Draft Tax Credits (Income Thresholds and Determination of Rates) (Amendment) 2015; Prison and Young Offender Institution (Amendment) 2015; Social Social Security (Housing Costs Amendments) 2015; Feed-in Tariffs (Amendment) (No. 2) 2015 - Secondary Legislation Scrutiny Committee Contents

Instruments of interest

Draft Small and Medium Sized Business (Credit Information) Regulations 2015
Draft Small and Medium Sized Business (Finance Platforms) Regulations 2015

44.  HM Treasury (HMT) has laid both these sets of draft Regulations, which are complementary to each other. By way of background, HMT states that at present the largest four banks account for over 80% of the main banking relationships for UK small and medium-sized enterprises (SMEs); and that, believing that such high concentration levels are bad for consumers and business, the Government are determined to see a step-change in competition in the UK banking market.

45.  In the Explanatory Memorandum (EM) to the draft Small and Medium Sized Business (Credit Information) Regulations 2015, HMT says that the problem of a lack of available credit information is a considerable barrier to entry into the market for lending to businesses. The Regulations are intended to open up access to data on SMEs to other finance providers, by requiring designated banks to share information on their SME customers with designated Credit Reference Agencies (CRAs): the obligation is dependent on agreement by the SME customer to the provision of data. Those designated CRAs will also be required to provide equal access to that data to finance providers. HMT will have power to designate banks and CRAs under the Regulations.

46.  In the EM to the draft Small and Medium Sized Business (Finance Platforms) Regulations 2015, HMT says that evidence suggests that the majority of SMEs only approach their main bank for finance, with around 40% giving up their search if they are unsuccessful; and that a proportion of the SMEs that are rejected by the largest UK lenders are viable businesses, and are rejected simply because they do not meet the risk profiles of the largest banks. HMT adds that, although the largest banks sometimes refer SMEs on to other providers or strategic partners on a bilateral basis, this is not happening systematically. The Regulations place an obligation on designated banks to refer SME customers that they reject for finance, with the SME's permission, to finance platforms that can match the SME with alternative finance providers. In this case as well, HMT will have the power to designate the banks and platforms to which the Regulations apply.

47.  In each EM, HMT gives details of the consultations which it carried out in relation to the proposals now embodied in these instruments.[12] Responses to both showed widespread support for the proposals.

Articles of Agreement of the Asian Infrastructure Investment Bank (Cm 9126)

48.  The Asian Infrastructure Investment Bank ("AIIB") is a new multilateral investment bank which is being set up "to foster sustainable economic development, create wealth and improve infrastructure connectivity in Asia[13] by investing in infrastructure and other productive sectors[14]." (Article 1 of the AIIB's Articles of Agreement). It has 57 prospective members (37 from Asia and 20 non-regional members) with China as the largest shareholder. Neither Japan or the USA are members. The AIIB will begin operations with $100 billion total authorised capital financed by members' contributions proportionate to their economic size. The UK will make a capital contribution of around £2 billion-20% paid in five equal annual instalments of around £80 million with the first due in 2015-16. The remaining 80% of the UK's contribution will be in the form of capital only subject to call when required by the AIIB to meet its liabilities. The Government state that they see membership as a way to build a closer economic relationship with the region and to maximise opportunities for British business. The AIIB requires a number of member states to ratify the treaty before it can become operational but sufficient members are expected to do so by the end of 2015.

Protocol of accession of Russia to the Convention of 16 December 1988 Concerning the Construction and Operation of the European Synchrotron Radiation Facility (Cm 9134)

49.  The European Synchrotron Radiation Facility (ESRF)[15] is based in Grenoble, France, and operates the most powerful high energy synchrotron light source in Europe. The facility produces very intense X-rays capable of penetrating material and revealing the inner structure of matter down to the level of atoms and molecules, a tool which has a wide range of scientific and commercial applications. The ESRF has been in operation for over 20 years and is funded and managed by 13 Member countries with additional smaller financial contributions being made by another eight Associate countries. This amendment to the Convention on its use reduces the UK's shareholding from 14% to 10.5%, which also reduces our financial contribution to 9.5 million Euros a year and our access to the machine to 10% of the available time. Belgium and Germany have also recently adjusted their shareholdings and the balance has been picked up by Russia.

Rail Vehicle Accessibility (B2007 Vehicles) Exemption Order 2015 (SI 2015/1631)

50.  This instrument exempts 27 stations on the Docklands Light Railway ("DLR") from the need to deploy a boarding ramp for disabled passengers where the gap between the floor of the rail vehicle and the platform is either more than 75mm horizontally or 50mm vertically.

51.  We note that the DLR operators have tried to find solutions to address the problem but have found that reduction of the horizontal gap to less than 85mm raised the risk of the carriage hitting the platform to levels that would jeopardise the safety of all passengers. We also note that the DLR operators supported their application for this exemption with evidence from trials by wheelchair users that indicated that an 85mm gap, although not compliant with the letter of the law, did not present them with practical problems. Given this, the House may take the view that the staggered exemptions for up to 10 years, set out in this instrument, are reasonable. We have, however, concerns about two aspects of the instrument: first that the DLR initially applied for an open-ended exemption and, although reduced to 10 years in the instrument, long exemptions can reduce the stimulus to pursue solutions, and, secondly, that the new exemption only came into effect nine months after the previous one had lapsed, which suggests to us that the exemption system needs to be more stringently monitored and enforced.

