expected that a great deal of them will undertake these new arrangements outwith the previous restriction on being in the same legal entity?
Secondly, having recently been to my local pharmacy and having talked to the pharmacists there, I was struck by the strain that they are under, both in terms of their workload and financially. Am I right in thinking that this hub-and-spoke model, which will be made more widely available, will in some way help smaller pharmacies deal financially with the situations that they face? Am I wrong in thinking that there is a financial dimension to this? If there is, I would be very grateful for any reply that the Minister can give, but, in summary, these regulations are a step in the right direction.
Baroness Finlay of Llandaff (CB)
My Lords, I am most grateful to the Minister for the comprehensive way in which she introduced this instrument, including how it corresponds with all the documentation that we have. I am glad to see that it applies to Wales; we have many small pharmacies with cross-border flow and many roads going across the border, so this SI will make things much easier.
Like the noble Viscount, Lord Stansgate, I have some questions. I hope that at least some of them will be answered; some of them may need time. One of my concerns is about how the finances of this will work, because pharmacies depend on a dispensing fee. Who will get the fee? Will that be down to local negotiation? Will the fee be split?
However, the principle of freeing up time for the pharmacist to undertake more clinical duties is to be welcomed. They are often the first point of call for patients now. They often know the patient. They spot the person who looks less well and can advise them appropriately. They can also advise on drug side-effects, if a person goes into the pharmacist and asks about new symptoms that they might have.
However, I wondered where the liability sits if there is an error. If I understood right, it would sit with the hub if it were in what is dispensed, but there may be a difference in liability for information given to the patient. One hopes this will never happen, but some of those governance issues need to be thought through in detail.
I note that the pharmacists are already taking impressive extended roles in some areas. For example, there is a scheme in Bristol where pharmacists are taking blood for PSA assessment and reaching a population who would not otherwise present for screening for cancers. If we have pharmacists doing more health screening that would certainly free up GP time. Again, pharmacists will need to be remunerated for that.
I was interested to see that the international evidence is a little variable. Germany, Finland, Belgium and Denmark already using a hub-and-spoke dispensing model but the evidence is not overwhelmingly conclusive. In hospitals, where you have a single large building and a large number of prescriptions, automated pharmacy has in many ways revolutionised the administration of medicines.
One of the concerns is the time lag from a dispensed medicine going from the hub out to the spoke. I hope that will be thought through, so that we do not have patients, perhaps with mobility difficulties, having difficulty getting back to collect their prescription, and that those things will be factored into such arrangements.
Another area that I have a slight concern about relates, not surprisingly, to my own area, palliative care. We know that the availability of controlled drugs is poor at times, yet they are often needed urgently. I hope that consideration has been given as to how the dispensing of controlled drugs in particular can be rapid and efficient, especially when the clinical situation has changed and new medications are required at speed for a patient to be able to remain at home, rather than ending up taking an unnecessary or inappropriate voyage to hospital, with possible admission. Those travel systems also come into it.
The last area that I hope this model will tackle is waste, because there are a lot of things that patients are prescribed but never end up taking. Those of us who have been in a house after someone has died will often have been given several supermarket bags—I will not name the supermarket—full of packs of medicines that have been dispensed. They can be extremely expensive but have not been taken. They cannot be taken back in at the moment and cannot be recycled. The schemes that recycled some of the opioids, such as diamorphine, have not continued over the years. This is an enormous financial waste to the NHS, because some of these medicines have been very expensive.
I hope that this model will free up pharmacists and incentivise them to dissuade patients from accepting prescriptions when they are not actually taking those medicines. I could spend hours relating numerous stories of patients who were either not taking their medicines or giving them to somebody else. I have even once been presented with some children trying to sell me grandmother’s pain relief at the foot of the stairs, which helped me understand why I could not get grandmother’s pain under control. There is a real problem of waste in the system. If this instrument will decrease waste without jeopardising pharmacist’ income from prescribing fees, that would be very welcome.
Lord Scriven (LD)
My Lords, I thank the Minister for outlining the purpose behind and need for these regulations.
On these Liberal Democrat Benches, we are of course open to innovation and efficiency in our healthcare system. We recognise the potential for modernising practices to streamline operations, to reduce burdens and, ultimately, to try to improve the delivery of medicines to patients. However, for something as sensitive and fundamental as dispensing medicines, the devil, as always, lies in the detail—as the noble Viscount, Lord Stansgate, and the noble Baroness, Lady Finlay of Llandaff, pointed out—so we must scrutinise these proposed changes with the utmost care.
Lord Kamall (Con)
My Lords, I thank the Minister for introducing this statutory instrument in her usual succinct way and all noble Lords who spoke in this debate. We on these very efficient Benches—so efficient that we have only one person here today, which is very good for productivity—recognise the Government’s intention to modernise pharmacy through the introduction of hub-and-spoke arrangements and to increase efficiency and free up pharmacies to focus more on patient care, finally getting away from the 1945 model that we have been stuck with where patients try to get an appointment with their GP in the morning and, if they are fortunate enough to see them, get triaged off to a pharmacist or to secondary care. This is much more efficient, and we welcome it.
I also welcome what many other noble Lords have said about more diagnosis and testing occurring at the level of the pharmacy. As we saw, one of the silver linings of Covid was the fact that people got more used to home testing. If we can see more home testing and more pharmacy testing out in the community, maybe we can reach those communities that we have found very hard to reach until now. We thought about this lots when I was in government; all Governments think about how to reach those hard-to-reach communities.
