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Grand Committee

Tuesday, 24 February 2015.

Arrangement of Business


3.30 pm

The Deputy Chairman of Committees (Lord Colwyn) (Con): My Lords, I remind the Committee that if there is a Division in the House we will adjourn for 10 minutes to vote.

Referral and Investigation of Proposed Marriages and Civil Partnerships (Scotland) Order 2015

Motion to Consider

3.31 pm

Moved by Baroness Williams of Trafford

That the Grand Committee do consider the Referral and Investigation of Proposed Marriages and Civil Partnerships (Scotland) Order 2015.

Relevant document: 17th Report from the Joint Committee on Statutory Instruments

Baroness Williams of Trafford (Con): My Lords, I shall speak also to the Referral and Investigation of Proposed Marriages and Civil Partnerships (Northern Ireland and Miscellaneous Provisions) Order 2015 and the Proposed Marriages and Civil Partnerships (Conduct of Investigations, etc.) Regulations 2015.

Part 4 of the Immigration Act 2014 constitutes the biggest reform of marriage preliminaries in a generation. It provides for a new referral and investigation scheme in England and Wales, aimed at tackling sham marriages and civil partnerships entered into for the purpose of circumventing the UK’s immigration controls. We are committed to dealing with those who seek to use marriage or civil partnership as a means of cheating their way into staying in the UK. The referral and investigation scheme will give us a much stronger platform for effective, systematic action to disrupt and deter sham marriages and civil partnerships, and prevent them gaining an immigration advantage.

The draft orders extend the referral and investigation scheme to proposed marriages and civil partnerships in Scotland and Northern Ireland. The operation of the scheme on a UK-wide basis will ensure that there is a robust response in place to the problem of sham marriage and avoids any risk of displacement of the problem from one part of the UK to another. We are grateful for the support of colleagues in the devolved Administrations for these measures.

The conduct of investigations regulations make provision for how we will conduct an investigation into whether a proposed marriage or civil partnership referred under the scheme is a sham. They set out the requirements with which the parties must comply as part of an investigation and the basis for the decision

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as to whether they have complied. If the parties do not comply with an investigation under the scheme, they will be unable to marry or enter into a civil partnership on the basis of that notice. The scheme will be implemented across the UK on 2 March. From this date, all marriages following civil preliminaries and civil partnerships in England and Wales will be subject to a minimum notice period of 28 days. This will also be the case in Scotland and Northern Ireland, under changes to devolved marriage and civil partnership laws.

Any couple including a non-EEA national wishing to marry in the Anglican Church in England and Wales will be required to complete civil preliminaries and give notice at a register office before their marriage. This will ensure that all couples within the scope of the scheme are correctly identified. Also from 2 March, registration officials will be required to refer to the Home Office all couples involving a non-EEA national who could gain an immigration advantage from the proposed marriage or civil partnership—for example, because they do not have evidence that they have settled status in the UK. Where a couple is referred to the Home Office under the scheme, we will be able to extend the notice period from 28 to 70 days where we suspect a sham and decide to investigate the genuine nature of the relationship.

By extending the notice period and channelling to us all proposed marriages and civil partnerships that could bring an immigration benefit, the new system will give us much more time and information to identify and act against shams before they happen. Where they go ahead, we will have the evidence that we need on file to be able to refuse any subsequent immigration application. The new scheme will provide the platform needed for us to tackle sham marriages and civil partnerships more effectively, and crack down on the abuse of our marriage and civil partnership laws, and of our immigration system. I beg to move.

Baroness Smith of Basildon (Lab): My Lords, I am grateful to the noble Baroness for her explanation of and information about these orders, and I think she knows that they have our full support. We expressed that support during the passage of the Immigration Bill, which was a long Bill that produced considerable debate—but, interestingly, this part did not provoke particularly long debates. There was widespread support in your Lordships’ House for the view that something had to be done to tackle those who seek to gain an immigration status in the UK on the basis of a marriage ceremony that is not a genuine marriage. I appreciate that it is seriously difficult to investigate and understand how often this happens, and there is now a reliance on those who conduct marriages to seek further information and to make a judgment, based on that information, about whether the marriage is fraudulent for the purposes of immigration or is a genuine relationship. We supported the measures then and we support them now.

Not only are these sham ceremonies wrong in principle and unfair to British citizens, they are also unfair on those in mixed nationality relationships that are genuine and do lead to marriage. We can have confidence in those marriages if we deal with sham marriages that are not genuine. I have a few questions, some of which

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are simply to refresh my memory on a couple of things in the Immigration Bill that relate to this issue. Earlier I was thinking about whether it is a duty on those conducting a marriage ceremony to refer any marriage they suspect of being sham or is it something that they may do? I know that there is information that they have to check, but that can be provided fraudulently anyway, which indeed has been part of the problem. Is it an actual duty on those conducting the marriage?

One reason I ask this relates to the news at the moment about the three young London girls who flew to Turkey and are now feared to have gone to Syria. A problem there is that the Government have in some ways outsourced the checking procedures from those who would have been responsible, such as the then UK Border Agency. It is now the responsibility of the airline to check whether they are able to leave the country. Now we have a situation where we expect those who conduct marriage ceremonies to check whether a couple are genuine. I am curious as to whether it would be an offence if the person did not conduct adequate checks, and what training, support, advice and guidance is being given to those who conduct marriages to help them make the correct assessment? That is key to making sure that we get this right. It is all very well to pass a law saying that something should happen, but unless we know that it will happen appropriately, we should still have some concerns.

I have to say that I did not find the Explanatory Memorandum very helpful at all. It refers to consultations, but the only ones it mentions are those which were conducted on the measures that are in the Bill itself, not those set out in this secondary legislation. One thing that always concerns me about secondary legislation is that often it is about the implementation of policies that have already been agreed. For a policy to be effective, its implementation often matters more than what was decided as the policy. I would have liked to have seen some consultation; some soundings and advice taken from those who are going to be at the sharp end of implementing the legislation to see if they are content with the tools they have in place. I went back to the original consultation, but it did not help much in that regard. If the Minister could tell me what conversations and discussions have been held with those who will be responsible for implementing the legislation, it would be quite helpful.

At the time the legislation was being passed, it was estimated that there were something between 4,000 and 10,000 applications to remain in the UK being made each year by those who we believed were party to a sham marriage. That is a huge range, and we said at the time that there has to be more intelligence gathering and an intelligence-based approach to this problem. Has anything more been done on that since then? If this is to be a referral-only mechanism to investigate sham marriages, I am concerned that we may be missing some of the sham applications that will be made as a result unless the appropriate training and guidance is given to those who are to conduct such marriages.

These are not concerns about the policy or the principle, but about how the law is going to work in practice. Are the tools and the funding in place? Those

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are the issues. In principle, however, we support these orders, just as we supported the legislation. However, if the noble Baroness is able to say something about the points I have raised, I would be most grateful to her.

Baroness Williams of Trafford: I thank the noble Baroness, as always, for her constructive comments. She asked three main questions, the first of which was on a duty to report. There is an existing duty to report on registration officials who suspect that a sham marriage or civil partnership has taken place or is about to take place. They currently have a duty to report that to the Home Office, and there will now also be a duty to refer all couples who are in scope of the scheme for the Home Office to make a decision about whether to investigate or not. That is where the extended period to investigate comes in.

The noble Baroness also asked about guidance and training. Statutory guidance for Home Office staff on the operation of the new scheme is being developed, alongside the requisite operational procedures for dealing with proposed marriages and civil partnerships which have been referred to the Home Office under the scheme. The guidance is expected to cover decisions about whether to investigate whether a proposed marriage or civil partnership is a sham, how the investigation may be conducted and whether a couple have complied with an investigation. The parameters for the guidance are set out in secondary legislation before the Committee, in the draft conduct of investigations regulations, and in the explanatory paper on the new scheme that the Government published in November 2013 to support parliamentary consideration of the relevant provisions in the Immigration Bill.

The noble Baroness talked about training, and help and advice for registrars. I understand that significant training has been provided to local registration staff to help them identify forged documents. That is not a perfect solution but it is the best that we have at our disposal at this point in time. Intelligence has also been shared with registration staff so that they are aware of the profile of a likely sham and what sort of pointers would indicate one.

The noble Baroness talked about consultation. We have consulted publicly, and consulted the devolved Administrations and their registrars on the scheme.

Baroness Smith of Basildon: I am grateful for that, which was helpful, although I was asking about consultation on these regulations, not on the Bill. The Explanatory Memorandum says that,

“no public or other consultation was held … on the Regulations”.

Perhaps she is talking about the Bill, not the regulations.

Baroness Williams of Trafford: Perhaps I need to come back to the noble Baroness on that. I had it in my mind that there had been both a public consultation and extensive discussions with the devolved Administrations. Rather than give her duff information from the Dispatch Box, I will get back to her. We have also worked closely with the Anglican Church on the changes that might affect the church. I will write to the

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noble Baroness on the specific point, but unless she has any other questions, I commend the regulations to the Committee.

Motion agreed.

Referral and Investigation of Proposed Marriages and Civil Partnerships (Northern Ireland and Miscellaneous Provisions) Order 2015

Motion to Consider

3.44 pm

Moved by Baroness Williams of Trafford

That that Grand Committee do consider the Referral and Investigation of Proposed Marriages and Civil Partnerships (Northern Ireland and Miscellaneous Provisions) Order 2015.

Relevant document: 17th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Proposed Marriages and Civil Partnerships (Conduct of Investigations, etc.) Regulations 2015

Motion to Consider

3.44 pm

Moved by Baroness Williams of Trafford

That the Grand Committee do consider the Proposed Marriages and Civil Partnerships (Conduct of Investigations, etc.) Regulations 2015.

Relevant document: 17th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Non-Domestic Rating (Shale Oil and Gas and Miscellaneous Amendments) Regulations 2015

Motion to Consider

3.45 pm

Moved by Lord Ahmad of Wimbledon

That the Grand Committee do consider the Non-Domestic Rating (Shale Oil and Gas and Miscellaneous Amendments) Regulations 2015.

Relevant documents: 21st Report from the Joint Committee on Statutory Instruments, 25th Report from the Secondary Legislation Scrutiny Committee

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con): My Lords, I shall speak also to the draft Non-Domestic Rating (Levy and Safety Net) (Amendment) Regulations 2015. These regulations make

24 Feb 2015 : Column GC310

important amendments to the rates retention scheme, which since April 2013 has allowed local government to retain 50% of all business rates. This has given local communities a vital share in local growth and has rewarded those authorities that work with their local businesses to support and boost local economies.

I will first consider the Non-Domestic Rating (Shale Oil and Gas and Miscellaneous Amendments) Regulations 2015. Safe shale oil and gas, supported by a robust regulatory system, will help safeguard the national energy supply on which families and businesses throughout the country rely. It will also create local jobs, but while we believe that drilling for shale oil and gas is nationally important, we recognise that, locally, communities should also see the benefits of such developments. The draft regulations will therefore allow local authorities which host shale oil and gas sites to retain not 50% but 100% of the business rates they collect from those sites.

We undertook a technical consultation on these proposals last year and sought views on the regulations in draft. A summary of the responses to that consultation and the Government’s response were published on 23 January. A number of respondents were opposed to the principle that local authorities should receive 100% of the rates collected. The Government are not persuaded, for the reasons I have already touched on. We continue to believe that communities that host shale oil and gas sites should receive additional financial benefits.