52.  Following the passage of the Deregulation Act 2015, this is the last such exemption order to be subject to parliamentary procedure. From 1 October 2015, such exemptions may be granted by the Minister and Parliament will only be informed about their use in an annual report. Given that future exemption orders will fall outside the scope of this Committee's scrutiny, Members of the House with a particular interest in the issues raised by these orders may wish to pay close regard to the Minister's reports setting out their use.

Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 (SI 2015/1646)
Assured Shorthold Tenancy Notices and Prescribed Requirements (England) (Amendment) Regulations 2015 (SI 2015/1725)

53.  The principal Regulations (SI 2015/1646) introduce a new prescribed form for a notice under section 21 of the Housing Act 1988 ("the 1988 Act") informing a tenant that the landlord intends to seek recovery of possession of a property let on an assured shorthold tenancy ("a section 21 notice"). In the Explanatory Memorandum, the Department for Communities and Local Government (DCLG) says that the Government are concerned about the unnecessary expenditure for landlords and the burden on the courts that has in the past arisen from the lack of a standard section 21 notice. Lack of certainty over notice periods has led to a large number of notices being deemed to defective and treated as invalid by the courts; landlords have to spend additional time and resources serving new notices and seeking legal advice. The principal Regulations were laid on 9 September to come into force on 1 October.

54.  On 29 September, DCLG laid the amending Regulations (SI 2015/1725) to come into force the following day. The Department says that SI 2015/1725 substitutes a new form to correct an error in the form contained in the Schedule to the principal Regulations - making it clear that where landlords wish to use section 21 of the 1988 Act to seek possession against tenants occupying properties under periodic tenancies under which more than two months' notice is required, the form is valid for four months from the date after which possession could be required, and not four months from the date of issue of the form as was stated in the original form. DCLG says that, given the relatively minor nature of the correction and the urgent need to rectify the principal Regulations, it considered it appropriate to breach the 21-day rule in order to provide immediate certainty to all users of the form.

55.  It is unfortunate that the error in the original form was spotted and corrected so late in the day. It is important that the Department makes every effort to ensure that all interested parties know which form to use.

Universal Credit (Work Allowance) Amendment Regulations 2015 (SI 2015/1649)

56.  These Regulations amend, from April 2016, the amount of earned income that a claimant can receive before their Universal Credit award is reduced (known as a "work allowance"). Once a household earns more than their work allowance, their Universal Credit payment is reduced by 65% of the amount of earnings which exceed the work allowance. As announced in the Summer Budget 2015,[16] these changes simplify the system by reducing the range of work allowances available to Universal Credit claimants from seven to two, reducing the rates of work allowances for some claimants and removing work allowances for claimants who either do not have responsibility for a child or do not have limited capability for work. The two new rates of work allowance will be set at £192 per month for those with housing costs and £397 per month for those without housing costs. The Explanatory Memorandum accompanying the instrument states that "the intention is that Universal Credit will continue to ensure that claimants are better off in work, and better off working more, but will not target support at those with above median earnings." This measure, in combination with the instrument reducing the income threshold in Tax Credits to £3,850 per year,[17] is expected to save the Exchequer £2.8 billion in 2015-16 rising to £3.4 billion by 2020-21. We are again disappointed that no impact assessment or similar statement has been provided showing how many people are likely to be affected by these changes and to what degree.

(See also the Report on the Social Security Housing Cost Amendment Regulations (SI 2015/1647) at the front of this Report)


Department for Energy and Climate Change
Overview of major schemes and relevant secondary legislation

57.  In July 2014, the Committee drew nine statutory instruments laid by the Department for Energy and Climate Change (DECC), which all related to Electricity Market Reform (EMR), to the special attention of the House, in the 6th report of Session 2014-15 (HL Paper 27). The Committee included as an appendix to that report a note from DECC giving an overview of the primary and secondary legislation agreed, or to come forward, covering EMR. DECC has updated and expanded its overview note, to cover secondary legislation relating to other major areas of energy policy as well:

·  Renewables Obligation

·  Feed-in Tariffs Scheme

·  Renewable Heat Incentive Scheme

·  Warm Home Discount Scheme

·  Home Energy and Energy Companies Obligation

·  Smart Metering Programme

·  Electricity Market Reform

We are publishing DECC's overview note on our website.[18]

12   Between 20 December 2013 and 21 February 2014 on "Improving access to SME credit data"; between 28 March 2014 and 25 April 2014 on "SME Finance: help to match SMEs rejected for finance with alternative lenders". Back

13   The definition used is the UN definition of Asia and Oceania, for relevant countries see: http://millenniumindicators.un.org/unsd/methods/m49/m49regin.htm Back

14   Infrastructure needs in the area have been identified in the transport and energy sectors and, to a lesser extent, in telecommunications (such as telephone and internet systems) but this is a non-exhaustive list. Under Article 26 the AIIB's Board of Directors will be responsible for the overall direction and operations of the bank, including the interpretation of the "other productive sectors" to which it lends.  Back

15   http://www.esrf.eu/ Back

16   The Summer Budget 2015: the relevant paragraph is 1.144 on page 37: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/443300/50325_HMT_Red_Book_Complete.pdf Back

17   See also the item earlier in this Report on the Draft Tax Credits (Income Thresholds and Determinations of Rates) (Amendment) Regulations 2015. Back

18   See: http://www.parliament.uk/documents/lords-committees/Secondary-Legislation-Scrutiny-Committee/DECCoverview2015.pdf Back

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