This is a House of Lords and House of Commons Committee joint report.
Joint Committee on Statutory Instruments
Date Published: 9 June 2023
At its meeting on 7 June 2023 the Committee scrutinised a number of instruments in accordance with Standing Orders. It was agreed that the special attention of both Houses should be drawn to three of those considered. The instruments and the grounds for reporting are given below. The relevant departmental memoranda are published as appendices to this report.
1.1The Committee draws the special attention of both Houses to these Regulations on the ground that they are defectively drafted in two respects.
1.2The Regulations, which are subject to the affirmative resolution procedure, establish a scheme for developers the purpose of which is to improve the safety and standard of buildings. Regulation 6 sets out the conditions which a person must meet in order to be eligible to be a member of the scheme. Regulation 6(b) specifies that one of those conditions is that the person is not a registered provider of social housing or a wholly owned subsidiary of such a provider. There are references in regulations 13, 15 and 16 to a person who “does not fall within regulation 6(b)”. In the view of the Committee, the most natural meaning of those words is as a reference to a person who does not meet the condition in regulation 6(b), namely a registered provider of social housing or a wholly owned subsidiary of such a provider. However, such a construction does not make sense in the contexts in which the words are used in regulations 13, 15 and 16 because they all relate to becoming a member of the scheme. Accordingly, the Committee asked the Department for Levelling Up, Housing and Communities to explain the words and their intended meaning.
1.3In a memorandum printed at Appendix 1, the Department makes it clear that the words are intended to refer to a person who does not fall within the categories described in regulation 6(b); in other words, it is intended to refer to a person who is not a registered provider of social housing or a wholly owned subsidiary of such a provider. The Department argues that the words have to be construed in this way because, in the contexts in which they appear, it does not make sense to give them any other meaning. While that may be right, that does not in the view of the Committee make the drafting appropriate or acceptable. It should not be necessary to give the words a meaning which is different from their natural meaning in order to make sense of them. The Committee accordingly reports regulations 13, 15 and 16 for defective drafting.
1.4Regulation 30 imposes notification requirements on persons who are not members of the scheme but are eligible to join it. The Regulations do not however provide for any sanction or other consequences if the person fails to comply with the requirement. In its memorandum, the Department justifies its approach on the basis that compliance with the notification requirements is not essential because there are other mechanisms available to local planning authorities for acquiring the relevant information. The Department also refers to the facts that few developers are likely to be affected, that they are in any event sophisticated entities who will understand the legislation, and that guidance will be issued to help interpret the Regulations. However, none of these matters address the point that a legal obligation must be capable of being enforced if it is to be effective. If compliance with a requirement is not necessary to achieve the policy objectives of the Regulations, then in the view of the Committee it should not be framed as such. The Committee accordingly reports regulation 30 for defective drafting.
2.1The Committee draws the special attention of both Houses to these Regulations on the ground that they appear to make unexpected use of the enabling powers in one respect.
2.2These Regulations, which are subject to the negative resolution procedure, are made under section 1(1) of the Trade (Australia and New Zealand) Act 2023 to implement the government procurement Chapters of the UK-Australia and UK-New Zealand Free Trade Agreements.
2.3Regulations 2(3)(b) and 4(3)(b) amend regulation 6 of the Public Contract Regulations 2015 and regulation 17 of the Utilities Contract Regulations 2016 (S.I.s 2015/102 and 2016/274). These provisions relate to procurements where the work is divided into lots: if the aggregate value of all the lots meets or exceeds the relevant procurement threshold, then the procurement rules apply to all the lots; but up to 20 per cent of that aggregate value can be awarded without having to comply with the procurement rules where the aggregate value of individual lots being awarded using that exception is below a de minimis threshold. Regulations 2(3)(b) and 4(3)(b) provide for that de minimis exception to apply even where the value of one or more lots—and therefore the total value of the procurement—cannot be estimated. The Committee asked the Cabinet Office to explain which provisions of the FTAs are being implemented by these regulations.
2.4In a memorandum printed at Appendix 2, the Department asserts that these regulations are intended to implement article 16.2(9) of the UK-Australia FTA. It is not clear to the Committee, however, how they achieve this outcome. Article 16.2(9) provides that a procurement for which the total estimated maximum value over its entire duration is not known is deemed to be a covered procurement and accordingly the procurement rules set out in the FTA would apply. Article 16.2(9) contains no express de minimis exception and so it is unclear how the amendments made by regulations 2(3)(b) and 4(3)(b) are consistent with this. The Committee is concerned that, read strictly, article 16.2(9) requires that where the value of one or more lots cannot be estimated, the entire procurement should be deemed to be covered by the procurement rules. If that is the case, it is not clear that the provisions in question can be said to be implementing article 16.2(9), and the Committee accordingly reports regulations 2(3)(b) and 4(3)(b) for making unexpected use of the enabling powers.
