Twenty First Report Contents

Instruments drawn to the special attention of the House

Draft Renewable Heat Incentive Scheme Regulations 2018

Date laid: 7 February 2018

Parliamentary procedure: affirmative

Summary: These Regulations propose a number of amendments to the existing Renewable Heat Incentive (RHI) scheme, including: the scheme eligibility criteria; methods for calculating and issuing scheme payments; budget control mechanisms; powers to impose sanctions for non-compliances under the scheme; and the levels of tariffs for making payments to scheme participants. A recent report by the National Audit Office highlights the ways in which the scheme has failed to live up to its original prospectus: take-up has been disappointing, projections of renewable energy and carbon reductions have been scaled back, and control of non-compliance and related overpayments has been inadequate. It is clear that the Department’s commitment to reforming the RHI scheme needs to be rigorous and ongoing if the deficiencies of the past are to be redressed.

We draw these Regulations to the special attention of the House on the ground that they give rise to issues of public policy likely to be of interest to the House.

1.The Department for Business, Energy and Industrial Strategy (BEIS) has laid these Regulations (“the Non-Domestic RHI Regulations”) with an Explanatory Memorandum (EM) and Impact Assessment. In parallel, BEIS has also laid the draft Domestic Renewable Heat Incentive Scheme (Amendment) Regulations 2018.

2.In the EM, BEIS says that the Non-Domestic RHI Regulations propose a number of amendments to the existing scheme, including to: the scheme eligibility criteria; methods for calculating and issuing scheme payments; budget control mechanisms; powers to impose sanctions for non-compliances under the scheme; and the levels of tariffs for making payments to scheme participants. BEIS says that the purpose of the amendments is to reform the RHI in line with the Department’s objectives, to ensure that the scheme focuses on long-term decarbonisation, promotes technologies with a credible role to play in that transition, and offers better value for money.

3.BEIS says that the Regulations have been brought forward after consultation on the reform of both the Domestic RHI and Non-domestic RHI schemes in spring 2016; a consultation on support for biomass combined heat and power plant in the Non-domestic RHI in early 2017; and a consultation on further proposed amendments to the Non-domestic RHI in autumn 2017. The Department provides a good deal more information about these consultations in section 8 of the EM.

NAO report

4.Not mentioned by BEIS is a report from the National Audit Office (NAO) on “Low-carbon heating of homes and businesses and the Renewable Heat Incentive”,1 which was published only on 23 February 2018 (two weeks after the draft Regulations were laid). The NAO report shines a bright light on the RHI scheme, and illuminates a number of deficiencies.

5.The NAO report finds, for example, that take-up of the RHI scheme has been much lower than originally anticipated. In its 2012 business case, the Department planned to deliver 513,000 new installations in Great Britain by 2020. The NAO notes that the Department decided to delay the launch of the Domestic scheme by 18 months to prioritise its limited internal capacity on introducing cost control measures into the Non-domestic scheme. However, the NAO comments that “initial assumptions about take-up were too optimistic... As at December 2017, the RHI had delivered just 78,048 new installations in Great Britain. At current rates of take-up, we estimate the RHI will achieve around 111,000 new installations by March 2021, just 22% of its original expectations.”2

6.The NAO report also says that the Department has reduced its ambitions for the renewable energy produced by the RHI by 65%, and for carbon reductions by 44%, and now sees the role of the RHI to be more focused on a smaller number of homes and businesses which are not connected to the gas grid. The NAO says that “the Department has lowered forecast lifetime spending from £47 billion to £23 billion (cash terms) and reduced ambitions for producing renewable energy and reducing carbon emissions”, but comments that BEIS has not fully replaced the reduced ambitions of the RHI for renewable heat with equivalent contributions from other sources.3

7.A further critical finding in the NAO report is that the Department cannot reliably estimate the amount overpaid to participants that have not complied with the scheme’s Regulations.4 While (in May 2017) Ofgem estimated that overpayments were worth 4.4% and 2.5% of Non-domestic and Domestic RHI expenditure respectively, equating to £3 million in 2016-17, the NAO found significant weaknesses in Ofgem’s estimate.5 Moreover, the NAO has commented that “Ofgem could be more effective in how it is aiming to reduce the rates of non-compliance” and, in particular, “Ofgem could do more to pinpoint the root causes of non-compliance and target its activities accordingly.”6

Conclusions

8.In proposing wide-ranging changes to the RHI scheme, BEIS is seeking to reform the scheme in recognition of the need to achieve more effective decarbonisation and better value for money than was secured by its operation in earlier years. The recent NAO report highlights the ways in which the scheme has failed to live up to its original prospectus: take-up has been disappointing, projections of renewable energy and carbon reductions have been scaled back, and control of non-compliance and related overpayments has been inadequate. It is clear that BEIS’ commitment to reforming the RHI scheme needs to be rigorous and ongoing if the deficiencies of the past are to be redressed.