That said, while the aim is understandable and commendable, we have some concerns. First, the Government have chosen to proceed with only one model—the patient-spoke-hub-spoke-patient model—rather than the two models proposed by the previous Conservative Government, the other of which was patient-spoke-hub-patient. We see this as a significant narrowing of options, particularly when the consultation revealed a divided response from stakeholders. As the noble Lord, Lord Scriven, said, while large pharmacies were very much in favour of the model that the Government ended up choosing, many smaller and independent pharmacies remained opposed, as well as patients and providers who may have benefited from the second model, where patients are dispensed to directly.
In the world that we live in, with Amazon, eBay and the advent of direct-to-consumer online pharmacies, which will dispense only if there is a valid prescription—they are not just selling stuff off prescription—it is really important that we encourage that innovation. It would be wonderful for patients, particularly those with limited mobility who find it difficult to get to pharmacies, to be able to order on the NHS app, have it approved and know it will be delivered to them within so many hours or days. That would be a far more efficient model. I hope that we are not inhibiting online pharmacies with all those safeguards.
I completely understand that there is always a balance between innovation and safety and precautions. Can the Government explain why they chose only one model? Was it because of concerns over safety, good lobbying or the interests of larger pharmacists being heard over the smaller pharmacists? We would be very interested in that. We are concerned about limiting it to a single model, particularly when we know that community pharmacies dispensing for GPs and distance sellers are finding innovative solutions.
Secondly, there is funding and support. The updated impact assessment openly admits that there is considerable uncertainty over the cost of establishing these hubs, their operating expenses and the level of uptake. Once again, there is an impact on smaller pharmacies. How do the Government intend to avoid the risk that smaller providers could be left behind or forced out of the market, reducing choice for patients and challenging the role of small community pharmacists? Are they concerned about this? In addressing that, have they looked at any incentives or ways to help smaller pharmacists who may not have the resources for that upfront investment?
Thirdly, the question of oversight and transparency remains. The Minister will be aware that I ask a lot of questions on patient data and accountability of data. The Government are yet to clarify who will be responsible for collecting and publishing data on the implementation and impact of these new arrangements, particularly in light of the abolition of NHS England. This oversight is crucial not only to ensure patient safety and quality of service but to understand the broader impact on costs and service delivery.
Let me be clear: we support the idea of the single patient record and the federated data platform. One of my jobs when I was a Minister was to make sure that we joined up and digitised the data as quickly as possible. We know what efficiencies that could lead to in our healthcare, but patient safety and data protection must be addressed with rigour. The framework for sharing patient information between hubs and spokes is a key feature of this reform, yet the SI and the supporting documents provide limited detail on how patient confidentiality will be maintained and how the risk inherent in multiparty data sharing will be mitigated.
We do not oppose the principle of modernising pharmacy dispensing through the hub-and-spoke model. We were disappointed that one model was chosen, as we thought we could have some innovation with the other model. Without clearer information and incentives to smaller providers, we worry about smaller community pharmacies being pushed out, particularly in the light of having only one model. How will the Government make sure that that risk is avoided? We urge them to engage more fully with all stakeholders, clarify their plans for funding and data governance, remain open to innovation and not close down other options prematurely. With that, I look forward to hearing from the Minister.
Baroness Merron (Lab)
My Lords, I thank noble Lords on all sides of the Committee for their helpful contributions to today’s debate. I get a sense of support for where we are going and questions about how it will happen, which I completely accept. This instrument is part of a package of measures to relieve pressure in community pharmacy and improve patient care and the ability of the NHS to serve patients, particularly in a community setting—one of the main pillars of change for our NHS fit for the future. It builds on legislation that is already in place to enable pharmacies to increase efficiency by dispensing medicines in their original packs. Pharmacy technicians are now able to act under patient group directions to supply medicines, and the Government will shortly bring forward legislation to enable them to be authorised to do more in the pharmacy.
My noble friend Lord Stansgate raised a number of issues; he asked how it has been received and raised the financial sustainability and attraction of these measures. I reiterate that the changes being introduced are enabling. They are purely voluntary. It is entirely up to pharmacists, which are independent businesses—it is important to remember that—to decide whether they feel that engaging one, two or several hubs is going to be beneficial to their business model. It is up to them to decide.
Lord Kamall (Con)
I appreciate the response from the Minister. She said that she will keep this under review. As part of that review, are the Government or officials looking at ways in which they could mitigate concerns about model 2 in terms of those relationship and safety concerns? That would perhaps enable investigation of a future model 2.
Baroness Merron (Lab)
It would be fair to say that the review will be on how well this is working rather than an attempt to move to model 2. In all the modelling, we believe this is the best way to go. Patient safety is paramount, as it always should be, as is the expansion of services to individuals, but we will keep the whole matter under review.
There were two other questions. The noble Lord, Lord Scriven, asked about the fee structure. The spoke will still receive the fee for dispensing and the paying hub for the services it provides. We are not planning to dictate how the fee structure will work between hubs and spokes, as I said in an earlier answer.