3.1The Committee draws the special attention of both Houses to this Order on the ground that it is defectively drafted in one respect.
3.2This Order, which is subject to the negative resolution procedure, provides for motor vehicle aftermarket agreements to be covered by a block exemption to the prohibition in the Competition Act 1998 against agreements that distort competition within the UK. This block exemption only applies on condition that such agreements do not exceed market share thresholds or contain “hardcore” or “excluded” restrictions. The effect of breaching those conditions is set out in article 7: the block exemption is cancelled in respect of the whole agreement, except where the agreement contains one or more excluded restrictions that can be severed from the rest of its terms; in that case, the block exemption is cancelled only in respect of each severable excluded restriction, even if the agreement also exceeds market share thresholds or contains hardcore restrictions.
3.3This is different from the approach taken in the Competition Act 1998 (Vertical Agreements Block Exemption) Order 2022 (S.I. 2022/516), where cancellation of the block exemption is limited to severable excluded restrictions only if the breach is so limited; if the agreement also breaches conditions as to market share or hardcore restrictions, the block exemption is cancelled in respect of the whole agreement. With that distinction in mind, the Committee asked the Department for Business and Trade to explain whether article 7 of this Order reflects the policy intent. In a memorandum printed at Appendix 3, the Department acknowledges that it does not: the policy intent is for the effect of a breach to be the same in both instruments. The Department has already corrected the error. The Committee accordingly reports article 7 for defective drafting, acknowledged by the Department.
At its meeting on 7 June 2023 the Committee considered the instruments set out in the Annex to this Report, none of which were required to be reported to both Houses.
S.I. Number |
S.I. Title |
Draft |
Armed Forces Act 2006 (Continuation) Order 2023 |
S.I. Number |
S.I. Title |
S.I. 2023/515 |
National Health Service (Charges to Overseas Visitors) (Amendment) (No. 2) Regulations 2023 |
S.I. 2023/520 |
Building etc. (Amendment) (England) Regulations 2023 |
S.I. 2023/522 |
Local Government Pension Scheme (Amendment) (No. 2) Regulations 2023 |
S.I. 2023/525 |
National Health Service (Performers Lists) (England) (Amendment) Regulations 2023 |
S.I. 2023/540 |
Railways and Other Guided Transport Systems (Safety) (Amendment) Regulations 2023 |
S.I. 2023/549 |
Social Fund Winter Fuel Payment (Temporary Increase) Regulations 2023 |
S.I. Number |
S.I. Title |
Draft |
Basildon (Electoral Changes) Order 2023 |
Draft |
Brentwood (Electoral Changes) Order 2023 |
S.I. Number |
S.I. Title |
S.I. 2023/502 |
Public Order Act 2023 (Commencement No. 1) Regulations 2023 |
1)The Committee has asked the Department for Levelling Up, Housing and Communities for a memorandum on the following points:
(1) Explain what is meant in regulations 13, 15 and 16 by the reference to a person who “does not fall within regulation 6(b)”, and why it is considered to have that meaning.
(2) Explain the consequences for an applicable person (within the meaning of regulation 28(3)) who fails to comply with the duty to notify the relevant local planning authority in accordance with clause 30(1) or (2).
Question (1):
2)Regarding Question 1, a person who “does not fall within regulation 6(b)” is a person who is not a registered provider of social housing, or a wholly-owned subsidiary of a registered provider of social housing (together, RPs). The Department’s explanation is set out below.
3)Chapter 1 of the regulations relates to the establishment of and eligibility for the Responsible Actors Scheme (the Scheme). Regulation 6, within Chapter 1, sets out who is eligible to be a member of the Scheme.
4)Regulation 6 provides that a person is eligible to be a member of the Scheme if: (a) they satisfy the substantive criteria set out in regulations 7, 8 or 9, and (b) they are “not a registered provider of social housing, or a wholly-owned subsidiary of a registered provider of social housing (where “wholly-owned subsidiary” has the meaning given in section 1159 of the Companies Act 2006)” (emphasis added). It is therefore clear from regulation 6(b) that RPs are not, and were never intended to be, eligible for the Scheme. They are excluded even if they satisfy the substantive criteria in regulations 7, 8 or 9.
5)Chapter 2 of the regulations deals with membership of the Scheme and regulations 13, 15 and 16 of Chapter 2 set out the processes by which persons are invited to apply and may apply to become members of the Scheme. These regulations are therefore to be read in the context of the regulations in Chapter 1 regarding eligibility for membership of the Scheme.