The regulations will ensure that in areas where there is more than one tier of local government, the additional 50% being retained from shale oil and gas sites will go to the authority which is responsible for mineral planning decisions. In two-tier areas, this will be the county council and in London it will be the London boroughs. This is because these authorities have significant levers for promoting these developments. Nevertheless, other tiers of local government will continue to receive the same share of the business rates from shale oil and gas sites as they would have received under the existing 50% retention system. So, for example, district councils will still receive 40% of the business rates on shale oil and gas sites. This means that no local council will be worse off as a result of this measure.

These regulations also include some unrelated but important amendments to the operation of the rates retention scheme. The amendments are technical and have been developed and agreed with officers from local government in working groups set up for that purpose. They will ensure that the scheme operates as we intend.

Before explaining the changes made by Parts 5 and 6 of the regulations, I remind noble Lords that the scheme requires authorities to make an estimate of business rates income before the start of the year. The sums retained by individual authorities and paid to central government are calculated on the basis of that estimate.

Following the end of the financial year, authorities report their actual income. For the most part, any difference between the start of year estimate and the end of year actual income is rolled forward and paid in future years. However, for some aspects of the

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scheme, reconciliation payments are made once the actual income is known. These regulations amend the scheme to ensure that when the reconciliation payments are calculated, the amounts due to or from precepting authorities are correct.

Regulations 12(3) and 13 will also ensure that payments under the rates retention scheme made by local government during the year are made in 12 rather than 10 instalments, bringing those payments into line with when the rates income is received by local government.

Regulation 12(4) will update the cost factors which are used to calculate the local authority’s cost of collecting business rates. This determines how much money each billing authority receives to cover the cost of billing and collecting local business rates.

Finally, Regulation 12(5) makes the necessary amendments to ensure that when Derby City Council grants rate relief in the newly designated Derby Enterprise Zone, it is compensated for the cost of that relief.

I now turn to the levy and safety net regulations. These, too, make a series of technical amendments which, as with the previous regulations, have been agreed with local government officers on a working group set up to advise on the detailed implementation of the scheme, as well as with the Local Government Association and the Chartered Institute of Public Finance and Accountancy.

I will start by reminding noble Lords that the rates retention scheme includes a safety net which provides support to those authorities which, in any year, see their rates income drop by more than 7.5% below their baseline funding level. This is funded by a levy on other authorities that saw business rates growth in that year.

Noble Lords will also recall that, in line with our proper accounting practice, authorities must now set money aside from the rates they collect in order to create a provision from which they can, in future, make refunds to ratepayers where a rating assessment is reduced on appeal. Last year, we provided that authorities could, if they chose, spread the initial costs of making that provision over five years, rather than having it hit their useable income in the first year.

These regulations ensure that where an authority has chosen to spread the cost of appeals, which in turn changes the income reported in those years, this adjustment is also reflected in the calculations of the levy and safety net. Without such changes, the calculation of levy and safety net payments due to authorities would be made as if their income in 2013-14 was lower than it actually is—and, crucially, that their income in each of the next four years was higher than it will be. The regulations, which are highly technical, ensure that the calculations of levy and safety net payments reflect the impact on each authority of a decision to spread the cost of the initial appeal provision.

These regulations will also ensure that payments arising from the levy and safety net are made in 12 rather than 10 monthly instalments. As with the previous regulations, this is to ensure that payments from local government to central government are aligned with payments from ratepayers to local government.

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Finally, I draw to the attention of the Committee a couple of minor typographical errors in the levy and safety net regulations. In Regulation 2(1), the word “Rating” needs to be inserted after the words “Non-Domestic” in order to fully describe the 2013 regulations. In paragraphs 7(2) and 8(2) of the new Schedule 1A to the 2013 regulations, the reference to “paragraph 1 of Schedule 1” should in fact be to “paragraph 2 of Schedule 1”. I apologise for these minor errors of drafting: we intend to rectify them when the instrument is prepared for signature. I commend these regulations to the Committee.

Lord McKenzie of Luton (Lab): My Lords, I wish to ask the Minister a couple of questions in support of my noble friend. On the shale oil and gas regulations, I think the Minister said that 40% will still go to district councils. I presume that that is 80% of the existing 50% that councils will retain. If it is not, it would be helpful if he could expand on that. Perhaps he can also say a little more about the reasons for allocating the additional 50% of business rate relief, where there are two-tier authorities, to county councils rather than to district councils. Is it simply because the former is the minerals authority, bearing in mind that it is the district councils that will suffer quite a lot of the disruption that is inevitably entailed in some of these activities?

Can the Minister also say a little more about how the extent of a class A and class B hereditament is to be determined? What sort of factors will be taken into account, bearing in mind that a lot of what goes on in fracking happens many feet below the surface? How is that, as a practical matter, going to be dealt with? Finally, can the Minister help us a little on what the retention of the 50% actually means? If, for example, an authority might otherwise be in receipt of a safety net payment, would that additional 50% be ignored completely and would the safety net payment still be made? Similarly, does it have any effect on what would have been the levy payment in those circumstances?

As for the baseline funding levels being uprated by 2%, presumably the effect of that is to reduce what the safety net would otherwise have been. Can the Minister give us a few statistics on recent experience with safety nets? We have presumably had only one period for which they have been paid, because they are paid nine months after the end of the year—so I think that there can be only one series of payments. It would be helpful to know what they are. Could we also know about the extent to which payments on account of safety nets were made for the first year, which presumably will have been made for 2014-15?

Can the Minister say a little more, too, on the status of outstanding appeals for business rates, and how those appeals might be analysed between relevant revaluation periods?

Lord Ahmad of Wimbledon: I apologise, but because of the aerial noise from the helicopter overhead I missed last question—and, if I missed it, I think that the officials behind me may also have missed it.

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Lord McKenzie of Luton: My final question was to do with the status of outstanding appeals, and whether we can have an analysis of those between the relevant revaluation years.

Lord Kennedy of Southwark (Lab): My Lords, first, I declare an interest as an elected member of Lewisham Council. As the Minister outlined, we are debating two sets of regulations. The first set, as he said, forms part of a scheme for local retention of business rates; the purpose is to designate classes of property liable to business rates to which the business rates income is to be wholly retained by local authorities. The second set of regulations makes changes to the operation and calculation of levy and safety net payments under the scheme for local retention of non-domestic rates.

I have no issue with either of these regulations as they stand, and I can see the benefit of incentivising local economic growth. I agree with my noble friend Lord McKenzie of Luton on the points that he raised; I would be interested to hear the response from the Minister to those points. I see the point about incentivising fracking schemes locally.

I should say at this point that I am a supporter of the UK doing all that it can to maximise different energy sources as our use and demand for power increase, ensuring security of supply. We all accept that fracking is not without its critics, and in some places controversy as well. As this is a relatively new technology in the UK, proceeding with appropriate levels of caution, risk assessment, and safety and security is really important, as it is that things are handled well here. Anything that the noble Lord could say about that in respect of local government would be appreciated.

I noted the comments in the accompanying note that some of the respondents to the consultation were concerned that these proposals could adversely affect independent planning decisions, and it would be useful if the noble Lord could say something about that when he responds to this debate. It would also be useful if the noble Lord could comment on the suggestion from the energy sector that the scheme could be extended to other aspects of energy-source extraction. I am not at all convinced by that, but it would be helpful to hear the views on this of the noble Lord and those of his department.

The second set of regulations is a sensible measure that protects local authorities against the risk of volatility in local rates income and the risk to local services that that could bring about by providing a safety net. They obviously make some changes there. I am content with these regulations and look forward to the noble Lord’s response.

4 pm

Lord Ahmad of Wimbledon: My Lords, I thank both noble Lords for their contributions and I will certainly seek to answer the questions where I can. If there are certain questions that I am unable to answer, I shall write to noble Lords in this regard.

On some of the questions of the noble Lord, Lord McKenzie, and first on the effect of the 50% disregard, it is disregarded for the purposes of the levy and safety

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net. The levy and safety net are not affected by the 50% disregard. The noble Lord also asked me to confirm the status with the issues around the 40% and the 80%. I am happy to confirm that the 40% to which I referred is indeed 80% of the 50% of the local share. I trust that that makes sense. If it does not, I am sure that the noble Lord will let me know, if not today, then later on.

He also asked about the extent of class A to class B and how that is determined in terms of factors. Local government will work with the Valuation Office Agency to identify classes A and B. Class A sites are the typical shale gas sites and class B covers combined new sites where shale gas is also present. I believe that he also asked a general question about the issue of appeals. As I am sure that the noble Lord recognises, there is a high number of business rate appeals, and they take too long to resolve. During the 2010 rating list there were 641,000 appeals that had been received, and as of September 2014 532,000 of these had been resolved. In the Autumn Statement 2013, the Government committed to resolve 95% of the 168,000 appeals outstanding as of 30 September 2013 by July 2015. As of September 2014 this figure had fallen to 52,000. While I welcome the broad support of the noble Lord, Lord Kennedy, he had a number of questions. I would like to pick up specifically on these matters and write to him.

Lord McKenzie of Luton: Can the noble Lord just clarify one of the answers, in which I think that he said on the issue of the 100% retention that it does not affect the safety net. Is that right? So it is ignored for that purpose, and an authority that might have been in receipt of a safety net, receiving additional business rate retention because of these arrangements, will still get the same level of safety net as it would have done otherwise.

Lord Ahmad of Wimbledon: Yes.

Lord McKenzie of Luton: That is very helpful.

Motion agreed.

Non-Domestic Rating (Levy and Safety Net) (Amendment) Regulations 2015

Motion to Consider

4.04 pm

Moved by Lord Ahmad of Wimbledon

That the Grand Committee do consider the Non-Domestic Rating (Levy and Safety Net) (Amendment) Regulations 2015.

Relevant document: 20th Report from the Joint Committee on Statutory Instruments

Motion agreed.

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Local Government (Transparency) (Descriptions of Information) (England) Order 2015

Motion to Consider

4.04 pm

Moved by Lord Ahmad of Wimbledon

That the Grand Committee do consider the Local Government (Transparency) (Descriptions of Information) (England) Order 2015.

Relevant document: 20th Report from the Joint Committee on Statutory Instruments

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con): My Lords, this order was laid before the House on 12 January 2015. It is about transparency and accountability in smaller authorities. I welcome noble Lords’ support for local authority transparency in previous debates. The order adds to the categories of information about which the Secretary of State may require authorities to publish information more frequently than annually.

On 17 December, under Section 2 of the Local Government, Planning and Land Act 1980, the Secretary of State issued a code of recommended practice on the publication of information by smaller authorities—the Transparency Code for Smaller Authorities. This applies to bodies including parish councils, internal drainage boards, charter trustees and port health authorities with an annual turnover not exceeding £25,000.

It is the Government’s intention to make it a legal requirement for smaller authorities to comply with the code. This will include a requirement to publish certain information relating to all formal meetings. However, the Secretary of State may require authorities to publish information more frequently than once a year only if it falls within a description of information to which Section 3(4) of the 1980 Act applies. In short, legislation needs to set out which categories of information the Secretary of State can require to be published more frequently than annually. This order adds to those descriptions of information, information relating to the meetings of a relevant authority, including the agendas, minutes and any other information concerning matters discussed at meetings. This will enable us to require the publication of meeting papers, agendas and minutes more frequently than annually.

The Local Audit and Accountability Act 2014 introduces a new local audit framework for public bodies, under which smaller authorities with an annual turnover not exceeding £25,000 will no longer be subject to routine external audit on an automatic annual basis, although they will still have an auditor nominated to field any complaints from local electors. This is a more proportionate approach to the country’s smallest public bodies and the amount of public money they handle. In place of an external audit, these authorities will be subject to the requirements set out in the Transparency Code for Smaller Authorities.Since the requirements of the code will represent a substitute for external audit under the new regime, the Government

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believe that requiring compliance through regulations is necessary. This will ensure that accountability is maintained and will increase the ability of local taxpayers to see how their hard-earned money is being spent and their services delivered.