Lord Scriven (LD)
This is an important point. This could create market distortion. If there was a hub with a number of community pharmacies as part of its parent group, is the noble Baroness saying that it could give an advantage to those pharmacies against an independent pharmacy that was not part of the hub group and therefore could charge that pharmacy a higher fee for providing exactly the same service? That could create market distortion. It is important that we understand that that could not happen within these regulations. If the Minister cannot give that answer, I ask her and her officials to go away, think about this carefully and write back. It is an important point.
Baroness Merron (Lab)
The whole point of the regulations, as well as cutting red tape, is about levelling the playing field. I understand the point the noble Lord is making, and I re-emphasise that arrangements between hubs and spokes are for them to make, rather than us to set. I am happy to look at the point the noble Lord makes and to write to him further with more detail.
Baroness Finlay of Llandaff (CB)
I will pick up on this because it is a concern. In her summing-up speech, the Minister spoke about the business interests of the hub and the spoke. A concern is whether you could have a hub, which will be a large, possibly even multi- national, provider that could create a monopoly. As has been recognised during this debate, in rural areas, in particular, dispensing doctors are often a small group. Pharmacy services have a relatively low turnover but are important to such communities that are a long way from other places and where the services provided by the pharmacist are particularly important. Yet, as a small spoke, they may not have the power to negotiate with a strong central hub that may well be driven by shareholders and profit. There is a little bit of me that would really like this to somehow be a not-for-profit arrangement over the whole of it, but I realise that that is not feasible.
Baroness Merron (Lab)
Perhaps it might be helpful to noble Lords if I refer to the Competition and Markets Authority in this regard because it noted that the proposed amendments that we are speaking of today are broadly competitive. It also acknowledged that there could be potential long-term competition risks if the market develops in such a way that pharmacy access to medicines, for example, is through an increasingly limited number of hub suppliers.
As the noble Baroness, Lady Finlay, suggested could happen, we might have only a few larger hubs emerging. I understand the concern that that could affect the availability of medicines for patients and their pricing. However, because of the recommendations from the Competition and Markets Authority, the department has committed to review the impact on competition once the hub market is sufficiently established. We will then assess whether action is needed to alleviate any barriers to the development of what, I believe, we all want to see: a dynamic, competitive hub market.
Lord Scriven (LD)
I am sorry to pursue this, but, in the impact assessment, the Government do not state how many hubs will be created. How can they reassure communities that these regulations will not distort the market? It is a very important issue for community pharmacies, which are dispersed. There is now a genuine concern that the Government do not even know how many hubs will be created—that links to the exact point that the Minister just made on the number of hubs.
Baroness Merron (Lab)
It is not possible to predict—although I do not think the noble Lord, Lord Scriven, is asking me to do so—how many pharmacies will take up this arrangement, because it is an enabling piece of legislation, not a requirement. It is also a matter between those businesses. To remind noble Lords, we already have provision in place for suitable pharmacy provision across the country, whether it is rural or urban, and that sits outside the regulations we are talking about today.
The noble Lord, Lord Scriven, asked about the regulation of hubs, and I can assure him that they will be registered pharmacies regulated by the General Pharmaceutical Council in Great Britain or the PSNI in Northern Ireland. The General Pharmaceutical Council has great experience in inspecting hubs and has substantial intelligence on what practical arrangements have been adopted by hub-and-spoke operators that work well. The pharmaceutical council will also ensure that all standards for registered pharmacies are met and—to the point raised by a number of noble Lords, including the noble Lord, Lord Kamall—that patient safety is protected.
To conclude, I emphasise that hub-and-spoke arrangements are not new, as large companies already operate their own hubs. This is probably a discussion for another day, but some people might suggest that that was an example of some market influence, if I can tactfully put it like that. In the meantime, I thank all noble Lords for their contributions, consideration and questions, and I beg to move.
Pollution Prevention and Control (Fees) (Miscellaneous Amendments) Regulations 2025
Lord Wilson of Sedgefield
That the Grand Committee do consider the Pollution Prevention and Control (Fees) (Miscellaneous Amendments) Regulations 2025.
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
My Lords, these regulations were laid before the House on 23 April and were debated and agreed by the House of Commons on 20 May. I am most grateful for the opportunity to join the Grand Committee’s proceedings.
Before outlining the provisions made by this draft instrument, I will briefly provide some context. The DESNZ Offshore Petroleum Regulator for Environment and Decommissioning—OPRED—minimises the impact of the offshore sector on the environment by controlling air emissions and discharges to sea and by reducing disturbances over the life cycle of operations, from seismic surveys through to post-decommissioning monitoring. OPRED recoups the eligible costs of its regulatory functions from industry in the offshore oil and gas sector—which I shall refer to as the offshore sector—rather than from the taxpayer.
OPRED’s recoverable costs are covered in two ways: first, by using regulations that are covered by the fees regulations; and, secondly, by five charging schemes that do not require legislative change and will be amended administratively. OPRED’s average annual fees income is about £6.7 million and is recovered from around 100 companies. Currently, the fees that it charges are based on hourly rates of £201 for environmental specialists and £104 for non-specialists. Environmental specialists are technical staff who carry out the functions of the Secretary of State and non-specialists are support staff.
I turn to the details of this instrument. The current hourly rates have been in force since June 2022. Having reviewed the cost base, OPRED concluded that the existing rates need revising to reflect today’s costs for regulatory services. The fees regulations will therefore amend the charging provisions by increasing the existing hourly rate for environmental specialists to £210 and increasing the hourly rate for non-specialists to £114. This will allow OPRED to recover its costs but not to make a profit.
