Eigthteenth Report of Session 2022–23

Instruments reported

At its meeting on 5 July 2023 the Committee scrutinised a number of instruments in accordance with Standing Orders. It was agreed that the special attention of the House of Commons should be drawn to one of those considered. The instrument and the grounds for reporting are given below. The relevant departmental memorandum is published as an appendix to this report.

1S.I. 2023/561: Reported for doubtful vires and failure to comply with proper legislative practice

Trade Preference Scheme (Developing Countries Trading Scheme) Regulations 2023

1.1The Committee draws the special attention of this House to these Regulations on the grounds that there is doubt as to whether they are intra vires in one respect and that they fail to comply with proper legislative practice in two respects.

1.2These Regulations, which are subject to the negative resolution procedure, establish a new trade preference scheme for developing countries.

1.3“Arms and ammunition” in relation to a trade preference scheme is to have the meaning specified in regulations made by the Secretary of State under section 10(4) of the Taxation (Cross-border Trade) Act 2018. As regulation 3 defines “arms and ammunition”, the Committee asked the Department for Business and Trade to explain whether the preamble should have also referred to section 10(4). In a memorandum printed at Appendix 1, the Department asserts that it correctly cited section 10(4) in the footnote to the preamble and that this approach is consistent with Statutory Instrument Practice (paragraph 3.11.16) and the GLD Statutory Instrument Drafting Guidance. The Committee disagrees. This is a fundamental error. The preamble should cite every enabling provision that the instrument derives its validity from or through. The section of Statutory Instrument Practice referred to by the Department relates to defining provisions found elsewhere, most likely in the enabling powers, not where the instrument being made is relying on an enabling power to provide the meaning of a term. Failing to cite a provision upon which the instrument relies can go to vires (Vibixa Ltd and another v Komori UK Ltd and others [2006] EWCA Civ 536) and the Committee accordingly reports regulation 3 for doubt as to whether it is intra vires.

1.4Regulation 27 removes Samoa and Vietnam from the list of “other eligible countries” in Part 3 of Schedule 3 to the 2018 Act. Paragraph 2 of that Schedule allows a country to be removed from Part 3 where the Secretary of State is satisfied that it has ceased to be a country that is similarly situated to the other countries listed in Part 3 in terms of its economic characteristics. In making that determination, the Secretary of State must have regard, among other things, to the country’s classification by the World Bank. The preamble does not cite these pre-conditions and the Committee asked the Department to explain. In its memorandum, the Department explains that it considers the first to be a pre-condition and asserts that it is sufficient to cite paragraph 2(1)(b) in the preamble to evidence fulfilment of that condition. In relation to the duty to have regard to the classification by the World Bank, the Department asserts that this is not a pre-condition but instead a consideration to be taken into account when satisfying the pre-condition in paragraph 2(1)(b). The Department explains that this approach is consistent with previous instruments.

1.5The Committee reads both provisions as pre-conditions that are required to be fulfilled before the instrument can be validly made. The purpose of setting out them out in the preamble is to enable the reader to know that they have been fulfilled. It is not sufficient for this purpose to cite the enabling power without specifying that its pre-conditions have been complied with, even where they appear in the same provision. The preamble should therefore have cited both pre-conditions, in the same way as section 28 is cited (see the Committee’s Fifth Report of Session 2022–23 in relation to S.I. 2022/613). The Committee accordingly reports the preamble to these Regulations for failure to comply with proper legislative practice.

1.6The new trade preference scheme operates in part based on a “DCTS Specified Goods Table” (as defined in regulation 2). As the relevant document could not be found, the Committee asked the Department to explain where it is available and from what date it was made available. In its memorandum, the Department provides the link where the Table can be found online and explains that it was made available on 19 June 2023. The “DCTS Specified Goods Table” is referred to in several places in the instrument and access to that document is required in order to effectively understand certain provisions (for example regulations 11, 14 and 15). This instrument was laid before Parliament on 24 May and comes into force on 19 June. It is not satisfactory for a document, without which the instrument cannot be understood, to be made available on the same day as the instrument comes into force and 25 days after the instrument was laid before Parliament. The Committee accordingly reports this instrument for failure to comply with proper legislative practice.