Central to local people holding their local authority to account is having timely access to information about how the authority spends its money and the goods and services it buys and provides. It is clear that once-yearly publication of minutes and papers would limit proper local accountability. Local people would be made aware of decisions only long after they had been made and the opportunity to participate or influence the process had passed. The publication of meeting agendas and papers three days in advance of meetings and of meeting minutes no later than a month after the meeting will give the local electorate a clear picture of the activities of these bodies and enable local people to participate properly in the local democratic process. Alongside the other publication requirements in the code, this represents real accountability and transparency to the communities these bodies serve.

Local agencies and people want the publication of key financial and governance data to be mandatory, as was clear from the broad support shown in consultation responses for the Government’s intention to increase transparency. To questions about making the code mandatory, 76% and 88% of respondents explicitly supported our proposals. Nevertheless, we are keen to support these authorities to meet the code’s requirements. We intend to deliver a programme of funding through the sector to assist these bodies in getting online and publishing the relevant information. This is currently being developed with the sector.

To conclude, the code is crucial to ensure that accountability and transparency under the new audit regime is not just maintained but increased. Now that we have reduced the audit burden, these authorities need to make sure that they are transparent to those who matter most: the local people they seek to serve. The publication of meeting minutes, agendas and papers is crucial for local people to see how the council is being run and how their taxes are being spent. Limiting the access to this information to just once a year would severely restrict local accountability. I am sure that most of us can relate to the conviction that greater transparency helps secure better services and greater accountability. Consultation responses have demonstrated broad support for increased transparency and for making the code mandatory. We should listen to these messages—and, based on them, I commend the order to the Committee.

Lord Kennedy of Southwark (Lab): My Lords, as the noble Lord, Lord Ahmad of Wimbledon, explained, the purpose of this order is to expand the description of information that the Secretary of State may require authorities to publish more frequently than annually. It affects a number of smaller public bodies, of which 5,300 have a turnover of less than £25,000 per annum. They will be exempt from routine external audit but will instead be required to publish information as specified for the benefit of local residents and others to see what has been spent, by whom and to what effect.

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I agree that it is important to make this code mandatory. It is a substitute for external audit, and there will be benefits for the authorities concerned, because a considerable amount of information that they would be required to provide under FOI requests will be published routinely. That is welcome. It is also important that people are able to get access to information about what their authority is doing and to get that information in a timely manner; the point about the production of papers such as minutes and so on is therefore very welcome.

I have only a couple of points for the noble Lord. Can he confirm what the complaint process will be after expenditure details are published? If a resident has a complaint, what will that process be? Will it be, in effect, the same system that we have at present, or will it be something different? Can he outline that for the benefit of the Grand Committee? Can he also outline the process if an external audit is thought necessary? In such cases, how would it actually be triggered? With that, I am content with the order.

Lord Ahmad of Wimbledon: My Lords, on the first point, certainly nothing changes in terms of looking into complaints and raising those issues. The matters here are ones of transparency; if anything, the existing procedures and processes will be used more readily because of the fact that more information is available more readily.

The noble Lord raised an important and valid point on replacing the audit requirement with a requirement of greater transparency. If I may, I will write to him; we need to ensure that we provide a detailed answer because it will be relevant to local authorities. I look to my officials on this, and will ensure that that forms part of the code in terms of any exceptions that might arise. With those assurances, I commend the order.

Lord Kennedy of Southwark: Perhaps I may add that that is important in relation to the odd case among these very small authorities. I know from my time in local government that every now and again one does get problems that need to be dealt with. I would be grateful if the noble Lord would come back to me on that point.

Motion agreed.

Community Right to Challenge (Business Improvement Districts) Regulations 2015

Motion to Consider

4.15 pm

Moved by Lord Ahmad of Wimbledon

That the Grand Committee do consider the Community Right to Challenge (Business Improvement Districts) Regulations 2015.

Relevant document: 20th Report from the Joint Committee on Statutory Instruments

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The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Lord Ahmad of Wimbledon) (Con): My Lords, the Committee will know that town centres in England face significant challenges to survive and prosper in the internet age. In order to thrive, there is often a need to innovate and renew. The Government have recognised the importance of local high streets and sought to provide support through a range of programmes, including for example funding for the Portas pilots and town teams. We have established the Future High Streets Forum to advise government and develop practical policies, and we have supported retail markets through the Love Your Local Market campaigns, which have been incredibly successful in promoting local businesses. I visited one in Kingston-upon-Thames, which showed some incredible innovation by local entrepreneurs.

We have supported the establishment of business improvement districts, with a loan fund to help start up costs; we have introduced business rate support, including doubling small business rate relief, capping the inflation increase to 2% and a targeted discount for smaller shops, pubs and restaurants; and we have lifted planning restrictions to increase flexibility on high streets. In total this amounts to more than £1.4 billion of government support. All this is having an effect. Britain’s vacancy rate was 13.3% in November, its lowest level since June 2010 according to the Local Data Company figures of 8 December 2014. In February 2014, more than half of small business employers said that their profits had increased in the last 12 months, up by 13% on June 2013.

Business improvement districts are an important part of the efforts to revitalise town centres and the Government are committed to making sure that they can maximise their impact. That is why the Government conducted a review of business improvement districts to look at options to further strengthen the role of BIDs to ensure that they are able to play a key role in shaping and revitalising their town centres. The review was undertaken during the spring and summer of 2014 and involved meetings with British BIDs and Associations of Town and City Management, as well as round tables involving more than 20 individual business improvement district bodies. The department also met with the Local Government Association and visited a range of business improvement district bodies and local authorities.

The review demonstrated the additional value that a business improvement district can bring to a town centre. However, it also highlighted how the current model and legislation can restrict business improvement districts from being actively involved in important decisions that affect them. One identified option was to give business improvement districts the opportunity to run local authority services by adding them to the list of relevant bodies that can challenge to run local authority services under the community right to challenge. As we all recognise, local government services can play a vital role in making town centres clean, attractive environments, running local markets and supporting a thriving business environment. In many cases, local working between BIDs and local government is helping to regenerate high streets that might otherwise succumb to the pressures of out-of-town retail and online shopping.

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In some instances, though, BIDs, as with the voluntary sector, have become frustrated by their inability to get their ideas for improvements listened to. In some cases, the BID may be a more appropriate body to deliver a service in their area; in others, they may simply want stronger levers to influence how services that are meant to benefit the retail area are delivered. The community right to challenge was introduced by this Government to allow the voluntary sector, social enterprises and parish councils the ability to make local authorities give full consideration to their proposals to deliver a service where they believe that they can do so better or differently. The right to challenge is not designed to be the first port of call for an organisation, nor does it provide an automatic right to take on a local authority service. However, it provides relevant bodies with the opportunity to have their ideas heard and to bid to run services. It is already allowing bodies such as charities and parish councils to put forward their proposals, and where they have done so it has been because they are convinced that the existing service could be improved.

The community right to challenge applies to local services, not to functions. It does not remove the accountability for a service from the democratically elected local authority, and it does not allow BIDs or private businesses to dictate commissioning decisions to a local authority. This change will add the following types of BID to the list of bodies able to use the community right to challenge: BIDs established under Section 41(1) of the Local Government Act 2003; joint BID arrangements—in other words, BIDs that operate across the boundaries of more than one local authority; property-owner BIDs; and joint BRS-BID arrangements—in other words, property-owner BIDs operating over more than one local authority area.

These changes will allow BIDs which have good proposals for delivering local services more effectively but are having trouble getting them taken seriously to use this power to make the local authority consider them, giving BIDs a further string to their bow when trying to improve conditions for business and growth in the local area. This devolves greater power and say to local bodies and helps continue to revitalise the great British high street that we all love and utilise. I commend these regulations to the Committee. I beg to move.

Lord McKenzie of Luton (Lab): My Lords, the Minister has spoken glowingly about the progress the Government have made on the high street, but I put to him a recent report from PWC and the Local Data Company which, while recognising that the pace of retailers shutting shops reduced over the first half of 2014, shows that the gulf between openings and closures has nearly doubled. That survey covered the three months from July 2014 to 30 September 2014, and analysis shows that the net decline for the year to date has risen to 964 closures. That is quite a staggering number and belies, in effect, the fundamental point the Minister has made. Will he respond to that?

I have a specific question about what he referred to as the targeted discount for retailers—the £1,000, going up to £1,500—and the impact of EU state-aid provisions.

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As I understand it, it is subject to state-aid consequences. Is the discount per hereditament as long as the rateable value is not more than £50,000? Is the state aid de minimis similarly per hereditament or per business? I wonder how those two things are dealt with. In relation to the £1,000, if it is per hereditament, does that mean that the likes of Starbucks, with its renowned corporate social responsibility approach, would be eligible for the discount on each of its relevant outlets?

Lord Kennedy of Southwark (Lab): My Lords, this regulation adds an additional type of body, the business improvement district, as a body able to deliver services locally. It can make an expression of interest in delivering a service under the community right to challenge provisions of the Localism Act. It enables certain bodies to provide services. In principle, that is fine, but it would be useful if the Minister could answer a number of points raised by my noble friend Lord McKenzie of Luton. Could he also say a little more about the community right to challenge in itself, and what has been the benefit of the proposals so far? I have not heard a huge amount about them since they were put on the statute book. As for business improvement districts, and their work to improve town centres, have those in his department thought a bit more about the sort of service that they would see these districts actually deliver? Does he see any risk of fragmentation of services, for example by focusing on a particular high street or area, and perhaps even additional costs to business or residents?

I do not know whether the Minister was in the House yesterday, but his noble friend Lord Naseby asked a very pertinent Question about the crisis on our high streets. When she answered the Question, the noble Baroness, Lady Williams of Trafford, placed a lot of emphasis on “click and collect”. I notice that the Minister did not mention that once in his presentation here today, and I must say that I am a bit sceptical that click and collect is going to be the solution to the problems on our high streets. You have only to walk or drive around in London or elsewhere to see that there is a real problem in our high streets now. The noble Lord, Lord Forsyth, also made a very interesting point about how much tax is paid by booming internet-based companies, which again causes problems for shops that are trying to compete.

Could the Minister also talk about the whole question of infrastructure and transport, while he has his noble friend Lady Kramer here? For high streets and shops to work, good transport links are needed. That is an important point as well. If he could deal with that today, it would be helpful. If he cannot, perhaps he could write to me on that point. I am not against these orders, but they go much wider than some of the points raised yesterday in your Lordships’ House.

Lord Ahmad of Wimbledon: My Lords, I thank both noble Lords for their questions. As I said in an earlier debate, when we look at our local markets and high streets, it is important that we focus on these areas in a localised way. It is important to put on record that a business improvement district is a defined area in which a levy is charged on all business rate

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payers in addition to the business rate bill. The levy is used to develop projects from which those businesses in the local area will benefit.

The noble Lord, Lord McKenzie, raised the PWC report. In my opening statement, I cited the improvements that we have seen in the high streets. We are giving local communities power to save shops through the community right to bid, and neighbourhood plans are also allowing local businesses to set out changes to local planning. I take on board the concerns that he raised about local high streets and the concerns about closures that have happened in certain areas. It is important that local authorities also take greater responsibility.