OPRED’s fees are determined by adding together the recorded number of hours worked per person on cost-recoverable activities, multiplied by the hourly rates for both environmental specialists and non-specialists, respectively. The new hourly rates were approved by His Majesty’s Treasury in December 2024 and calculated in line with the Treasury’s Managing Public Money guidance. They cover the expenditure on all resources used by OPRED to support its activities—for example, staff salaries, accommodation, IT and legal services.
There is no formal requirement to consult on the proposed changes. However, OPRED informed the offshore sector of the planned revisions to the hourly rates in February 2025, and no representations were received. OPRED’s fees regime guidance will be revised to reflect the new hourly rates.
I conclude by emphasising that the revisions to the hourly rates introduced by the fees regulations will allow OPRED to recover the eligible costs of providing regulatory services from those who benefit from it, rather than passing those costs on to the taxpayer. I beg to move.
Earl Russell (LD)
My Lords, we are in favour of and support these proposed changes. The original regulations allowed the Department for Energy Security and Net Zero’s Offshore Petroleum Regulator for Environment and Decommissioning—OPRED—to recover the eligible costs of providing regulatory services from the offshore sector rather than the taxpayer. It is entirely appropriate that those who benefit from these services bear the associated costs.
The regulations before us simply propose to increase the hourly rate for offshore workers: for environmental specialists from £201 to £210, and for non-specialists from £104 to £114. As the Minister said, the current rates have been in force since June 2022 and these regulations have been updated in the past. OPRED has reviewed its cost base and concluded that these revised rates are necessary to reflect today’s costs for regulatory services, calculated in line with His Majesty’s Treasury’s Managing Public Money guidance.
I have had a chance to look through the statutory instrument, the methods used to calculate the costs and the chargeable hours calculations, and they all look fine to me. This is basically an inflationary upgrade, and we are happy to support it to ensure that people who fulfil these specialist, vital jobs are adequately recompensed for their work. I made the mistake of looking at the debate in the other place on this, and I was a little surprised that a simple fees increase managed to be described as ideological and destructive madness driving us closer to economic decline. I wish to make it clear from these Benches that nothing could be further from the truth.
Since we are here, I will ask the Minister a couple of very quick questions. The changes are minor. I recognise that there was no need to consult this time, that industry was informed and that there were no responses, but can I confirm that there is a process for consultation if there are larger changes in future? I notice that a lot of micro and minor industries are associated with this, so will the Minister confirm that, as far as the Government are concerned, there is no cumulative impact of such fee increases on them? I assume that there is not, but I take the moment to check. However, these Benches fully support this basic upgrade in people’s wages.
Lord Jamieson (Con)
My Lords, this may appear to be a narrowly focused measure but it speaks to some wider strategic choices being made—or not being made—by this Government on energy, the environment and industry. It revises the fees charged by OPRED for its regulatory oversight. The current fees have been in place for a while and are being updated in line with revised cost assessments and Treasury guidance for full cost recovery, with the new rates being £210 for specialists and £114 for non-specialists, with the aim of ensuring that the industry, rather than the taxpayer, bears the cost of its own regulation. We on these Benches accept the principle that the polluter pays, and we recognise the importance of cost recovery where it is applied fairly and transparently.
However, although we do not oppose the principle of updating these fees, there are several areas where greater clarity from the Government would be welcome in the broader sense. First, there is strategic clarity. This comes at a time when the Government are shutting down the North Sea oil and gas industry. A windfall tax remains in place and the long-term future of the basin is uncertain. In this context, even modest fee increases risk sending mixed signals. How do these changes align with the Government’s stated ambitions on energy security, net zero and investment in our own homegrown energy?
Secondly, there is investor confidence. The Government may argue that this is a minor adjustment but, for businesses already navigating a complex mix of fiscal and regulatory pressures, predictability matters. Offshore Energies UK has said that the sector could invest up to £200 billion this decade across offshore wind, hydrogen and carbon capture. Can we be confident that the regulatory framework and its associated costs are evolving to match that ambition?
Thirdly, there is the role and future of OPRED. OPRED was designed to regulate the offshore hydrocarbons industry, yet its remit is expanding to include the regulation of net-zero activities, such as offshore wind, hydrogen storage and carbon capture. How will OPRED be restructured and resourced to meet this broader role? Are the cost recovery mechanisms fit for that future?
Fourthly, on fairness across the sector, the Government invoke the “polluter pays” principle, and rightly so, but is this principle being applied consistently across the offshore space? Are our non-hydrocarbon actors, such as offshore wind developers or electricity interconnectors, contributing equitably or is the hydrocarbon sector being left to shoulder a disproportionate share of the regulatory cost?
Fifthly, on employment and skills, the offshore energy sector supports approximately 120,000 jobs across the UK. To preserve and grow the workforce through the energy transition, we need continuity not just in investment but in regulation. What assurance can the Government give that the fee policy is not operating in isolation from the broader industrial skills strategy?
Finally, on transparency, the Explanatory Memorandum notes that OPRED reviewed its costs and consulted with the industry in February 2025 but no responses were received. Should this be interpreted as assent, or does it point to confusion—even disengagement—from an industry uncertain about what to expect from the Government?
