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)
Information
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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