I remember from my own experience in a local authority when I was the cabinet member responsible that we ensured, for example, a simple solution on parking, which is now used extensively across London and other areas—20 minutes’ free parking to bolster the local shop network. That perhaps also alludes to a point that the noble Lord, Lord Kennedy, raised about transport and supporting transport infrastructure. We need to ease the burden on shops and local businesses by helping them to facilitate foot flow and shopper flow into them. In many areas, local authorities do a very good job in ensuring that they can ease parking restrictions, for example.

The noble Lord, Lord McKenzie, always asks very technical questions when I am in Committee or on the Floor of the House. I am minded of the fact that he researches these issues quite thoroughly. On the impact of state aid and the two questions that he asked, I seek his indulgence and will write to him specifically on those issues.

The noble Lord, Lord Kennedy, referred to the risk of fragmentation of services. I do not share that concern about BIDs because we are seeking to widen the scope of organisations that can deliver services more effectively. As I said in my opening remarks, when local authorities are looking to procure services, accountability remains with them. They are the democratically elected bodies that electors will hold to account. The idea is not to break up or fragment services but to widen their scope and to identify the bodies that can deliver services most effectively. Certainly there has been a demand to see how local businesses working in an area can take greater responsibility for local services.

4.30 pm

The noble Lord, Lord Kennedy, asked about the type of services that can be delivered by a BID. We expect BIDs to challenge to run services such as cleaning services or environmental measures. There is no limit on what projects and services can be provided through a business improvement district. It will be down to the local authority to judge whether the bid put in by the BID, among other players, can deliver the most efficient and cost-effective service locally.

On the question of how many organisations have successfully used the right to challenge, the information gathering we have done to date indicates that there have been about 50 instances of community groups using the right to challenge. A survey we carried out in

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July 2014 of voluntary and community sector groups that had used our advice service found that 43 organisations out of the 105 respondents intended to put in an expression of interest in the months ahead. Of the expressions of interest that we are currently aware of, seven have triggered procurement exercises or have led to work being awarded through service-level agreements.

Lord Kennedy of Southwark: My Lords, it has struck me that we have not mentioned anything about the planning process. I am a councillor in Lewisham and the Brockley Road, which is in the area I represent, is a wonderful high street. It is vibrant and has many different types of shops there—there is a Co-op, a Budgens and other smaller shops—and the variety works. Lordship Lane, which is near to where I live, also has a great deal of variety.

However, there are other places which have problems and where there are not-so-good shops that are all very similar. This legislation may be part of the solution, but is there not an issue about the powers that authorities have in being able to use the planning process to ensure that they get a better variety of shops to serve their communities? You can find very good and very poor high streets close to each other, and the variety of shops, the kind of people who use them and the transport links can vary locally as well.

Lord Ahmad of Wimbledon: On some of the specific issues and more generally, the Government have sought to again look at the planning process to see how that may be improved. The concept of the changes we have seen—for example, in neighbourhood planning—allows local business areas and local people to set out what their planning priorities are. The move has been towards ensuring greater responsibility at a local level. However, we all share the noble Lord’s concerns. Local high streets are the lifeblood of what defines Britain today. The Love Your Local Market and Love Your High Street campaigns are not divided on political lines because we all support the incentive. Across the country, many local authorities of all political colours are currently looking towards their high streets and delivering and procuring good services from a variety of different providers. We need to recognise and applaud that—but, of course, there is always more work to do.

Motion agreed.

Motor Vehicles (Wearing of Seat Belts) (Amendment) (No. 2) Regulations 2015

Motion to Consider

4.35 pm

Moved by Baroness Kramer

That the Grand Committee do consider the Motor Vehicles (Wearing of Seat Belts) (Amendment) (No. 2) Regulations 2015.

Relevant document: 20th Report from the Joint Committee on Statutory Instruments

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The Minister of State, Department for Transport (Baroness Kramer) (LD):My Lords, this Motion will allow a new type of child seat to be used in motor vehicles in Great Britain. This has already been discussed in another place. It has long been an established fact that wearing seatbelts is an important safety mechanism. Seatbelts are a significant factor in saving lives in collisions. In a crash, individuals not wearing a seatbelt are twice as likely to die as those wearing a seatbelt. Therefore the Department for Transport takes this matter very seriously.

It is especially distressing when a crash involves young children. Safety for children in cars has improved in recent years but, unfortunately, car crashes are one of the leading causes of child fatalities. This is why the department has been involved in developing, under the auspices of the United Nations, the new standard which has been adopted by the European Union. Child seats currently come in an array of overlapping size groupings which confuse many parents and can encourage them to switch to a forward-facing seat too early. This new standard of child seat is known as i-size, and has many advantages over the existing designs currently allowed. As well as requiring a child to travel in a rearward position until the age of 15 months, it also provides side impact protection for better protection of the head and neck, with a more rigorous testing procedure for new designs, including an improved crash-test dummy. Furthermore, by doing away with the overlapping groupings and moving to a system based on the child’s height, it will be much easier for parents to choose the correct seat.

The new standard does not replace the current one. Both standards will run in parallel. Therefore, car seats complying with either standard may continue to be sold and used safely and will not require parents to purchase a new design of child seat if they are using one which meets the current standard. With the introduction of i-size, consumers will be given an extra option to choose a seat that conforms to the latest standard when purchasing a new car seat for their child. This also means that manufacturers will not have to stop making existing designs. However, many manufacturers have already designed and tested i-size products and are ready to bring them to the UK market. Indeed, they are pressing us to make this change. While it is anticipated that approvals for the old standard will eventually be phased out, it is not the intention to prevent existing products being used.

This issue is an important aspect of designing safer vehicles, which was a major challenge identified in this Government’s strategic framework for road safety. I therefore commend the regulations to the Committee. I beg to move.

Viscount Simon (Lab): My Lords, the noble Baroness the Minister described this very well. It makes perfect sense. It will help maintain the health and safety of very young children. I have only two questions but I do not know whether she will know the answers. How has the new type of child crash-test dummies been changed? How has the new side-impact test been changed again?

Lord Rosser (Lab): Perhaps I may raise just one or two points on these regulations. In particular I refer to the impact assessment. Impact assessments quite often

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contain little gems that are not actually set out in the Explanatory Memorandum. This impact assessment sets out the policy objectives and states that:

“The policy objective is to reduce the number and seriousness of injuries to child vehicle occupants whilst keeping any additional burden to industry or vehicle users to a proportionate level”.

It goes on to talk about UN-ECE Regulation 129, to which the Minister has referred, as intending to provide additional safety benefits over and above the existing standards. As I understand it, this regulation, which has been accepted by the EU, is not compulsory. However, I note that when the impact assessment goes on to look at the policy options, it sets out the first one as “do nothing”, which is fairly obvious, while the second option would allow the use of regulation 129 covering standard child restraints in vehicles as well as the existing regulation 44 standard. It states that this is the favoured policy option, and that indeed is what the Minister has said.

The assessment then goes on to set out that a third option to require all new child seats sold from the date of implementation to be of regulation 129 standard was dismissed, which is fairly strong language, on the basis that this would go beyond the requirements of the EU directive and would be considered to be gold-plating and not be deliverable. Am I to understand that implementing a directive in a gold-plated way means that you implement it in such a way so as to reduce the number of child fatalities, as well as the number of serious and slight injuries, on the basis, as we are told, that the new restraint under regulation 129 is safer?

Further on in the impact assessment, on page 5, two policy options are set out, excluding the do-nothing one. The second one, which I think is the one that has been dismissed—I should like to know by whom—states:

“Require all new child seats sold from date of implementation (early 2015) to be of Regulation 129 standard”.

It continues:

“This would ensure that all new units sold would be of a higher safety standard, and also ensure that these safer child restraints permeate the market quicker than would be the case under option 1”.

That is the option that the Minister, on behalf of the Government, has said is favoured and is indeed provided for in these regulations. Can the noble Baroness confirm that, given the reference to the fact that this would constitute gold-plating, the definition of “gold-plating” would ensure safer child restraints being required and that they would also,

“permeate the market quicker than would be the case under option 1”?

It would be an interesting example of what gold-plating means. Perhaps a rather happier wording could have been used in the impact assessment instead of this enthusiasm for dismissing something as gold-plating. It might have been a bit more open to have said, “Yes, we have made a decision not to go for the safest option, the one that would reduce the number of fatalities, serious and slight injuries. We have decided to go for the option that does not make it compulsory but which we recognise might not achieve the same reduction in fatalities and injuries to young children”.

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As that is my understanding, I think it would have been better if it had been put in that way rather than this enthusiasm for using the word “gold-plating”.

I also notice that the option which was looked at was the one that would:

“Require all new child seats sold from the date of implementation (early 2015) to be of Regulation 129 standard”.

If I have understood this impact assessment correctly, it estimates that, without it being a requirement, the take-up of the enhanced car seats will still be between 70% and 100% by 2020, with what is described as a “best uptake of 85%”. I would be grateful if the Minister could confirm that that is the case. If it is expected that there will nevertheless still be a high uptake of child restraints that conform to the higher standard set by UN-ECE Regulation 129 over a period of five years, why was it not considered that the second option—a requirement that all new child seats sold from the date of implementation are to be of regulation 129 standard—should be brought into force in two, three, four or five years’ time? At least we would then have had a guarantee that it was going to come in.

I am sure the Minister will correct me if I am wrong but, as I understand it, under these regulations there is no date when it will actually become the required standard. If we are expecting such a high uptake of the new, higher-standard child restraint by 2020, what is the objection to saying to what would appear to be the relatively low percentage that would not conform to the higher standard that, by that time, you will have to conform to the higher standard? I do not understand why that has not been incorporated into the regulations. I can appreciate why the regulations do not require everyone to conform from early 2015 but, bearing in mind the high uptake that is expected, I do not understand why there is nothing in the order to say that from a certain date—two, three, four, five years’ ahead—it will become the required standard.

4.45 pm

Baroness Kramer: My Lords, perhaps I may respond first to the noble Viscount, Lord Simon. Currently, there is not a side impact test; that now comes in with the new regulations. The dummies will be designed so that they demonstrate the damage that comes with a side impact test. If there is further information on the dummies that I have not mentioned, I will gladly write to him and let him know.

On the point of the noble Lord, Lord Rosser, essentially about why the new seat is not mandatory or why we do not have a date for its becoming mandatory, it is possible that the documentation has not been clear. Part of the new standard does not fit in to the car by use of a seat-belt. It requires an Isofix point to be built in, which is deemed to be a safer way for a seat to be anchored. That standard became mandatory for new cars from 2012. It would have been seen in many new cars built from around 2006 and even in some from before then, but obviously many cars that parents own date from an earlier period and therefore do not have an Isofix anchor embedded in them. If we were to make this mandatory today, we would effectively be

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requiring parents to go out and purchase a new car when they simply want to purchase a car seat. That really is an unacceptable burden.

There will be demand from parents who have older cars or cars which do not have the Isofix fitting to purchase a seat for their child. We are satisfied that the current standard is very safe. That does not mean that we do not want to pursue opportunities to increase the measure of safety. I described earlier the side-impact benefit and the noble Viscount, Lord Simon, followed up on it. We recognise that existing car seats provide a great deal of safety for children, so we do not feel that it is necessary to tell parents that they have to buy a new car in order to buy a seat that meets the new standard.

We accept that over time, as they replace their cars and their car seats, parents will follow the new standards, but this means that there is a period of time when we need to have both standards operating in parallel. To put in a date would in fact be artificial. It is sensible to do all we can to encourage the take-up of the new car seats in vehicles which can take the fitting. It will be a matter of parent choice, but the majority of parents want the car seat that provides their child with the greatest protection. It is also true to say that as the volume of sales of the new car seats goes up—they are currently more expensive than the current car seats—the price will inevitably come down as economies of scale kick in.