In conclusion, although the SI may be modest in scope, it prompts important questions about how we fund and structure environmental regulation in a rapidly evolving energy system. We on these Benches do not oppose the measure, but we urge the Minister to place it within a broader strategic vision—one that balances accountability with long-term investment, climate ambition and energy resilience. I look forward to hearing the Minister’s response.
Lord Wilson of Sedgefield (Lab)
My Lords, I thank noble Lords for their valuable contributions to this debate, which reflected the relatively uncontroversial— I would have thought—nature of the regulations.
As I said, these fees regulations will enable OPRED to recover its costs for the provision of regulatory services under the offshore oil and gas environmental regulatory regime, as opposed to such costs being passed on to the taxpayer. The change to the hourly rates will increase OPRED’s annual fees from £6.7 million to around £7.3 million per annum, reflecting the current cost of providing environmental regulatory activities to the offshore sector.
On chargeable activities, OPRED considers the environmental implications of all offshore oil and gas operations before issuing permits and consents covering areas as diverse as seismic surveys, marine licences, oil pollution, emergency plans, chemical permits, oil discharge permits and consent to locate permission for offshore isolation. This SI is not ideologically based. In essence, it is the specialists putting up the fees by £9 and the support staff doing so by £10. The work that OPRED undertakes is very important for the rest of the industry and the North Sea.
I want to answer some of the points noble Lords raised. As far as micro industries are concerned, these regulations will affect only about 100 companies working in the North Sea. As far as consultation is concerned, any further fee increases will be subject to industry consultation and strategic clarity; that is important. None of those who were consulted this time round responded, but I think that this means that people were content with the fact that they were seeing these fees go up by £9 and £10, which increased the burden on the whole of the industry by £500,000. OPRED’s costs ensure that we can continue both to provide effective environmental regulatory services and to adapt to changing requirements, such as changes to the environmental impact assessment guidance.
As far as the North Sea basin is concerned, I do think that it has a future; we are going to be taking fossil fuels out of the basin for decades to come. It will also be an area where we can transform from taking fossil fuels out of the sea to wind and carbon capture, to ensure that we progress to net zero and that our energy is homegrown. As noble Lords know, gas prices are sorted out internationally, so if we have homegrown energy, we will have more control over it. That is what we want to see. With that, I hope that the Committee can agree to the fees going up by £9 and £10. I beg to move.
Casinos (Gaming Machines and Mandatory Conditions) Regulations 2025
(1 day, 16 hours ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Baroness Twycross
That the Grand Committee do consider the Casinos (Gaming Machines and Mandatory Conditions) Regulations 2025.
Relevant document: 27th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, I am pleased to speak to these regulations, which were laid before the House in draft on 12 May. This instrument has been considered by the Secondary Legislation Scrutiny Committee and was not drawn to the special attention of the House. It is part of a package of statutory instruments that, together, make a number of changes to the legislative framework for land-based casinos.
If these regulations are approved by both Houses, I intend to sign two related statutory instruments that follow the negative procedure: the Gambling Act 2005 (Commencement No. 6 and Transitional Provisions) (Amendment) Order 2025 and the Gambling Act 2005 (Premises Licences and Provisional Statements) (Amendment) (England and Wales) Regulations 2025. The former extends existing casino entitlements, and the regulations we are debating today introduce protections—equivalent to those for 2005 Act casinos—for converted casino premises as a result of the extended entitlements.
The premises licences and provisional statements regulations amend existing procedures so that a converted casino operator can apply to its licensing authority to vary its premises licence to enable it to exercise the extended entitlement. We published the negative instruments in draft on 12 May, the same day that these regulations were laid, to provide transparency about the range of changes we are proposing and to allow for proper scrutiny. None of the interconnected legislative instruments will be made unless the protections in these regulations are approved by Parliament.
The Government are focused on economic growth. I believe that enabling a responsible gambling sector to grow is compatible with creating an even safer one. We have already brought forward measures to improve consumer protections, including the introduction of stake limits for online slot games and establishing a statutory levy on gambling operators, to fund the research, prevention and treatment of gambling-related harms. Our manifesto also committed to working with industry to ensure responsible gambling, and we acknowledge the difficulties that land-based gambling businesses, particularly casinos, have faced since the Covid-19 pandemic. Therefore, following a consideration of the best available evidence, we intend to proceed with a series of reforms for the land-based casino sector.
Since being appointed, I have visited casinos and witnessed the contributions that they bring, with jobs, tax revenues and support for the night-time economy. The casino sector directly employs around 10,000 people, with many in non-gambling roles such as hospitality. Venues are often steeped in history and feature bars, restaurants and, in some cases, theatres. The sector generates £866 million in gross gambling yield each year, with up to 50% of this paid in gaming duty. We intend to implement measures that are estimated to increase this GGY figure by £53 million to £58 million.
Many of the restrictions that apply to land-based casinos derive from legislation that had not envisaged the rise of online gambling. In light of this, restrictions on product availability in casinos are now less important for protecting customers than factors such as the design of products and the quality of monitoring. We therefore intend to change the restrictions that apply to the supply of some products, giving casinos greater freedom about what they offer customers. None of this will be at the expense of protecting customers from gambling-related harm.