6)By referring in regulations 13, 15 and 16 to a person who is likely to satisfy the criteria in regulations 7 or 8, or 9 (as the case may be), but who “does not fall within regulation 6(b)”, the Department intends to cover persons who are likely to be eligible for the Scheme. As such, consistent with regulation 6(b), RPs are to be excluded from the invitation and application processes provided for in regulations 13, 15 and 16. In other words, read in context, the language of “not fall[ing] within regulation 6(b)” means “not falling within [the category of persons described in] regulation 6(b)”, namely RPs.
7)A construction which has the effect of making only RPs subject to the processes in regulations 13, 15 and 16 would be contrary to the clear language regarding eligibility in regulation 6(b). Further, it would not make sense against the backdrop of the negotiations which produced the Self Remediation Terms referred to in regulation 21.
8)For these reasons, the Department considers that the risk of misinterpretation is low.
9)If confusion does arise, the Department’s current intention is to expand the Scheme through further regulations (as referred to in the Explanatory Memorandum) and, if necessary, a drafting amendment may at that stage be made, subject to Parliamentary approval.
Question (2):
10)On Question 2, there are no consequences for a failure to comply with regulations 30(1) and 30(2). There is no specific enforcement mechanism or sanction where a developer who is subject to the prohibitions elects not to comply with these provisions. As explained below, however, a failure to comply with these notification provisions will not affect planning decisions by a local planning authority (LPA) or undermine their ability to take relevant enforcement action.
11)LPAs will not be solely reliant on notifications under regulations 30(1) and 30(2) when taking planning and enforcement decisions, since whether or not a developer is prohibited will be apparent from the prohibitions list referred to in regulation 20. The intention is that LPAs will primarily rely on that list when carrying out their functions. Further, where it appears to the LPA that there may have been a breach of planning control, they may seek further information using enforcement powers provided for in the Schedule to the regulations. Their wider ability to take enforcement action provided for in the Schedule is not conditional on the notification provisions having been complied with.
12)The purpose of regulations 30(1) and 30(2) is thus to provide an additional information sharing mechanism to support LPAs in making planning decisions and taking enforcement action. Where a prohibited person provides them with relevant information pursuant to the notification provisions, this will assist planning enforcement teams to prepare to take action and to support both the effective enforcement of the prohibitions and the prompt notification to LPAs of the prohibitions having been lifted.
13)This approach is permitted by the primary power at section 128(6), which provides that regulations may “require a person of a prescribed description to give a notification relating to development (and may make provision about the content and form of a notification and the way in which it is to be given)”.
14)Additionally, the notification provisions will only be relevant to a developer who has had the prohibitions applied to them. Such developers will be sophisticated commercial entities who it is reasonable to expect will understand the effect of regulations 30(1) and 30(2).
15)It is anticipated that these provisions will apply only to a small number of developers (if any), since most eligible developers can be expected promptly to join the Scheme following its inception. This expectation is supported by the fact that (at the time of writing) 47 of the 50 developers who have been invited to sign the developer remediation contract have done so, and one additional developer has signed ahead of being formally invited to do so. Even where a developer does not join the Scheme, or has its Scheme membership terminated, it may still seek to join (or re-join) and may therefore choose to act transparently and in good faith in its dealings with LPAs by complying voluntarily with regulation 30(1). With respect to regulation 30(2), the Department expects that a developer who is no longer a prohibited person will comply because of the obvious benefit to it of ensuring an LPA is aware that it is no longer prohibited.
16)Finally, the Department wishes to inform the Committee that given the nature of this Scheme and its subject matter, it intends to produce guidance, where necessary, to assist developers, building owners, leaseholders, local planning authorities and the public in interpreting and understanding the regulations and the operation of the Scheme and this guidance may cover the matters set out above.
Department for Levelling Up, Housing and Communities
23 May 2023
1)The Committee has asked the Cabinet Office for a memorandum on the following point(s):
(1) In relation to regulations 2(3)(b) and 4(3)(b), explain—
(a) which provisions of the government procurement Chapters of the UK-Australia and UK-New Zealand FTAs they are implementing or what matters they are dealing with arising from those Chapters; and
(b) how they are consistent with the obligations of the United Kingdom under those agreements, having regard in particular to Article 16.2(9) of the UK-Australia FTA.
(2) Explain what power is relied on in regulation 4(7) to correct deficiencies arising from the withdrawal of the United Kingdom from the EU in regulation 45 of the Utilities Contracts Regulations 2016 (2016/274), given that similar amendments were made by S.I. 2020/1319 under section 8(1) of the European Union (Withdrawal) Act 2018.
2)In relation to point (1), regulations 2(3)(b) and 4(3)(b) were intended to implement Article 16.2(9) of the UK-Australia FTA in respect of the valuation of lots. While these amendments relate to both the Public Contracts Regulations 2015 (“PCRs”) and the Utilities Contracts Regulations 2016 (“UCRs”), the following explanation refers only to the PCRs, however the UCR provisions are largely identical.