I think that we will see a very good take-up of these new car seats, but to make it mandatory would place a burden on some families for whom the purchase of a new car would be exceedingly difficult. What we do not want is for anybody to be tempted not to use a car seat because the only one that they can legally purchase cannot be fitted into the car they already have. I think that the noble Lord will recognise that. Over time, we can see what is happening with the turnover of cars; that is not something that is ideally predictable. It will be possible at some point to remove the earlier standard and simply go with the new standard because there will have been sufficient turnover in the car fleet. I hope, with that understanding that this is a sensible way that does not place an extraordinary burden on families—

Lord Rosser: Am I to take it that the cost of changing an existing car and thus enabling it to take the new fitting or arrangement is either prohibitive or just not technically feasible?

Baroness Kramer: I am not an expert in whether one can easily retrofit an Isofix fitting—it has a top tether anchorage point. According to the information I have just been given, it is not possible to retrofit into a car, so it is a case of buying a car in which this fitting is part of the original design of the car, because it is so fundamental.

Lord Rosser: That is less a comment about not wanting to gold-plate an EU directive than it is actually saying that in relation to existing cars it is not possible to do it anyway. The Minister has said that it is not a question of cost, but that you actually cannot do it.

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Baroness Kramer: I suppose that we could theoretically require parents to go out and buy a new car, which is why we have used phrases such as gold-plating. It is clearly not feasible to bring in the new standard and require parents to have a car that meets it. They may be in the second-hand market for cars, or they may have an older car which, because of family finances, they are not in a position to replace. But as I have said, existing car seats offer a great deal of safety to children, and parents have been very satisfied with them. The industry has demonstrated their quality, but that does not mean that we do not keep on improving, and it is the rationale for running the two standards in parallel.

Parents are very concerned about safety of their children. As the new car fleet turns over, take-up of the new standard will obviously overrule the old standard and we will reach a point—I cannot tell the noble Lord in which year—at which it will be possible to phase out the old standard.

Viscount Simon: I thank the Minister for her reply on side-impact testing. From a purely academic point of view, side-impact testing has been taking place privately for many years for research purposes by TRL, the universities and the manufacturers. It is an interesting point of view that it is now being used as a logistic point of view, and it is very good that it now forms part of the legislation.

Baroness Kramer: I thank the noble Viscount, Lord Simon, for those comments. We are all very focused on the issue of safety and we have to give credit to the industry and the consumer for constantly driving forward the technical progress that makes cars safer. That is something we all want and it is an important part of the work that the Government have done on a whole series of fronts. With that understanding, I hope that this is a sensible way in which to bring in a new standard for car seats which gives parents the opportunity to move to the new standard without making life impossible for those for whom it would be unaffordable for a whole variety of reasons. Having addressed the range of issues, I hope that noble Lords will be able to agree to the regulations and that they can be brought into force.

Motion agreed.

Renewable Transport Fuel Obligations (Amendment) Order 2015

Motion to Consider

4.56 pm

Moved by Baroness Kramer

That the Grand Committee do consider the Renewable Transport Fuel Obligations (Amendment) Order 2015.

Relevant documents: 20th Report from the Joint Committee on Statutory Instruments, 25th Report from the Secondary Legislation Scrutiny Committee

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The Minister of State, Department for Transport (Baroness Kramer) (LD): My Lords, the order follows a good deal of consultation and makes some relatively small but important changes to the renewable transport fuel obligation scheme—the RTFO. The changes would improve consistency in the way the RTFO treats two different types of biodiesel, and would encourage investment in renewable gaseous fuels. The RTFO is a certificate trading scheme that places an obligation on suppliers of fossil fuels in the UK to ensure that certain amounts of sustainable biofuel are supplied. The obligation can be met by redeeming renewable transport fuel certificates known as RTFCs. Their value is determined by the market, and trading them provides a financial reward for those supplying renewable transport fuel.

The RTFO order was amended in 2011 to ensure that only biofuels meeting mandatory sustainability criteria were rewarded with RTFCs. The 2011 amendment also introduced new requirements on suppliers to report on the sustainability of the biofuel being supplied and for this to be assured through independent verification. In April last year we published our response to a call for evidence on additional support mechanisms for advanced and more sustainable fuels. At the same time, we concluded a post-implementation review of the RTFO scheme. The review considered the extent to which the RTFO had achieved its objectives to support the supply of sustainable biofuels in the UK. The review also noted the significant achievements made by the UK biofuel industry to date.

Since the RTFO was introduced in 2008, savings in greenhouse gas emissions, excluding impacts from indirect land use change, have increased from 46% to reach 69% in 2013-14. The most recent statistics also showed that 46% of biofuels supplied in the UK were made from a waste or residue such as used cooking oil, which does not compete for land with food crops. A further public consultation on the proposed changes to the RTFO order we are considering today ran in the summer of 2014.

This small group of amendments aims to build on the RTFO scheme’s success and deliver two important commitments. The amendments will, first, provide consistency in respect of how we treat renewable fuels under the RTFO by aligning the treatment of two particular types of biodiesel; and, secondly, encourage investment in the development of emerging renewable transport technologies such as sustainable renewable gaseous fuels, by adjusting the reward provided to reflect their higher energy content relative to liquid biofuels.

Hydotreated vegetable oil, or HVO, and fatty acid methyl ester, or FAME, are both renewable fuels that can be blended with diesel. The biological feedstocks used in the HVO process are similar to those used for FAME: for example, vegetable or plant oils and waste animal fats. In both the FAME and HVO processes, a secondary, non-biological feedstock is used and incorporated into the final fuel. For FAME, this is methanol derived from natural gas, while for HVO it is hydrogen produced from natural gas. However, although FAME is deemed to be 100% renewable in calculating the reward of RTFCs, HVO is currently not. The

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effect of the order would be to provide for HVO to be treated in the same way as FAME. This is in line with our emerging understanding of how HVO should be treated under the renewable energy directive and is consistent with the approach in other EU member states to these two types of biodiesel.

Our policy aim for gaseous fuels is to level the playing field for renewable gaseous and liquid fuels. Doing so provides a clear signal that the UK Government will provide a positive investment climate for those looking to supply renewable gaseous fuels in the HGV and other sectors. Renewable gaseous fuels are currently rewarded at one RTFC per kilogram of fuel supplied, and liquid renewable fuels at one RTFC per litre. However, the energy contained in a kilogram of gaseous fuel is generally higher than the energy found in a litre of liquid fuel. The draft order would provide that 1.9 RTFCs per kilogram would be rewarded for biomethane and 1.75 RTFCs per kilogram for both biopropane and biobutane. As is the case now, double the amount of RTFCs would be awarded where the fuel is produced from wastes or residues.

I am aware that the Secondary Legislation Scrutiny Committee has reasonably advised the House that the order may imperfectly deliver the policy, due to uncertainties highlighted by the department in our cost-benefit analysis. I will address the concern that has been raised. The range of costs and benefits is essentially determined by which sort of biodiesel will be displaced by extra RTFCs going to renewable gaseous fuel. We are estimating discounted carbon-reduction benefits of £2.65 million, assuming a 50:50 spilt in the displacement of biodiesel from waste versus biodiesel from crop.

Waste-derived biodiesel is incentivised by being awarded twice the number of certificates per litre compared to crop-based biodiesel. As a consequence, it is a more cost-effective option in meeting the obligation. There would only be a carbon cost should a significant volume of waste-derived biodiesel be displaced—and then only if approaching 60% of the displacement was of waste-derived biodiesel.

As biodiesel from waste is the cheaper option to meet the obligation, and is in limited supply, we fully expect that biodiesel from crop would be displaced by increased rewards for renewable gaseous fuels. This means that the carbon savings for 2015 to 2020 are likely to be towards the higher end of those estimated in our cost-benefit analysis central scenario—nearer the £16 million benefit end of the scale. Further, I stress that we have limited options to decarbonise the heavy goods sector, and I believe that, in the long term, renewable gaseous fuels will be an important element in meeting our carbon-reduction targets.

The draft order will also introduce two measures to support effective administration. The first would update and streamline the powers of the RTFO administrator to require information. The second measure would put it beyond doubt that the administrator can apply mathematical rounding as part of calculating the number of RTFCs it issues.

Biofuels have proved a complex and controversial topic over the years. However, we know that vehicles are going to continue to require liquid and gaseous

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fuels for decades to come. We therefore need to develop technologies and capacity to produce low-carbon fuels in the UK, to reduce emissions from road transport and to encourage sustainable growth and jobs.

The proposed changes in the draft order are supported by stakeholders and make a number of worthwhile improvements in that direction. I know that the industry and investors would like to see greater certainty on the pathway to meeting the 2020 transport renewable energy target. The Committee will be pleased to hear that, in anticipation of measures to address indirect land use change—ILUC—being agreed in Europe later this year, we have been working with a very broad group of interested parties through our Transport Energy Task Force on precisely how to improve the investment climate. The group will report to Ministers in the coming months. I commend the draft order to the Committee.

Lord Rosser (Lab): The only issue that I wished to raise—and I am sure that the Minister will hardly be surprised—was the report of the Secondary Legislation Scrutiny Committee and the concerns it expressed. I had intended to mention them in order to give the Minister the opportunity to put the Government’s response on the record. She has, of course, already done that in her introductory comments.

In the light of the Minister’s speech, it rather begs the question why the three different scenarios of low, central and high were drawn up for the period 2015-20, given that, as I understand from her speech, she is almost dismissing at least one, if not two, of those scenarios as being based on unrealistic modelling assumptions. If she is so sure that the issue raised by the Secondary Legislation Scrutiny Committee—that this is about not just a range of carbon savings but a range covering both carbon savings and carbon costs—will not be the case, why did we end up with a cost-benefit analysis that contained those projections? What is the case for having projections that the Government apparently do not believe for one minute are likely to occur? I would be grateful if she will address that point.

One of the things that the Secondary Legislation Scrutiny Committee said, in paragraph 28, was:

“The central scenario assumes an increase in the size of the HGV fleet able to use gaseous fuel from the current 500 to 7,400 by 2020, that 12.5% of fuel used is renewable gaseous fuel and a 50/50 displacement split between the two types of biofuels. These are modelling assumptions. They do not as the CBA explains … ‘represent today’s mix of biofuels’”.

I am grateful to the Minister for having set out the Government’s response straight away, but I am still a little puzzled about why we have ended up with a document that has raised scenarios which, as I understand it from the Minister’s speech, the Government are now saying are extremely unlikely. Why include them in the first place if the Government do not believe that they are going to happen? What is the answer the point made by the Secondary Legislation Scrutiny Committee that the 50/50 displacement split between two types of biofuels does not actually represent today’s mix of biofuels?

Baroness Kramer: I thank the noble Lord, Lord Rosser, for his comments. It is standard practice to look at a range of impacts in developing forecasts.

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I came out of business, and the department very much follows the same pattern of talking to the industry and all the various relevant groups whose behaviour can impact on those forecasts and coming up with a forecast that seems reasonable and likely and in which it has a high level of confidence. In this case, from the perspective of the department, it was considered to be quite a conservative estimate. It was chosen as what could be called the central forecast in which the department has the greatest level of confidence, based on the work, research and analysis that it has done.

It is also standard practice to then say, “What if we were wrong?”, and to look at both a more pessimistic range and at what would happen if we could, reasonably, be more optimistic about the behaviour of certain factors. I would hate to see the department, in doing its analysis, simply going with the forecast in which it had the greatest confidence, without presenting, for other people to consider, what the impact would be of variations in the underlying factors, both downwards and upwards. That is fairly standard and a wise way to present issues. It is also a way to tease out concerns that then have to be answered.