There are two types of casino licence. The first is for those who were already operating when the Gambling Act 2005 came into force, which I will refer to as “converted casinos”. The second are those created by that Act. The Act created two types of casino within this licence category, which I will refer to as “small casinos” and “large casinos”. Converted casinos are generally allowed only 20 gaming machines, or at least one is a category B machine, regardless of their size. This compares to up to 80 machines for small casinos and 150 for large casinos.
To support the sector, this package will give converted casinos the option of having the same gaming machine allowance as small casinos. For converted casinos with a gambling area that is smaller than the minimum required for a small casino—500 square metres—a sliding scale will apply for gaming machine allowances commensurate with their size. This will more closely align the rules for all casinos.
Converted casinos will have to abide by a number of strict conditions in order to increase the number of machines they offer. If they wish to site 80 gaming machines, they will need to meet the same size requirements as small casinos. This means that they must have a gambling area of at least 500 square metres, a non-gambling area of at least 250 square metres and a table gaming area of at least 250 square metres. They will become subject to a maximum machine-to-table ratio, meaning the number of machines in the casino cannot be more than five times the number of tables available for use. An additional protection prevents these casinos from siting more than 80 machines within casino premises that are connected to each other. Smaller converted casinos will be allowed to increase their gaming machine entitlement depending on their size. Their table gaming and non-gambling areas will need to be at least half the size of their gambling area.
These rules are vital to ensure that customers are offered a mixture of gambling and non-gambling opportunities when they visit a casino. The strict requirements on how much space can be allocated to each activity will mean that, even with an increase in the number of machines, casinos will not be overwhelmed with an electronic offering. This instrument also introduces a maximum gambling area for converted casinos. In allowing converted casinos a similar entitlement to small casinos, it is fair and consistent that they are subject to similar restrictions. Therefore, all converted casino premises will be limited to a maximum gambling area of less than 1,500 square metres, matching the maximum gambling area allowed for small casinos. However, a conditional exemption is made for casinos that currently operate with a gambling area of 1,500 square metres or more.
This package of instruments will also allow betting to take place in all converted casinos. The current regulatory framework prohibits these casinos from offering betting products, whereas venues licensed under the 2005 Act can do so. The prohibition makes little sense, as a casino customer can place a bet on their mobile phone while in the venue but not with the casino itself. This change will allow converted casinos not only to offer a new gambling product but to invest in other parts of their venues, such as sports bars. A limit would be put on the number of separate betting positions or self-service betting terminals that can be offered by the casino.
Finally, I draw the Grand Committee’s attention to two changes that this instrument will make to small casinos. They are currently required to comply with a maximum machine-to-table ratio of 2:1, whereby for every table in use, the casino is permitted to offer a maximum of two gaming machines. This ratio will be updated from 2:1 to 5:1, to align small casinos with large ones and to prevent operators from having to provide tables for which there is no customer demand. Small casinos are also currently required to have a minimum table gaming area of 500 square metres; as a result of these regulations, this requirement will change to 250 square metres. This will amend an anomaly whereby the minimum gambling area and minimum table gaming area were required to be of the same size.
This is a sensible package of measures that will update the outdated restrictions that currently apply to land-based casinos. It strikes the right balance between supporting the sector to grow, while still ensuring that those who visit these venues will be protected from gambling-related harm. I beg to move.
Lord Bourne of Aberystwyth (Con)
My Lords, first, I thank the Minister for setting out what is, in many ways, a very technical SI, as well as the two related SIs to which she referred.
I understand that a lot of the pressure and motivation —if not the only motivation—behind this measure is economic growth and the international competitiveness dimension. However, I certainly had some concerns on reading through the SI. Perhaps I am unique in this —I do not know—but it seems to me that the regulations would potentially alter the split between gaming machines and table-based gaming, which I think the Minister referred to, from 2:1 to 5:1. That is quite a considerable shift. The latter form, table-based gaming, represents a less intense gaming experience and is, I would argue, potentially less harmful to consumers. The Minister will know that 25% of casinos in this country are in the poorest decile of the country; we should therefore be concerned about the connection with gambling harm. Has there been a corresponding increase in space and opportunities for customers to take a break from gambling? There has been an increase in the space available for gambling machines. If there has been an increase in the areas for non-gambling, what is that increase, and what sort of facilities do these areas represent?
It is very clear in the analysis and the evidence that the annual increase in income for the gambling sector after three years is between £52 million and £63 million per annum—the gross gambling yield, I should say—with a median figure of £58 million. I recognise that that is obviously subject to costs and tax, but it still represents a considerable increase. Should we not at the same time be increasing the amount that is put aside to help with gambling addiction and gambling harm? There is no indication of that happening here in the measure.
If one looks at the theme of the analysis and the evidence, which I have done, it is quite clear. Page 4 of the impact assessment states:
“There is a risk that this measure increases the prevalence of gambling-related harm”.
Page 37 states that
“there is a risk that gambling harm will increase with the implementation of this measure”.
That is my concern: we should be doing something about that. I am not against the measure as such. Clearly, economic growth is desirable, but should we not at the same time be concerned about gambling harm, which it is quite clearly an ill in society, including in some of the poorest communities of the country?
Lord Foster of Bath (LD)
My Lords, I am absolutely delighted to follow the noble Lord, Lord Bourne. I share the concerns that he expressed. I am not going to oppose this statutory instrument but I want to raise some concerns about it, not least in terms of the potential impact on increasing gambling harm.