3)Where a proposed work, a proposed provision of services or proposed acquisition of similar supplies is divided into separate lots, regulation 6(11) to (15) provide special rules to ensure that the value of those lots is combined for the purpose of determining whether the procurement of those lots should be in accordance with the rules found in Part 2 of the PCRs. Regulation 6(14) of the PCRs allows a contracting authority to award what is known as a de minimis contract without following the rules in Part 2 of the PCRs (even where the aggregate value of all the lots may exceed the relevant threshold), provided (as set out in reg. 6(15)) it doesn’t exceed 20% of the total value of all the lots into which the works, services or supplies has been divided.
4)New paragraph (15A) sets out how the de minimis contracts can be awarded where the aggregate value of all the lots cannot be estimated, in light of the requirement in Article 16.2(9) of the FTA.
5)In relation to point (2), the amendments made by regulation 4(7) to regulation 45 of the UCRs are not to correct deficiencies arising from the withdrawal of the UK from the EU, but are consequential amendments as a result of implementing Article 16.6(2) of the UK-Australia FTA which requires “a notice of intended procurement” to be published for every “covered procurement” by every contracting authority. As such regulation 4(7) relies on the power provided in section 2(1)(c) of the Trade (Australia and New Zealand) Act 2023. Any deficiencies to the relevant provisions (regulations 45 and 67) as a result of Brexit were already corrected by S.I. 2020/1319.
6)The UCRs currently allow sub-central contracting authorities, in certain circumstances, to use a periodic indicative notice (“PIN”) (referred to as a notice of planned procurement in the FTA) as a call for competition rather than having to also publish a contract notice (referred to as a notice of intended procurement in the FTA). To implement Article 16.6(2) of the FTA this option has to be removed. This requires, inter alia, the omission of paragraphs (5), (6) and (8) of regulation 67 of the UCRs.
7)Regulation 45 allows for shortened timeframes on the publication of a contract notice when a PIN has been previously published. This is still permissible under the FTA. Paragraph (4) of regulation 45 includes a cross-reference to regulation 67(5)(c) which sets out some of the information that must have been included in the PIN to take advantage of the shortened timeframes on publication of the contract notice. Due to the fact that regulation 67(5) is being omitted, regulation 45(4) required replacing.
8)New paragraph (4A) of regulation 45 of the UCRs replaces paragraph (4) and largely replicates it, subject to the following amendments, which are all a consequence of the FTA implementation:
a)the opening words set out the new application of the provision (as a result of the Welsh Government doing their own implementation) and remove reference to the PIN being used as a call for competition;
b)the cross-reference to regulation 67(5)(c) in paragraph (4)(a) has been removed and the detail previously set out in regulation 67(5)(c) is now contained in regulation 45(4A)(b);
c)the wording in regulation 67(5)(c)(ii)(bb), as now set out in regulation 45(4A)(b)(ii)(bb), has been updated to reflect the omission of regulation 67(5) and that using a PIN as a call for competition is no longer permitted;
d)subparagraph (b) is now subparagraph (c).
Cabinet Office
24 May 2023
1)The Committee has asked the Department for Business and Trade for a memorandum on the following point(s):
Explain whether it reflects the policy intent that article 7 does not have the effect of cancelling the block exemption where an agreement contains both hard core restrictions and one or more severable excluded restrictions and is only cancelled in respect of each severable excluded restriction (especially having regard to the combined effect of articles 9 and 11 of S.I. 2022/516).
2)We are grateful to the Committee for bringing this point to our attention.
3)The Department acknowledges that the point raised by the Committee reflects an error in the drafting of S.I. 2023/501. It is the policy intent that article 7 should have the effect of cancelling the block exemption in respect of any agreement which contains a hardcore restriction (or is in breach of the condition relating to market share thresholds or contains an excluded restriction which is not severable from the agreement). The Department apologises for the error.
4)Consistent with the position under S.I. 2022/516, it is only where the breach is limited to the agreement containing one or more excluded restrictions which are each severable from the agreement that the block exemption should be cancelled in respect of those excluded restrictions rather than the agreement as a whole.
5)The Department intends to correct the error at the earliest opportunity and thanks the Committee again for its review.
Department for Business and Trade
23 May 2023
Jessica Morden, in the Chair
Lord Beith
Lord Chartres
Baroness D’Souza
Peter Grant
Lord Sahota
Baroness Sater
Lord Smith of Hindhead
Maggie Throup
Draft Report (Thirty-Ninth 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 3.3 read and agreed to.
Annex agreed to.
Papers were appended to the Report as Appendices 1 to 3.
Resolved, That the Report be the Thirty-Nineth Report of the Committee to both Houses.
Ordered, That the Chair make the Report to the House of Commons and that the Report be made to the House of Lords.
Adjourned till Wednesday 14 June at 3.40 p.m.