Education (Student Support) (Amendment) Regulations 2018 (SI 2018/136)

Date laid: 6 February 2018

Parliamentary procedure: negative

Summary: These Regulations provide that eligible full-time students starting postgraduate pre-registration courses in nursing, midwifery, and the allied health professions from 1 August 2018 onwards will be funded through the standard student support system, rather than through the NHS Bursary. This mirrors the change in funding introduced for undergraduate students starting pre-registration courses in the same sectors from August 2017. We have received comments on the Regulations from the Royal College of Nursing (RCN) and the Chartered Society of Physiotherapy, and a response from the Department of Health and Social Care to the RCN’s comments.

The RCN has pointed to data about applications to nursing courses as evidence of a negative impact of the change in funding from bursaries to loans, while the Government warn against premature interpretation of the data, and stress the initiatives being taken to encourage people to pursue healthcare careers.

We consider that it must now be the time for the Government to take a definitive view of the effect of the changes from the 2017 Regulations on participation in nursing courses, and judge the funding reforms by results, rather than by aspirations. The review of post-18 education now underway includes assessing whether the funding system promotes the skills needed by our society: evidence already available from the healthcare education sector must surely be central to this assessment.

We draw these Regulations to the special attention of the House on the ground that they give rise to issues of public policy likely to be of interest to the House.

2017 Regulations

9.In our 26th Report of Session 2016-17,7 we drew an earlier instrument – the Education (Student Fees, Awards and Support) (Amendment) Regulations 2017 (SI 2017/114) – to the attention of the House, noting that the Regulations put in place arrangements to allow undergraduate healthcare students to draw on the loan-based student support system, once bursaries had been withdrawn by the Department of Health (DH), from 1 August 2017.

10.We received and published comments on those Regulations from UNISON and from the Royal College of Nursing (RCN), with a Government response. We highlighted the divergence of views about the impact of the changes, as between the Government and those representing the professions affected, and we commented that it would be essential for the Government to monitor and evaluate the effects of the changes on student nurses, midwives and allied health professionals.

2018 Regulations

11.The Department for Education (DfE) has laid the latest Regulations (SI 2018/136) with an Explanatory Memorandum (EM) and Equality Analysis (EA).8 In the EM, DfE refers to the changes already made by the Department of Health and Social Care (DHSC), which have meant that, from 1 August 2017, eligible undergraduate students starting pre-registration courses in nursing, nursing and social work, midwifery, operating department practice and the allied health professions are funded through the standard student support system administered by the Student Loans Company rather than through the NHS Bursary scheme. DfE says that, in amending earlier instruments, SI 2018/136 provides that eligible full-time students starting postgraduate pre-registration courses in nursing, midwifery, and the allied health professions from 1 August 2018 onwards will also be funded through the standard student support system, rather than through the NHS Bursary.

12.In the EA, DfE says that its overall assessment of the proposed change from bursaries to loans is in line with the conclusion reached by DHSC in its own EA,9 that “although to a lesser extent than undergraduate nursing, midwifery and AHP [allied health professions] courses the postgraduate courses have a disproportionately female intake and so the reforms will possibly have an adverse impact on women.” DfE adds that there is also some evidence that women, older students, those with a lower income and students from some religions are slightly more likely to be averse to taking out increased borrowing, and that the increased student loan borrowing burden for postgraduate and dental profession students may therefore make their participation on courses less likely. However, DfE stresses that the DHSC initiative “should be seen in context; these changes are designed to enable growth in the postgraduate healthcare student intake by lifting student number controls; ensure the long-term sustainability of university provision, and support the needs of the healthcare workforce.”