The Minister has been very generous with her time in speaking with me on a number of occasions recently; I am very grateful for that. She already knows that I have considerable concern about the Government’s current approach, which seems to suggest that, in the wider desire of the Government to increase the whole state of the economy in the country, they also want to grow the gambling industry as part of that. I have argued with the Minister—although I know that she disagrees—that it is simply not possible to grow the gambling industry without also having an increase in gambling harm, whereas she and the Government believe that it is possible both to grow the industry and to reduce the level of gambling harm. You would not increase the tobacco industry and expect it to reduce the consumption of tobacco; the same is true for products in the gambling sector. No doubt this debate will continue between me, the Minister and others over the coming months.
If I look at this statutory instrument, I have some real concerns about it. We have with it an impact assessment. A few minutes ago, the noble Lord, Lord Bourne, asked a simple question: could we have some more data about the length of time spent on these machines? He will be delighted to know that, on page 19 of the impact assessment, that data, which we are told is
“a useful insight into how customers currently play on gaming machines”,
is provided. Unfortunately, however, all of the figures are blacked out. We are advised that this is helpful information, yet it—together with many other bits that would be very helpful to us—is blacked out.
The noble Lord, Lord Bourne, is concerned about some of the parts of the report that talk about the possibility of these measures leading to increased gambling harm. Paragraph 2.68 says:
“Overall, the existing evidence on the causal link between increasing the number of gaming machines in casinos and harm is inconclusive”.
So it is not convinced. It goes on:
“Although we have data on gaming machine participation rates and harm, we are unable to confidently state the nature of the causal connection between the two”.
This evidence that we have, the most useful bits of it blacked out, suggests that even the Government are not sure about the level of harm.
Lord Parkinson of Whitley Bay (Con)
My Lords, the noble Lord, Lord Foster of Bath, is right: nothing catches the eye in an impact assessment like a redaction, and there are a number of them in this assessment. I know that some of the information will of course be commercially sensitive, but, if we are to have evidence-led policy, it is important that we can share as much as possible. I look forward to what the Minister has to say about the reasons for the redactions that have been made here.
We on this side of the Committee remain broadly committed to a regulatory framework for gambling that seeks to strike the right balance between addressing harm, upholding consumer protections and recognising the significant role that land-based casinos play in the UK’s leisure and hospitality economy, in the ways that the Minister outlined in her opening speech. We support the principle of reforming the rules governing casinos to reflect changes in technology, consumer behaviour and market pressures, which have been seen over the past two decades.
The proposals contained in this statutory instrument are, as the policy rationale section of the Explanatory Notes makes clear, grounded in the gambling White Paper, which was published by the previous Government in 2023. That White Paper acknowledged the outdated nature of land-based regulation and set out a number of sensible, evidence-led proposals, including changes to the machine-to-table ratio, adjustments to minimum casino floor space and lifting restrictions on in-casino betting. A consultation followed and, in May last year, the previous Conservative Government confirmed their intention to implement these modernising reforms.
The regulations before the Committee today follow directly from that process, so we welcome the fact that the Government have brought them before us. They aim to provide much-needed flexibility to land-based casinos, which have been hit particularly hard by rising operational costs and the impact of the pandemic, in contrast to the growth seen in the online gambling sector. We recognise that a standardised 5:1 gaming machine-to-table ratio, applied fairly across casinos regulated under both the 1968 Act and the 2005 Act, is a proportionate change.
We also support the reduction in minimum table gaming space for small casinos to 250 square metres, which will bring consistency and allow smaller venues to remain viable. Permitting all casinos to offer betting, subject to proportionate safeguards, also aligns the land-based sector more closely with online operators, as the Minister said. So these changes reflect much of what operators have long called for: a level playing field across the different licensing regimes, as well as the ability to offer a wider mix of products and experiences to their customers.
While we support these parts of the reforms, we note that the Government are largely following through on decisions that flowed from the White Paper in the previous Parliament. What is needed now is a clearer vision of how the Government will support the land-based sector going forward, particularly in the face of sustained inflationary pressures; increased taxation, including the rises in national insurance contributions; and rising regulatory compliance costs. We continue to have concerns about the rise of the gambling black market and urge the Minister to do all she can to ensure that her colleagues at His Majesty’s Treasury do not proceed with their tax hike, which we think will hurt bingo halls and much-loved sports across the UK and could fuel the dangers of the black market.
We remain clear that any regulation must be accompanied by rigorous safeguards. As my noble friend Lord Bourne of Aberystwyth and the noble Lord, Lord Foster of Bath, made clear, gambling is never without risk of harm. The land-based sector may not present the same immediacy of risk as online gambling, but the need for effective harm prevention measures remains in this form of gambling as it does elsewhere. The statutory levy, the requirement for casinos to maintain non-gambling areas and the obligations to monitor and intervene with customers who are at risk must be properly enforced. We would welcome assurances from the Minister on how those safeguards might be monitored and what role the Gambling Commission will play in doing that.
I thank the Minister for her very clear introduction to these statutory instruments. I have four questions for her. First, how will the Government ensure that the Gambling Commission is adequately resourced and empowered to enforce the new machine-to-table ratio and the betting provisions across all forms of casinos? Secondly, given the significant transition costs outlined, what specific support or guidance will be offered to smaller and medium-sized casinos to help them adapt to these reforms without risking closures or job losses?