The answer to the concerns raised by the noble Lord, Lord Rosser, is that the department is convinced that all the logic and the discussions with all the various players indicate that the form of fuel most likely to be displaced is crop-based biodiesel rather than waste-based biodiesel, and because of that, the department has a great deal of confidence in the carbon benefits. Again, we raised those issues to discuss the cost-benefit analysis, as I think was entirely appropriate.

Lord Rosser: I asked the Minister about the report of the Secondary Legislation Scrutiny Committee, which ends up saying:

“For this reason, we draw this Order to the special attention of the House on the ground that it may”—

may, not will—

“imperfectly achieve its policy objective”.

Is that a view with which the Government agree or disagree:

“it may imperfectly achieve its policy objective”?

Baroness Kramer: The Government have a high degree of confidence in their central forecast. I have never seen forecasts turn out exactly right, to the right-hand side of the decimal point. Forecasting is an attempt to look into and understand the future, so it is never a perfect science. It is right that that is always recognised. The noble Lord will also recognise that biodiesel and biofuel prices will always be volatile in this industry. That affects the trend, and there will be variance year on year in actual behaviour. It is right that there is always an element of uncertainty in forecasting, but it is also right to use the research, the analysis and the discussion with the industry to come up with the scenario in which one has the greatest confidence. That is what I think the department has, entirely appropriately, done. It has shaped and presented its policy on that basis. Given that understanding that it would be sheer arrogance to present only one scenario

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without considering both upside and downside, this is a considered policy that I think, generally, has been widely welcomed by all players and participants.

I also point out that the amendment makes only a small change to the current market for RTFCs. Although we are concerned to make sure that our modelling is as good as it can be and that it does not have the arrogance to ignore the fact that there are variances and volatilities, we also recognise that, were either the upside or the downside scenario to prove to be the one that actually played out, the impact would be relatively small because this is only a very small change in the current market for RTFCs.

I hope that, on that basis, the noble Lord will feel that the Government have taken a rational approach and that he will feel capable of supporting the order.

Motion agreed.

Crime and Courts Act 2013 (Consequential Amendments) (No. 2) Order 2015

Motion to Consider

5.15 pm

Moved by Baroness Kramer

That the Grand Committee do consider the Crime and Courts Act 2013 (Consequential Amendments) (No. 2) Order 2015.

Relevant document: 21st Report from the Joint Committee on Statutory Instruments

The Minister of State, Department for Transport (Baroness Kramer) (LD): My Lords, this order is makes four amendments to the Road Traffic Offenders Act 1988 in consequence of the introduction of the Crime and Courts Act 2013, which inserted a new Section 5A into the Road Traffic Act 1988.

Section 5A creates new drug-driving offences of driving or being in charge of a motor vehicle with a specified drug in the body above specified limits. The Drug Driving (Specified Limits) (England and Wales) Regulations 2014 were made on 24 October 2014. They specified the drugs and their limits, and will come into force in England and Wales on 2 March 2015. Although the new Section 5A applies to Scotland as well, it is for the Scottish Government to make regulations to specify the drugs and their limits. I understand that the Scottish Government are in the process of considering responses to a consultation and hope to publish an analysis report shortly. The views offered in the consultation will inform their decision on the drugs and their limits for the new drug-driving offence in Scotland. This order therefore applies to Great Britain where the amendments extend the penalties already available in relation to similar driving offences connected with drink-driving and drug-driving to the new drug-driving offences. It also provides for the endorsement of an offender’s driving licence counterpart and the driver’s record in relation to the new offences.

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As noble Lords are aware, the review of drink and drug-driving law by Sir Peter North concluded that there is,

“a significant drug driving problem”,

and recommended the new offence. Drivers impaired by drugs kill large numbers of people, and there could be as many as 200 drug-driving-related deaths a year in Great Britain. Statistics show that a drug-driver has 1/50th of the chance of being prosecuted compared to a drink-driver. European evidence from the driving under the influence of drugs, alcohol and medicines project—DRUID—suggests that drug-driving is about half as prevalent as drink-driving. We estimate it to be around a third as prevalent in Great Britain, so enforcement related to drugs is disproportionately low. Ensuring we have the full range of penalties and the ability to record offenders fully to support the new offence will thus enable more effective law enforcement and act as a deterrent to those who recklessly risk killing and injuring on the road as a result of taking drugs and driving.

I turn to the detail of the order we are proposing. Section 45 of the Road Traffic Offenders Act 1988 provides for the period during which an endorsement remains effective on the counterpart of a driving licence following a conviction where endorsement of the offence has been ordered. This order amends the Act so an endorsement ordered upon a person’s conviction for the new offence remains effective until 11 years have elapsed since the conviction, in line with other drink-driving and drug-driving offences, rather than just four years as it currently stands.

When the relevant part of the Road Safety Act 2006 is brought into force, Section 45, which relates to the endorsement of counterparts, will be repealed and Section 45A, which relates to the endorsement of driving records, will be in force. The amendments made by the Road Safety Act 2006 are part of the legislative changes which abolish the paper driving licence counterpart so that all endorsements will need to be recorded electronically on a person’s driving record only. This order has therefore been drafted so that when these Road Safety Act changes commence, the amendments made by this order to Section 45A will enable the endorsement of a person’s driving record for the Section 5A offences of driving or attempting to drive with a specified drug in the body above specified limits to remain effective until 11 years have elapsed since the conviction.

The order also amends the Road Traffic Offenders Act to provide for the penalties applicable to the offences of failing to provide a specimen for analysis under Section 7 and failing to permit a specimen to be subjected to a laboratory test under Section 7A without reasonable excuse in the course of an investigation into whether a person has committed an offence under Section 5A.

Noble Lords may be wondering why the Government have tabled this order so close to the commencement of the new Section 5A offences on 2 March. It was originally hoped that the abolition of the paper driving licence counterpart would have been completed by the end of October 2014. Our intention was to wait for that legislation to be made and make the amendment

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to Section 45A—“Effect of endorsement of driving records”—which would come into force instead of amending a revoked Section 45. However, industry asked for more time to get ready for the abolition of the counterpart. To accommodate the needs of industry, and so that Parliament does not have to revisit this piece of legislation in the future, this order has been drafted to refer to Section 45 but also to Section 45A of the Road Traffic Offenders Act, to cover the situation where Section 45 is revoked and Section 45A is commenced.

The Government believe that it is important that those drivers who continue to commit drug-driving offences and put lives at risk have their counterparts or driving records endorsed for a considerable period of time and so are able to feel the full force of the law when prosecuted. With the power of social media, it is also important that potential drug-driving offenders are not incentivised to refuse to provide a specimen or to refuse to allow that specimen to be analysed, in order to get a lesser penalty. I urge Members to agree that we must send a strong message that this House, Parliament and wider society will not tolerate those who persist in drug-driving and the threat they pose to other road users. I therefore recommend that the Committee approves this order. I beg to move.

Lord Teverson (LD): My Lords, I have come very recently to this debate, but I was interested to come along and listen to it. I am interested in two areas, which are probably old territory—I hope that the Minister will forgive me. This is an important bit of legislation; drug-driving is equally as dangerous and as much of a hazard to fellow citizens as drink-driving. However, I am still unclear how the enforcement of this testing is to be done in a practical way. We always think of drug-driving as being about illegal drugs, but presumably some legal highs or even medicinal pharmaceuticals, particularly tranquilisers, can be equally dangerous. Is that covered in this legislation? I would be interested to hear and understand that context.

Lord Rosser (Lab): I thank the Minister for explaining the purpose and content of this order. As she said, and as the Explanatory Memorandum sets out, the order amends the 1988 Act in consequence of the introduction to the Act, through the Crime and Courts Act 2013, of new drug-related road traffic offences, which make it a criminal offence to drive, attempt to drive or be in charge of a motor vehicle with a concentration of a specified controlled drug above a laid-down limit. The amendments in the order extend the penalties connected with drink and drugs, including failure to provide a specimen, to the new drug-related road traffic offences and provide for the endorsement of an offender’s counterpart and driving record in relation to the new offences. As the Minister said, the new offence comes into force shortly—at the beginning of next week—in England and Wales. Regulations determined by Parliament last October, I think, specified the controlled drugs and their limits.

I appreciate that the key debate on this issue has already taken place and the decisions have been made, but can the Minister give an up-to-date indication of

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the number of proceedings per year expected to be brought under the new offence of driving having taken a relevant controlled drug above the specified limit and whether the ability to test for and prove that drugs above the specified limit have been taken is sufficiently robust to expect a proportion of guilty findings similar to that applicable to drink-driving proceedings, namely 96%? Perhaps she could also say something about whether the necessary equipment to undertake these tests on those who it is felt may have been driving with a concentration of a specified controlled drug above a specified limit is now available, so that we are ready to go as far the bringing into force of these new offences is concerned. What is the cost of that equipment? How many police forces already have it? Who has to pay for it? Does it have to be used back at the police station or do we have equipment that can be used at the road side? It would be helpful if the Minister was able to comment on those points.

As I understand the penalties and levels, a zero-tolerance approach is being adopted towards anyone who is found to have a concentration of a specified controlled drug unless they are able to show that it resulted from having taken a drug for medical reasons.

The Explanatory Memorandum states:

“No formal consultation for these amendments has been undertaken as these are consequential amendments upon the creation of new drug driving offences”.

Has consultation taken place previously on what the penalties should be and whether they should be on a par with, lower than or higher than those related to drink-driving, or has it just been assumed that they should be on a similar level? Was a view taken on whether driving having taken drugs is likely to have a lesser or greater impact on driving ability than having consumed alcohol? One assumes, in the light of the comment in the Explanatory Memorandum that the penalties are on a par with those for similar driving offences connected with drink and drugs, that the impact is deemed to be the same. Perhaps the Minister could confirm that point because, if the impact is deemed likely to be greater, one would have thought that that would have been reflected in the penalty; if it was deemed likely to be lower, likewise it might have been thought that that would have been reflected in the penalty the other way.

Finally, the Explanatory Memorandum states in paragraph 12 that a supplier has been selected to evaluate the effect of the new drug-driving offences. Could the Minister say who that supplier is?

Baroness Kramer: I thank noble Lords. I should make it clear to my noble friend Lord Teverson that there is an existing Section 4 offence that is used to deal with driving under the influence of drugs not specified for the purpose of the new offence. That remains in place. The existing drug-impaired driving offence remains, and therefore all drug-impaired drivers can be prosecuted, whatever and how many drugs they have taken. I give him that assurance. There is a process to add drugs to the list of specified drugs. I will write to my noble friend with the details of how drugs can be added in that process. There is both the broad brush and the ability to add new drugs to the

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list. For a new drug to be covered by the new offence, the following are necessary: the drug has to be recognised and classified by the Home Office under the Misuse of Drugs Act 1971; a consultation would then need to follow on whether to add it to those specified under the offence of drug-driving and at what level to set the specified limit; and regulations would need to be approved under the affirmative procedure. So there is a procedure in place to add to the list.

I am sure the noble Lord, Lord Rosser, will correct me if I have misunderstood this, but one of his questions was essentially about whether or not there should be a difference between the sentencing for impairment caused by alcohol and that for impairment caused through drug use. The rationale to me is that identifying the specified drug is step one, and then defining the level above which having that drug in one’s system is the standard of impairment for the offence is step two. That, essentially, is the way in which this legislation works. In other words, first, the drug is identified—I have read out the process that is gone through to get a drug on the list, which obviously involves consultation—and, secondly, the limit above which that drug in the system would be considered an offence is determined. The noble Lord will understand that that is, in many ways, the same as the approach used with alcohol. It is illegal to drive with above a certain limit of alcohol in the system.