13.DfE’s EA contains an assessment of the impact of the undergraduate healthcare changes, namely the switch from NHS bursaries to the standard student support system from August 2017. In sum, DfE says that the UCAS end-of-cycle report shows that the total number of applicants to nursing fell by 18% in 2017 compared with the number of applicants in 2016, equating to 11,750 fewer applicants. DfE comments that, while this fall in applicants to nursing was bigger than the overall 2.6% fall in applicants across the sector for 2017-18, it did not translate into an equivalently large fall in acceptances, which fell by 0.9% compared with 2016.

14.In our report on the 2017 Regulations, we noted that DH had stressed that the changes from August 2017 would place new nursing, midwifery and Allied Health Professionals (AHP) students on the same support system as the general student population, and that evidence had shown that increases in fees in the wider Higher Education (HE) system had not had a detrimental impact on the numbers of students applying to university. It appears from the latest UCAS end-of-cycle report that such experience from the wider HE system has not been replicated in the nursing sector: a fall of 18% in applicants is a very different outcome.

Comments from Royal College of Nursing: Government response

15.We have received comments on the latest Regulations from the RCN, which we are publishing on our website.10 We obtained a response from the DHSC to these comments, which we are also publishing on our website.

16.The RCN has said that, in the EA, the Government accept that the change could adversely affect participation of female, disadvantaged, older and ethnic minority students due to increased debt aversion. DHSC has responded that, while the Government’s EAs have indeed acknowledged that some research suggests some groups may be more averse to debt, it has outlined steps taken to mitigate these risks. In particular, the response itemises several additional allowances available to eligible students owing to the unique demands of healthcare courses.

17.The RCN has referred to the Government claim that the change to funding arrangements will “increase the supply of nurses, midwives and allied health professionals to the NHS”. It has commented that, overall, applications to nursing courses have fallen by 33% since the same time in January 2016, and that this runs contrary to the Government’s aspiration to grow the pipeline supply of the future nursing workforce through this policy. DHSC has responded that, while it acknowledges that early indications of the latest UCAS application data (published in February 2018) show that the number of students applying to study nursing has decreased from this point in the cycle last year, the 2018 university application cycle is not over, and that caution should be applied when interpreting the figures at this point. DHSC has said that it is also prioritising new routes into nursing, which will allow thousands of people from all backgrounds to pursue careers in the Health and Care sector and allow employers to grow their own workforce.

18.Finally, the RCN’s has said that “… the policy [of replacing postgraduate bursaries with student loans] represents poor and ineffective public policy as it undermines the Government’s commitment to increase the number of nurses entering the workforce”. DHSC has responded that universities have consistently argued that the healthcare postgraduate market was prime for growth if the Government offered a loan product, and that the reforms which it is proposing follow the approach which the Government take across the wider HE sector in making a contribution towards, but not fully funding, postgraduate courses.

NHS Improvement data

19.On 21 February 2018, NHS Improvement published its Quarter 3 2017-18 performance report11 which, among other things, showed that 10.3% (35,835) nursing posts were unfilled (as reported in the “Guardian” newspaper).12 We asked DHSC to comment on the data, and we are also publishing its response to the data on our website. DHSC has said that the data show 35,835 nursing and midwifery vacancies, and that, of these, approximately 31,351 (87%) are filled by temporary staff (32% agency and 55% bank). It has stressed that NHS Improvement is working with the Department, NHS Digital and Health Education England to collect a range of data on vacancies and to validate the raw vacancy data. It has also said that the NHS employs more staff now than at any other time in its 69-year history, and that the latest NHS Digital figures show there are almost 42,700 more professionally qualified clinical staff working in the NHS since 2010, including almost 14,200 more nurses on wards and over 14,900 more doctors working in the NHS.

Comments from the Chartered Society of Physiotherapy

20.We have also received a letter from the Chief Executive of the Chartered Society of Physiotherapy which states that it is essential to put in place revised funding arrangements, notably, access to loan funding for those physiotherapy students who enter the profession by the route of a Master’s degree. We are publishing this letter on our website.

Conclusions

21.Commenting on the 2017 Regulations (SI 2017/114), we previously remarked on the divergence of views between the Government and the nursing profession about the impact on the take-up of nursing courses of the change in funding from bursaries to loans. It is clear that those views have, if anything, moved further apart in the intervening period. The RCN has pointed to data about applications to nursing courses as evidence of a negative impact, while the Government warn against premature interpretation of the data, and stress the initiatives being taken to encourage people to pursue healthcare careers.

