We are writing on behalf of the Secondary Legislation Scrutiny Committee (SLSC) and its Sub-Committees.
We have recently raised with the Economic Secretary to the Treasury, Mr John Glen MP, the issue of the availability of Impact Assessments (IAs) provided by HM Treasury in relation to statutory instruments laid in preparation for the UK’s exit from the EU. The correspondence is enclosed with this letter [see footnote 51 of this Report].
In the 13th Report of Sub-Committee A of the SLSC, we reported on the draft Credit Rating Agencies (Amendment, etc.) (EU Exit) Regulations 2019 (“the CRA Regulations”). We noted that the IA described the impact on financial services businesses not only of the CRA Regulations, but also of nine others, all but one of which had already been laid before Parliament. In his reply of 16 January, the Economic Secretary explained that the IA had received a “fit for purpose” rating from the Regulatory Policy Committee on 19 November 2018 and had then been published; but that unfortunately this had meant that the IA was not available for reference during debates on several of the instruments to which it related.
As you may be aware, during Grand Committee consideration in this House on 4 February of the draft Over the Counter Derivatives, Central Counterparties and Trade Repositories (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018 (“the OTC Regulations”), Members voiced concern that the IA relating to that instrument, and eight others, had been published only on 29 January, while the OTC Regulations themselves had been laid before Parliament on 5 December of last year.
Since our initial letter of concern of 8 January 2019, a number of further HM Treasury and HM Revenue and Customs instruments have been laid before Parliament. Many instruments which we have now considered were accompanied by an Explanatory Memorandum referring to an IA being prepared but they were not published alongside the instrument.
If instruments are to be scrutinised effectively, all relevant information, including the IA, must be submitted at the same time that the instrument is laid. It is therefore unacceptable that, at this critical time when Parliament is being asked to consider an exceptionally large volume of instruments concerning highly complex areas of law, your Department has failed to provide IAs in a timely manner.
We look forward to your early reply to this letter. We expect that you will be able to assure us that your Department will in future provide IAs in good time to support effective scrutiny of the instruments laid by your Department.
19 February 2019
I am writing in response to your letter of 19 February, on behalf of the Secondary Legislation Scrutiny Committee (SLSC) and its Sub-Committees, regarding impact assessments.
Your letter refers in particular to impact assessments covering financial services EU Exit instruments, made under the European Union (Withdrawal) Act 2018 (EUWA), to ensure that the UK continues to have a functioning financial services regulatory regime in all scenarios, including if the UK leaves the EU without a deal on 29 March 2019.
I recognise the importance of making Impact Assessments available for Parliamentary scrutiny. HM Treasury has worked at pace to prepare this legislation and accompanying Impact Assessments, in line with the Better Regulation Framework. However, as your letter acknowledges, they have unfortunately not been available at the time these instruments have been laid, and in some cases, debated. I can confirm that all Impact Assessments covering financial services EU Exit instruments have now been published, have been available for many, and will be available for all future debates.
I would also stress that the situation for businesses would be much worse in the absence of this legislation. As a whole, these SIs will significantly reduce costs to business in a “no deal” scenario, as without them, firms would be left to deal with an unworkable and inconsistent regulatory framework that would substantially disrupt their businesses. The absence of published Impact Assessments should not detract from the necessity of the SIs.
Your letter also raises HM Revenue and Customs (HMRC) instruments that have recently been laid before Parliament. While there have been some unfortunate delays in impact assessments being published on customs, VAT and excise legislation, HMRC have now set out what the relevant SIs mean for businesses and individuals. I can confirm that a further Impact Assessment will be published on the 25 February, providing Parliament and stakeholders with more detailed information on what HMRC’s SIs mean for them. HMRC will publish an Impact Assessment, where required, for any further SIs they lay.
HM Treasury and HMRC will continue working at pace on Impact Assessments, to enable Parliamentary scrutiny of the relevant Sis in good time.
22 February 2019