The noble Lord also asked about testing equipment. We understand that 12 forces at present have station-based screening devices. Manufacturers are talking widely to various forces, who are obviously considering whether to purchase devices to enhance their capacity to enforce. Mobile screeners are also available. The new mobile screener tests only for cannabis and cocaine, but those are two of the most prevalent types of drugs detected among drug drivers. Again, police forces manage their budgets and so they must decide how to use their budget to acquire equipment for enforcement.

Lord Rosser: I am sure the noble Baroness will correct me if I am wrong but 12 forces have station-based equipment and the new offence comes in at the beginning of next week. Does that mean that there is a significant number of forces that cannot enforce this offence because they do not have the equipment?

Baroness Kramer: At this point in time, 12 forces have station-based screening devices. We are encouraging forces to talk with manufacturers about the kind of products available. I am sure the noble Lord would not want the introduction of the offence to be delayed until all forces had decided on the kind of equipment they wished to purchase for enforcement.

Lord Rosser: I hope the noble Baroness will not take this as an attempt at withering criticism but police forces have known for some time that this new offence was likely to come into force. If I understand correctly, it does not look as though many of them have been taking active steps to make sure they have got the equipment to be able to enforce. Is it a question of cost? Does this equipment cost a large sum of money?

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Baroness Kramer: I do apologise. I am not being clear. Driving under the influence of drugs, even though it has not been specified, has long been an offence, as the noble Lord is aware, and the method for enforcement has been a blood test. That has been used by all forces over many years and remains in place, so they have that capacity. However, with the new list of specified drugs, many of them are now interested in alternative screening devices, particularly mobile devices, because that puts them in a position, as it were, to issue a fixed penalty on the spot. I think we will see that take-up, given the new opportunities for enforcement that are provided by forces up and down the country. But of course they always have the fallback of using the blood test, which has always been available to them and continues to be.

I hope that I have covered the range of issues. If I have not, I will gladly read through Hansard and provide a letter with more detail. I hope, on that basis, that your Lordships will feel that they can support this order.

Motion agreed.

Electrically Assisted Pedal Cycles (Amendment) Regulations 2015

Motion to Consider

5.37 pm

Moved by Baroness Kramer

That the Grand Committee do consider the Electrically Assisted Pedal Cycles (Amendment) Regulations 2015.

Relevant document: 21st Report from the Joint Committee on Statutory Instruments

The Minister of State, Department for Transport (Baroness Kramer) (LD): My Lords, these draft regulations are being made to change the class of electrically assisted pedal cycles—EAPCs—that are not treated as motor vehicles when used on roads in Great Britain. The changes are intended to encourage the use of EAPCs to the benefit of both individuals and businesses.

The current regulations came into force in 1983. They set out the requirements that EAPCs must satisfy in order for them not to be treated as motor vehicles when used on roads. Compliant EAPCs are not subject to vehicle excise duty and do not need to be registered or insured. Riders are not required to hold a driving licence, although no one under 14 is allowed to ride one on roads. The requirements that have to be satisfied in order for EAPCs not to be treated as motor vehicles on roads relate to their weight, the maximum power of the motor and the speed at which electric assistance cuts off. The EAPC must be capable of being propelled solely by pedals, for example, in the event of a depleted battery or motor failure. However, in practice, it is our understanding that most users pedal their machines and that, for those where a separate throttle is fitted, the riders mix the power delivery between pedalling and the throttle control.

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Since 1983, there have been significant improvements to technology, in particular in relation to power supply, where heavy lead-acid batteries have largely been superseded by lighter and more efficient lithium-ion batteries. Attitudes towards cycle use, both for consumers and businesses, have also been transformed with regard to congestion, operating costs, emissions and health. Finally, legislation and standards in Europe have changed. In 2013, a new EU framework regulation on the mandatory type approval of two or three-wheel vehicles and quadricycles was not applied to a class of EAPCs. The current GB requirements are more restrictive, so it is right that we now make harmonising changes to provide a wider choice of products for individuals and businesses.

We began a review of the EAPC requirements in 2010, with an initial consultation on limited changes. Further views were received via the Government’s Red Tape Challenge Review in the following year. We then commissioned the Transport Research Laboratory to,

“gather, generate and expert-review evidence from a wide variety of sources (including Red Tape Challenge and the 2010 EAPC consultation responses) on the forces and pressures influencing pedal cycle construction, sale and use in Great Britain, and provide DfT with costed, practical and appropriate options for legislative change”.

The amending legislation now before the Committee is thus the culmination of careful and extensive consideration.

Three main changes are proposed. First, the maximum motor power for bicycles is to be increased from 200 watts to 250 watts. That matches the most popular EAPCs manufactured for the EU market and will alone significantly increase the choice of products available to our consumers. Secondly, we have decided to remove all the current weight limits for EAPCs—that is, the 40 kilogram limit for bicycles other than tandems or tricycles and the 60 kilogram limit for tandems and tricycles. Again, this matches the position elsewhere in Europe.

Concern has been particularly expressed by Transport for London and the Mayor of London regarding allowing EAPCs not treated as motor vehicles on the roads to be heavier, but we are satisfied that the change is largely self-limiting as a 250-watt motor is simply not going to provide enough power to move an unacceptably heavy load. We have no evidence from other European countries, where these vehicles have been in use for some time, to suggest that they pose safety risks. Our review of the current position has indicated that a realistic unladen weight for a cargo tricycle is between 125 kilograms and 150 kilograms, well above the current weight limit of 60 kilograms. The existing weight limit forces manufacturers to use parts and materials that are not suitable for commercial use. The removal of the limit could encourage the use of innovative design and allow a greater choice of construction materials. The third change is to allow vehicles with more than three wheels to be classified as EAPCs. There is not much evidence of demand for such vehicles at present, but we consider that harmonising with the European convention in this respect has the potential to stimulate demand, particularly for light urban delivery vehicles.

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I previously mentioned the electric assist cut-off speed. We plan a harmonising change from 15 to 15.5 miles per hour. This is simply to align with the European standard of 25 kilometres per hour. However, unlike the EU, we will continue to include EAPCs— those that can be powered solely by the electric motor by virtue of a throttle or switch—of up to speeds of 15.5 mph in the category of EAPCs that are not treated as motor vehicles on roads. We believe that this is a distinct benefit to our disabled and elderly users. Finally, we are taking the opportunity to replace references to a withdrawn British standard on power measurement with the latest British and European equivalent and to recognise any other comparable European measurements.

Our impact assessment of the changes anticipates that they will stimulate significant growth in EAPC sales. That growth is forecast to deliver savings to consumers of between £92 million and £267 million over the next 10 years through car operating cost savings, health benefits, reduced congestion and wider impacts. Businesses are forecast to save between £5.8 million and £22.9 million through congestion savings, and goods delivery and van operational savings. The net annual benefit to businesses is estimated to be just over £0.6 million per year. Overall, the changes have been widely welcomed by the majority of the stakeholders and individuals who commented on the draft legislation. I beg to move.

Lord Campbell-Savours (Lab): My Lords, while this might not be the greatest issue confronting Parliament, it is actually quite an important little change. A couple of years ago I did some research into these bikes. Indeed, I have just sent a note to the Minister’s civil servants to check on a particular kind of vehicle which I thought might have fallen within this designation, but I understand that that is not the case because it does not have pedals. During the course of her speech, the Minister said that bikes without pedals might, at some stage in the future, be the subject of an amendment to the law. I think I heard that correctly.

The bikes I am referring to do not have pedals and do not exceed 15.5 miles per hour, so they cannot go very fast. They do not need an MOT, nor do people need a licence or insurance for them. People do not need to use a helmet at the moment or pay road tax. There is very little difference between these bikes and the electrically assisted bikes or mopeds that are covered by the order before the Committee. To what extent will genuine consideration be made of these more advanced vehicles without pedals?

I would imagine that nationally there are a lot of bikes being held in stock that fall under the old regulations. I have seen these bikes in Tesco, where they cost around £450. I presume that a number of retailers must be holding stocks under the old regulations. Were they consulted and did they express a view on whether the implementation of this regulation should be delayed?

5.45 pm

It would be good if at some stage in future these other bikes could be included. Why did I do a bit of research on them? I wanted one myself. It was interesting

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to go around different companies to look at what products were available. I went to one depot that had a show room full of these bikes that exceeded the 40 kilogram limit, but they were the type that lacked pedals. They are out there for sale, though I presume that they have not been sold because they fall outside the regulations. I also presume that they are to be re-exported, because they cannot be sold in the United Kingdom. At some point in the future maybe Ministers might be more sympathetic. If we are governed here by European regulations and cannot exceed them I have no case, but I am interested to hear what the Minister has to say in reply.

Lord Rosser (Lab): Before I start, I shall say that have a number of questions. They relate to the impact assessment and I suppose that being confronted by a 21-page impact assessment full of statements and figures constitutes a challenge. I am not expecting answers today to the questions, some of which are highly detailed, so there is no need for any frantic activity behind the Minister. I am more than willing to have a response subsequent to this meeting, if she would like to do it that way.

I also note with interest in the impact assessment the statement of fact that this measure seeks to increase the EAPC sales,

“by harmonising GB legal standards for EAPCs with European standards”.

In some parts of the House that kind of statement would be dynamite to those with a certain lack of enthusiasm for the EU. Perhaps that is why this item is being discussed at 10 minutes to six in the Moses Room, when attendance might be fairly limited, rather than in another environment that might have provoked a few more people to turn up. I make that comment somewhat facetiously, bearing in mind the commitment to harmonising with EU standards.

The Minister has set out that to be currently classified as an EAPC—an electrically assisted pedal cycle—in this country the vehicle has to comply with a number of requirements and has set out the changes. As she said, those requirements are that: the continuous rated power of the motor must not exceed 200 watts for standard bicycles and 250 watts for tandems and tricycles; the electrical assistance must cut off when the vehicle reaches 15 mph; and the unladen weight must not exceed 40 kilograms for standard bicycles and 60 kilograms for tandems and tricycles. The changes which this order makes to bring us into line with European standards are that: the maximum motor power for standard bikes is increased to 250 watts; the electronically assisted cut-off speed is amended to 15.5 mph; all the weight limits are removed; and vehicles with more than three wheels are permitted.

Although the impact assessment tells us that there will be an anticipated increase in bike sales by 7,850 units to 20,400 by 2024, it does not really explain which of the changes that will be made by this order will be driving this increase. Is it the increase from 15 to 15.5 mph, which does not appear significant? Is it the increase in the maximum motor power for standard bicycles from 200 to 250 watts? Is it—as I

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think my noble friend Lord Campbell-Savours suggested—the removal of the weight limits? Or is it the change permitting vehicles with more than three wheels?

How many vehicles with more than three wheels do the Government anticipate will appear on our roads as a result of this order? If the weight limits are to be removed, could the Minister confirm that these are unladen weights, which is what I understand to be the position? I know the Minister addressed this point in her opening comments about not expecting anybody to go stupid over the weight limits because of the fact that the bike would not be able to move if it got above a certain weight, but is there any weight beyond which an EAPC—bicycle, tandem, tricycle or vehicle with more than three wheels—becomes potentially unsafe for the driver or for other road users? Or is the Government’s view that that level would be reached only in a situation where you could not actually pedal the bicycle, tandem or tricycle in any case and therefore it is an irrelevant consideration?

On safety, page 1 of the impact assessment states that the objective is “to simplify and reduce” legislation,

“whilst maintaining or improving safety standards”.