22.While the EM states that DHSC made it clear that there would be only a one-year delay between changing the funding for undergraduate and postgraduate courses, we understand that the change was not anticipated by some of those recruited to courses starting in the autumn of this year, who may now be deterred by the introduction of loans. We note as well that in mid-February of this year the Prime Minister launched a review of post-18 education and funding, and that the terms of reference for the review which the Department for Education has published refers to the need for “a funding system that provides value for money and works for students and taxpayers, incentivises choice and competition across the sector, and encourages the development of the skills that we need as a country”.13

23.We consider that it must now be the time for the Government to take a definitive view of the effect of the changes from the 2017 Regulations on participation in nursing courses, and judge the funding reforms by results, rather than by aspirations. The review of post-18 education now underway includes assessing whether the funding system promotes the skills needed by our society: evidence already available from the healthcare education sector must surely be central to this assessment.

Criminal Legal Aid (Remuneration)(Amendment) Regulations 2018 (SI 2018/220)

Date laid: 23 February 2018

Parliamentary procedure: negative

Summary: This instrument reforms and restructures payments made under the Advocates’ Graduated Fee Scheme (“AGFS”), the fee scheme through which criminal defence advocates are paid for carrying out publicly-funded work in the Crown Court. A key element of the reform is to move away from past reliance on Pages of Prosecution Evidence as a means of calculating the work done, because of the increasing use of electronic evidence, such as mobile phone, hard drive and video material. Instead payment is based on a more detailed categorisation of the offence that the defendant is charged with, moving from the current 11 categories to 48 which are set out in document, Banding of Offences in the Advocates’ Graduated Fee Scheme. The Impact Assessment (IA) states that these changes will increase legal aid spend by an additional £9 million per year. Submissions from the Bar Council and the Criminal Bar Association dispute this conclusion and we have written to the Minister seeking an explanation for the disparity of figures in the Explanatory Memorandum and the IA.

These Regulations are drawn to the special attention of the House on the ground they give rise to issues of public policy likely to be of interest to the House

24.These Regulations have been laid by the Ministry of Justice (MOJ) under the Legal Aid, Sentencing and Punishment of Offenders Act 2012, and are accompanied by an Explanatory Memorandum (EM) and an Impact Assessment (IA). The Regulations cross-refer to the document Banding of Offences in the Advocates’ Graduated Fee Scheme14 (“the Banding Scheme”), which categorises offences. In conjunction with the instrument, this will determine the level of the payment an advocate will receive. We have received submissions on the revisions from the Bar Council and the Criminal Bar Association, and these are published on our website. 15

25.This instrument reforms and restructures payments made under the Advocates’ Graduated Fee Scheme (AGFS), the fee scheme through which criminal defence advocates are paid for carrying out publicly-funded work in the Crown Court. The AGFS was last subject to major change in 2007. The MOJ states that these amendments are intended to reward the work done by defence advocates in Crown Court cases more accurately, are simpler and clearer, and support other reforms to the criminal justice system, such as the Better Case Management (BCM) programme.

The current scheme

26.The current AGFS calculates advocates’ fees through a complex formula, which comprises a “graduated” fee and several “fixed” fees. Key considerations in calculating the complexity of the case, and therefore the level of graduated fee, are the number of witnesses or the number of Pages of Prosecution Evidence served (PPE). The graduated fee also includes several “bundled” payments that include, amongst other things, attendance at the first and second day of a trial, attendance at the Plea and Trial Preparation Hearing (PTPH), and attendance at four “standard appearances” (for example, the preliminary hearing, or pre-trial review). These bundled payments are paid regardless of whether they occur in a case or not.

The changes proposed

27.A key element of the reform is to move away from PPE as a means of calculating the work done by an advocate in a case. Electronic evidence such as mobile phone, hard drive or video material, is being used increasingly, and the complex formula currently used to convert this into “pages” means PPE is no longer an accurate method for assessing the amount of work done. The formula also makes it difficult for advocates to know how much they will be paid before they take on a case.