Instruments not reported

The Committee has considered the instruments set out in the Annex to this Report, none of which were required to be reported.

Annex

Instruments subject to annulment

Appendix 1: Memorandum from the Department for Business and Trade

S.I. 2023/561

The Trade Preference Scheme (Developing Countries Trading Scheme) Regulations 2023

1. The Committee has asked the Department for Business and Trade (DBT) for a memorandum on the following point(s):

1. Explain whether the preamble should have also cited section 10(4) of the Taxation (Cross-border) Trade Act 2018 (in light of regulation 3).

2. Explain why the preamble does not contain references to the pre-conditions in paragraph 2 of Schedule 3 to the Taxation (Cross-border Trade) Act 2018, namely that—

a) the Secretary of State needs to be satisfied that Samoa and Vietnam have ceased to be similarly situated to the other countries in Part 3 of Schedule 3 in terms of their economic characteristics, and

b) the Secretary of State needs to have had regard, among other things, to the classification of countries by the World Bank.

3. Explain where the “DCTS Specified Goods Table” defined in regulation 2 can be found online and from what date it was made available (noting that the link in the footnote in regulation 2 leads to a page stating that it cannot be found).

Point 1

2. DBT considers that it has correctly cited section 10(4) of the Taxation (Cross-border Trade) Act 2018 (“the Act”) in the footnote to the preamble. This approach is in accordance with the Statutory Instrument Practice, 5th ed. (see paragraph 3.11.16) as well as the GLP SI Drafting Guidance (see paragraph 6.3.20).

Point 2

3. The preamble cites paragraph 2(1)(b) of Schedule 3 to the Act which is the provision that specifies the pre-condition referred to in point 2(a) of the Committee’s query. DBT considers that this satisfies the requirement to reference the pre-condition. In adopting this approach, DBT has sought consistency with how pre-conditions have been referred to in previous related SIs, in particular:

a. S.I. 2020/1438 cites paragraph 2(1) of Schedule 3 in its preamble but does not specifically reference the pre-condition;

b. S.I. 2021/1489 cites paragraph 2(1) of Schedule 3 in its preamble but does not specifically reference the pre-condition.

4. In relation to point 2(b) of the Committee’s query, DBT has again sought to maintain consistent practice with previous related SIs (namely, SI. 2020.1438 and SI. 2021/1489 referred to above). On this:

a. DBT does not consider the requirement that the Secretary of State has regard to a country’s World Bank classification to be a ‘pre-condition’ when exercising the powers in paragraph 2(1)(b) of Schedule 3 to the Act. Instead, it specifies considerations to be taken into account when satisfying the pre-condition contained in paragraph 2(1)(b) of Schedule 3 to the Act.

Point 3

5. The DCTS Specified Goods Table can be found online at: https://www.gov.uk/government/publications/reference-document-for-the-trade-preference-scheme-developing-countries-trading-scheme-regulations-2023. The DCTS Specified Goods Table was made available at the above link on 19 June 2023.

6. DBT regrets that the link in the footnote in regulation 2 previously led to a page that could not be found and assures the Committee that this has now been rectified.

Department for Business and Trade

27 June 2023

Formal Minutes

Wednesday 5 July 2023

Members present

Jessica Morden, in the Chair

Peter Grant

Report consideration

Draft Report (Eighteenth Report), proposed by the Chair, brought up and read.

Ordered, That the draft Report be read a second time, paragraph by paragraph.

Paragraphs 1.1 to 1.6 read and agreed to.

Annex agreed to.

A Paper was appended to the Report as an Appendix.

Resolved, That the Report be the Eighteenth Report of the Committee to the House.

Ordered, That the Chair make the Report to the House.

Adjournment

Adjourned to a day and time to be fixed by the Chair.