Can the Minister say a little more about how the order will actually improve safety standards?

The impact assessment also states on page 1 that,

“the most commonly produced EU bicycles cannot be used in the UK without road tax and a driving licence”.

Since the order will change that situation, could the Minister say what the impact of the order will be on the UK bicycle manufacturing industry, as opposed to the retail sector, when the most commonly used EU bicycles can be used in the UK without having to pay road tax or have a driving licence? My understanding is that the UK bicycle manufacturing sector is stated in the impact assessment to be valued at, I think, just over £50 million. It is very small in that sense. Is it not possible that this order and the changes it incorporates will be something of a blow to what is left of the UK bicycle manufacturing sector? Is that why the impact assessment does not address that issue, saying in paragraph 5.8 that it,

“concentrates solely on the benefits to the retail sector from increased sales of EAPCs”?

The impact assessment tells us on page 3, although the Explanatory Memorandum does not, that:

“The current GB Regulations define an EAPC”,

as including a requirement—which I think comes on to a point that my noble friend has been making—that:

“It must be fitted with pedals by means of which it is capable of being propelled”.

Could the Minister confirm that that requirement is not being deleted by the order we are discussing at the moment?

Page 5 of the impact assessment states, at paragraph 5.1, that as,

“no evidence has been provided or otherwise identified that suggests any significant quantifiable additional safety (accident/casualty) or other costs, the impact assessment assumes negligible costs”.

However, since the impact assessment holds out the prospect of a significant increase in EAPC sales, is it

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the contention that users of EAPCs are less likely—or no more likely—to suffer fatalities, or serious or slight injuries, than users of cars or trucks engaged in similar trips?

Paragraph 5.22 states:

“The accident benefits from reduced car use are ignored as any potential costs from increased accidents are not included in the earlier section for bikes”.

What is the evidence that these two figures would cancel each other out, as this would appear to be the justification for making that statement?

The order aligns the UK with the EU 250 watt maximum motor power limit. Does it also mean that in future in the UK, drivers of EAPC vehicles with engines of between 201 and 250 watts will no longer have to undertake compulsory basic training or wear helmets? If that is the case—I may well be wrong—will the Minister point out where in the documentation it says that, and what the impact would be on safety? Could she also say whether any people in this country currently drive EAPC vehicles of between 201 watts and 250 watts with the current regulations in force? What she has been saying is that the current regulations on the tax and driving licence act as a deterrent to anyone driving vehicles of between 201 watts and 250 watts.

In paragraph 5.2, the impact assessment refers to higher sales of EAPC bicycles having the potential to displace journeys by bus. I do not want to exaggerate this because I appreciate that we are talking about relatively small numbers, but is there any significant estimated impact of this on bus revenue, or is it deemed to be so negligible as to be—I say this in the best spirit—not worth bothering about? If there is going to be this transfer from bus travel to bike travel, how will that contribute to the declared objective set out in the impact assessment, to which I have already referred, of,

“maintaining or improving safety standards”?

I will not raise the next issue regarding a gap in the wording of the impact assessment. I will forget that for the moment.

Paragraph 5.7 of the impact assessment states that the direct benefits to business are assumed to be,

“increased profits from increased bike sales”.

Is that a net figure that also reflects any adverse impact on car or van sales, since the documentation clearly envisages a transfer of journeys from car, van and, indeed, bus as a result of this order?

If I read it correctly, the impact assessment claims benefits from the order of between £97 million and £290 million over a 10-year period to 2024. Having a gap of nearly £200 million from benefits that, at a maximum, are less than £300 million does not, frankly, inspire confidence in the likely impact of this order.

The impact assessment on page 2 states that benefits to the cycling industry from increased bike sales are,

“likely to be displaced by reduced expenditure in other retail sectors”.

Is it the Government’s view that one will cancel out the other—and, if so, what is the evidence for that?

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Paragraph 5.16 on page 9 of the impact assessment states, in respect of EAPCs:

“Evidence from online appraisal of lifecycle benefits typically provide estimates of life expectancy of 15,000 miles, equivalent to just over 6 years’ use”.

That works out at some 2,500 miles per year. Paragraph 5.19 on page 10 of the impact assessment states that,

“this impact assessment assumes EAPC users cycle 2,392 kms per year”.

That is considerably less than the 2,500 miles per year figure quoted in paragraph 5.16 of the impact assessment. Why are the figures so different—unless they are not comparable, which may well be the case? But if they are not comparable—if I am not comparing like with like—perhaps I may have a response, albeit at some later stage, on what different considerations they are reflecting.

6 pm

Lord Campbell-Savours: I have been listening very carefully to my noble friend’s comments. There is a danger that the targets will not be met, although if electrically powered bicycles without pedals which fit the same criteria about kilogram limits and miles per hour are included, they will be far exceeded. We are missing an opportunity, if I have understood it correctly. If it is simply bicycles with pedals, that is going to limit the market very much. I suspect that those who have been responding to the impact assessment may well have had in mind the kind of electrically assisted vehicles to which I am referring.

Lord Rosser: I thank my noble friend for that intervention. One of the questions I raised earlier was whether there is still a requirement for pedals or whether it has been removed, which is part of the point that my noble friend has made. I think that is probably the situation, but I am asking for confirmation that it is still there.

My final point—I am sure to everybody’s great relief—is that the net present value of business benefits reflected here, which I assume means increased bike sales, is quoted in paragraph 5.14 of the impact assessment as being £2.7 million to £10.3 million over the period 2015-24, but in paragraph 5.26 of the same document as being £2.6 million to £10 million. Is that simply a case of slightly different figures being quoted or am I not comparing like with like? If I am not comparing like with like, what are the different factors taken into account in the two sets of figures? Can the Minister say whether the net present value of business benefits are in addition to or included in the overall widely different benefit figures of £97 million and £290 million? I assume that they are in addition to them, but I would be grateful for confirmation.

I have raised a number of questions which arise from, frankly, basically one read of the impact assessment. I am afraid I could not face going through it again, and if I had gone through it again I might well have found the answers to some of the questions that I have raised. I do not want anybody to take that as a derogatory comment about the impact assessment. It

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contains some very interesting statistics and information, and I appreciate having received it. I would not wish my comments to be taken as a hostile reaction to it.

Baroness Kramer: My Lords, I am grateful that the noble Lord, Lord Rosser, did not read the impact assessment another two or three times because I suspect he would have come forward with other questions and queries. I will make sure that those who prepared the impact assessment are told of his compliments, if I may take them that way, on the detail that has been provided.

In answer to the noble Lord, Lord Campbell-Savours, and partly to the noble Lord, Lord Rosser, I think the vehicle the noble Lord, Lord Campbell-Savours, described is classified as a low-powered moped and that it would be sensible to have a conversation after this Committee to understand exactly what kind of non-pedal bike he is talking about.

Lord Campbell-Savours: They are vehicles which at the moment carry a limit of a 200-watt motor and cannot exceed 40 kilograms.

Baroness Kramer: I think we will have to investigate that because the noble Lord deserves a more detailed response. These regulations apply to vehicles which must have a pedalling capacity, so that continues in place. Only those kinds of vehicles are covered by these regulations. I will look at the regimes for the other vehicles the noble Lord has described.

I will just try to address some of the questions asked by the noble Lord, Lord Rosser, although he has kindly said that we could respond in writing. Particularly when comparative numbers are involved, that will be a wise approach, but I shall make some more general comments around the questions he raised. For example, he asked where the benefits for this would come from and whether it was because of a particular aspect of the change in regulation. The argument as I understand it—it makes sense to me—is that it is the harmonisation which creates the change because it means that suddenly people in the UK are able to access the much wider range of models available in continental Europe but which have not been available here because, under the British classification, they would have required registration, taxation, insurance, licensing and so on. A much greater range of models will suddenly become available.

He asked whether that could have an impact on UK bicycle manufacturers. I would argue that for them one of the most hampering experiences has been the need to produce one bike for the British market and another model to compete effectively in the European market. With harmonisation, they can now look at a model that reaches the entire population of the EU, which should change the dynamic significantly. Having a single market, as it were, for electrically assisted pedal cycles creates an opportunity for UK manufacturers to focus not just on the domestic market alone but on a far broader market. That is potentially a very significant opportunity for them.

Lord Rosser: I appreciate that one can look at the issue as the Minister has done, but the other obvious point is that we can now have bicycles in this country

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that we could not have before, and they are being manufactured big time within Europe and presumably not being manufactured on any great scale by the bicycle manufacturing industry in this country. Therefore, we are likely to be dominated by bicycles manufactured in Europe. But I appreciate that one can look at it the other way, as the Minister is doing, and say that it is an opportunity for the bicycle manufacturing industry in this country to start to manufacture these bicycles and sell them. She said that the great majority of those who responded welcomed the change. Was there any response from the UK bicycle manufacturing industry and was it quite happy with what is happening?

Baroness Kramer: I would be glad to see whether there is anything that we can share that comes from those manufacturers. I am not sure that I can give the noble Lord an answer at this moment in time. I am sure that he would not want to see a protectionist approach to an industry. Typically, the UK has thrived from a much more open trading environment rather than a protectionist environment, and I see no reason why that should not be true in this industry as well as any other.

The noble Lord asked about four-wheeled vehicles, which now come within scope provided that they meet all the other criteria. Royal Mail in the past, as well as others, have seen this as a potential mechanism for last-mile delivery, rather than sending around white van man on all occasions. So there is potential in this area that so far we have been unable to test because these vehicles have not been available to people. It is an area that we will be watching with great interest.

The noble Lord asked about safety. Perhaps I can at the same time address the weight issues. The noble Lord said that the fact that the power of the engine is limited constrains the weight of the vehicle—but with a weight constraint there is a constant intention to try to lightweight the vehicles to get them under the barrier. Removing the weight restriction gives an ability to consider a sturdier construction and a more appropriate one for those vehicles that carry goods, albeit in relatively small amounts—otherwise one would never be able to move them. We see removing the weight restriction as a safety measure, because in effect it prevents the gaming of that particular standard, which we do not think has anything much to add.

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Lord Campbell-Savours: I am sorry to come back on the question of pedals. Is any work being done on whether we can change the regulations to include vehicles without pedals subject to exactly the same limits as the ones with pedals? That would be of great interest to the industry—because if we could develop that, we would have a winner.

Baroness Kramer: I do not know. This is not an area on which I have direct policy responsibility, so I do not know of any work that is happening. I would be glad to share with the noble Lord any particular work that is being done. On the other hand, the department is always looking at technology. At times we have looked at things such as Segways, and there is constant discussion about mobility scooters, so there is a constant lookout for different technologies to see whether they require an adjustment in regulation. But at this moment I know of nothing.

Under EU law, this regime could not apply to vehicles without pedals. I am not aware of what other regimes could be available. We will write to the noble Lord if there is anything happening that would help flush out some of the issues he has raised.

The noble Lord, Lord Rosser, continued the discussion about three-wheeled and four-wheeled vehicles and whether there are particular safety risks around them or around changing the regulations. We have a lot of continental European experience to look at, and after reviewing that information there is nothing to indicate that there is any particular safety risk associated with changing these parameters. Relatively few four-wheeled vehicles are sold, and most tricycles that are sold are towards the heavier end of the permitted range and are quite difficult to manoeuvre—but nothing has indicated to us that there are any particular safety risks.

I hope that I have covered most of the questions. There were quite a number of very specific questions and I will be glad to follow up on them. I sense a general understanding that this is a sensible measure for us to support. I hope that the Committee will support the Motion.

Motion agreed.

Committee adjourned at 6.13 pm.