28.Nor will the number of witnesses be taken into account; instead payment will be based on a more detailed categorisation of the offence that the defendant is charged with. Under the current scheme, there are 11 offence categories, the reformed AGFS, set out in the Banding Scheme Document, has 48. Tables set out in the Regulations may then increase the weight given to the amount of time spent by an advocate on a case, to determine the fee to be paid. The instrument also provides that certain tasks (for example, standard appearances, PTPHs) will in future be paid for individually, which the MOJ states is consistent with BCM reforms which aim to reduce the number of unnecessary hearings.

Consultation outcome

29.The Government consulted on proposals to reform the AGFS for eight weeks and received 408 responses from members of the legal profession and representative bodies. 43% to 50% of respondents agreed that the new categorisation of offences in the Banding Document should be introduced. Respondents expressed concern, however, about the potential impact of the proposed scheme on junior advocates who typically take the less complex cases. The MOJ states that the new AGFS has been adjusted to assist them, for example, by increased fees for standard appearances and PTPHs that are often undertaken by juniors. Both the Bar Council and the Criminal Bar Association acknowledge that the consultation was constructive and the MOJ responded to their most pressing concerns about fees for junior advocates.

Impact

30.The MOJ indicates that the impact of the new AGFS on individual advocates will vary according to the mix of work they undertake: for example, those conducting more trials are likely to be paid more under it, but those who take guilty pleas are likely to receive lower fees. Although it is difficult to predict the likely outturn, as it now depends more on the mix of cases, the IA states that these payment changes will not be cost neutral, and paragraph 10.3 of the EM estimates that the new scheme is “likely to increase legal aid spend by an additional £9 million per year”.

31.We have received submissions from both the Bar Council and the Criminal Bar Association contesting this statement. Both point to Table 9 on page 21 of the IA which does confirm that MOJ anticipates that the spend will be £9 million above the figures for 2014-15, but goes on to state that this would be £3 million above the figures for 2015-16, and £2 million below the figures for 2016-17. So rather than being more generous as indicated in the EM, the MOJ’s figures in the IA indicate that the restructuring will represent a cut in funding of around £2 million (with the caveats set out in paragraph 15 above).

32.Both submissions also mention that there is no inflation protection built into the scheme and that there is no mechanism for regular review. The Criminal Bar Association goes on to describe the negative effects this change will have on the recruitment and retention of self-employed practitioners whose costs will rise but whose income will not.

33.The Criminal Bar Association also mentions a transitional impact from the restructuring. Because the restructuring changes from 11 to 48 categories of offences and is to come into effect only five weeks after being laid before Parliament, this will create problems with billing. They state that the company that provides the majority of chambers with their billing systems (Lex) has indicated that it will not be able to update its systems for several months. This will mean that all billing is likely to be manual for a significant period of time. This will be slower and negatively affect the cash flow of advocates, with the most junior advocates being the worst affected.

Conclusion

34.We understand that the MOJ’s standard policy with any review of fees is that the outcome should be cost neutral: the fees may be distributed in a different way but the total sum expended should not increase or decrease. Although the deviation in question is a small percentage of the total expenditure, there is a clear disparity between the figures in the IA and the way the information is presented in the EM. We have therefore written to the Minister to seek an explanation.


1 See National Audit Office, Report: Low-carbon heating of homes and businesses and the Renewable Heat Incentive, 23 February 2018: https://www.nao.org.uk/wp-content/uploads/2018/02/Low-carbon-heating-of-homes-and-businesses-and-the-Renewable-Heat-Incentive-Summary.pdf [accessed 6 March 2018]

2 Paragraph 9 of the NAO report.

3 Paragraph 10 of the NAO report.

4 Non-compliance includes generating heat for ineligible uses (such as heating domestic swimming pools), using unsustainable fuel sources and inaccurate metering.

5 Paragraph 14 of the NAO report.

6 Paragraph 15 of the NAO report.

7 26th Report, Session 2017-19 (HL Paper 120).

12 See Guardian, NHS England has one in 11 posts unfilled, 21 February 2018: https://www.theguardian.com/society/2018/feb/21/nhs-england-has-one-in-11-posts-unfilled [accessed 7 March 2018]

13 See “Review of Post-18 Education and Funding Terms of Reference”: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/682348/Post_18_review_-_ToR.pdf

14 Ministry of Justice, Banding of Offences in the Advocates’ Graduated Fee Scheme (AGFS) : Version 1.1, February 2018: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/683445/agfs-banding-of-offences.pdf [accessed 7 March 2018]




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