Thirdly, what mechanisms will be put in place to evaluate the impact of these reforms on gambling-related harm and the sustainability of the sector, and when might we expect the first published review? Fourthly, and finally, can she clarify why the Government are taking a different approach to machine reforms in adult gaming centres? I am sure that she is aware of the widespread concerns raised in that part of the sector.
While we support the objectives of these regulations, which rightly aim to bring greater coherence and modernisation to the regulation of land-based casinos, these changes must be the start of a broader, evidence-led strategy for growth, investment and safer gambling. We will continue to press the Government to deliver on that ambition and to ensure that the sector remains sustainable and socially responsible.
Baroness Twycross (Lab)
This has been an interesting debate, and I am grateful to all noble Lords for their insightful contributions. It is clear from today’s discussion that all noble Lords share the Government’s intention of and commitment to protecting the British public from gambling-related harm. I am keen to do that while ensuring that those who wish to gamble can continue to do so safely and have protections around them to enable them to do so. As outlined, these changes will modernise the regulatory framework for land-based casinos and allow the sector to grow while still protecting its customers.
I turn now to specific points raised about the instrument. The noble Lords, Lord Bourne of Aberystwyth and Lord Foster of Bath, raised concerns around gambling harm. Casinos are a highly regulated environment. They have a significant amount of player supervision alongside a number of protections on gaming machines themselves. Importantly, this instrument contains a number of protections that will ensure that customers will continue to be offered a range of gambling and non-gambling opportunities that help to reduce the risk of harm.
Casinos will be allowed to increase the number of machines they offer only if they meet a number of strict requirements. Operators will have to submit an application to vary their licence to their licensing authority, setting out how they meet these conditions and enclosing a new plan. The licensing authority will have to approve this application before more machines can be offered.
The noble Lord, Lord Foster, raised concerns about dormant licences. As noble Lords will be aware, there is only a limited number of casino licences. Converted casinos can move only within their permitted area and instances of relocation are very rare. Stakeholder engagement suggests there is highly unlikely to be a significant increase in the number of these licences that are revisited. The 2005 Act casinos cannot move from the location that their licence granted them. Therefore, no new casino licences will be granted as part of this process.
Lord Foster of Bath (LD)
I may have got this wrong and I would be grateful if the Minister can put me right. My understanding is that there are 42 currently dormant casino premises licences, which would enable 42 casinos to open. This is not about a casino that exists moving to another location; I am well aware of the rules around that. My simple question was: what prevents them opening under this new, perhaps brighter economic climate that the Government are now providing to casinos?
Baroness Twycross (Lab)
It is a licence rather than the premises that cannot be moved. My understanding is that a licence cannot be moved out of the local authority area.
Lord Foster of Bath (LD)
I know that. I apologise for pursuing this but perhaps the Minister will agree to write to me about it. It seems important. I am not talking about casinos moving their licence to somewhere else. They have a licence. They are already allowed to operate within a particular local authority, where its gambling policy allows casinos to do that. There are 42 of those licences outstanding, as I understand it—those are 2020 figures. How are we going to prevent them opening under this new, brighter economic climate for casinos?
Baroness Twycross (Lab)
This may be where the noble Lord and I diverge in opinion, because the Government’s view is that the casino sector is one of the most well-controlled environments in the sector. There are clear restrictions on the licences. As the noble Lord is aware, there are 186 converted licences, with over 130 in use. They are allocated to permitted areas and cannot move to new areas. No new converted licences will be created. Our stakeholder engagement and analysis suggests there will not be a significant increase. As the noble Lord indicated, there may be some increase if people think that these licences are more profitable but, as noble Lords would perhaps describe it, this is one of the more regulated parts of the sector. It is not necessarily, in our view, a bad thing that the sector is seen as more profitable to those people who have casinos. I am happy to write; I am not sure I will be able to give a different answer but we will look into that and I will revert to the noble Lord in due course.
The noble Lord, Lord Parkinson, raised a number of questions. On how these measures will be enforced, the Gambling Commission will work together with local authorities on enforcement and licensing applications. There is no requirement for any casino to take up these entitlements. DCMS and the Gambling Commission have jointly commissioned an evaluation of the gambling White Paper measures, and we published the plans for evaluation last year. I will draw those plans to the noble Lord’s attention; we can write to him on that.
The noble Lords, Lord Parkinson and Lord Foster, raised—potentially from slightly different perspectives—the issue of adult gaming centres. There were a number of measures in the gambling White Paper in relation to this. We recently set out, in a letter to industry that followed these casino reforms, that we will look at ways of supporting the bingo sector and family entertainment centres. We have paused any reforms to the 80:20 rule, as I want to understand better how the adult gaming centre sector protects its customers from gambling-related harm. I have not ruled out making changes in future, but it felt appropriate to consider this in greater depth. The Government are taking action where it is needed. In our view, these casino reforms are a key part of our wider growth agenda.
On the impact assessment, which was raised by the noble Lords, Lord Parkinson and Lord Foster, redactions are standard practice for commercially sensitive information. I will check again with the department on the question of the redaction around the costs; I will write to the noble Lord on that point and copy in other noble Lords who have taken part in this debate.
I hope that I have managed to cover most of the pertinent points made by your Lordships in this debate. I am really grateful for all the points raised and for your Lordships’ interest in both the land-based casino sector and gambling more broadly.