Sixteenth Report Contents

Instruments of interest

Draft Air Quality (Taxis and Private Hire Vehicles Database) (England and Wales) Regulations 2019

6.The purpose of these draft Regulations is to require all licensing authorities (that is, all district and unitary councils outside of London and Transport for London) in England and Wales to submit certain information, such as vehicle registration numbers, about their licensed taxis and Private Hire Vehicles (PHVs) to a central database. This includes companies such as Uber. The intention is for local authorities to use this information to check whether taxis or PHVs meet the relevant emission standard in a local Clean Air Zone where charges apply for vehicles. The Department for Environment, Food and Rural Affairs (Defra) explains that the UK’s plan for tackling roadside nitrogen dioxide concentrations3 found that Clean Air Zones and charges for drivers whose vehicles do not meet the relevant emission standard were the most effective measures to achieve compliance with statutory nitrogen dioxide limits in the shortest time. Several local authorities have consulted on proposals for Clean Air Zones and vehicle charges and are planning to introduce them by the end of 2019, using automatic number plate recognition cameras. The new database is necessary as local authorities may choose to use different charges for taxis/PHVs and private vehicles, and currently hold only information on taxis/PHVs licensed within their own area. Defra says that the database will operate in a way that aims to complement existing processes for gathering licensing data to minimise the administrative burden.

Draft Aviation Security (Amendment etc.) (EU Exit) Regulations 2019

7.At present, common aviation standards and procedures are based on EU law. Passengers (and their baggage) who have been screened in the UK do not need to be rescreened if they transfer between flights at other EU airports. However, Member States do have the discretion to apply their own more stringent security measures. After exit day, this instrument provides that the effect of the regulatory framework will be the same in practice, and it retains the existing procedures. The UK already applies “More Stringent Measures”, which require that all transfer passengers (and their luggage) are rescreened, including those from EU airports. There will therefore be no change to the screening of EU transfer passengers in the UK following exit. The Department for Transport (DfT) explained that:

“… the [European] Commission published a Preparedness Notice on the 13th November and additional details on this on the 30th November … These documents set out some of the Commission intentions on how the EU will prepare for a no-deal scenario, including on aviation security, where they state that they will recognise UK security standards. The Commission state that they will ‘take action to ensure that passengers and their cabin baggage flying from the UK and transiting via EU27 airports continue to be exempted from a second security screening, by applying the so-called ‘One Stop Security’ system’. Therefore, we expect that passengers flying from the UK and transferring through an EU airport will continue to not have to be rescreened.”

8.The EU ACC34 scheme is the EU inbound cargo regime. It requires air carriers and their supply chains to hold designations granted by an EU Member State confirming the security standards they apply in order to fly cargo into the EU. Any approvals granted under this regime are recognised in all EU Member States. When the UK leaves the EU, the default position is that the UK is no longer part of this regime. These Regulations ensure that, after exit, designations will be issued to all carriers who currently hold an EU ACC3 designation and fly cargo into the UK, and their supply chains. The Government are taking this measure to ensure there are no barriers to international trade, and to facilitate ongoing efforts to minimise the administrative burden on industry. DfT explained that the Commission’s intention is that:

“‘… cargo will be included in the One Stop Security system’ so that air carriers carrying cargo from the UK to the EU will not require an EU security designation. They [the Commission] also stated that they will ensure ‘re-attribution’ of UK-issued designations for air carriers carrying cargo from a third country into the EU, which means designations of third country carriers issued by the UK prior to Brexit will continue to be valid in the EU.”

Draft Electricity and Gas (Market Integrity and Transparency) (Amendment) (EU Exit) Regulations 2019

Draft Electricity and Gas etc. (Amendment etc.) (EU Exit) Regulations 2019

Draft Electricity Network Codes and Guidelines (Markets and Trading) (Amendment) (EU Exit) Regulations 2019

Draft Electricity Network Codes and Guidelines (System Operation and Connection) (Amendment etc.) (EU Exit) Regulations 2019

Draft Gas (Security of Supply and Network Codes) (Amendment) (EU Exit) Regulations 2019

9.The purpose of these five sets of draft Regulations is to address deficiencies in retained EU law on electricity and gas markets to ensure that the UK energy market can continue to operate effectively in a potential ‘no deal’ withdrawal from the EU. The Department for Business, Energy and Industrial Strategy says that the instruments aim to minimise disruption to the UK’s energy markets and ensure legislative continuity for industry following EU exit, with a particular focus on Northern Ireland and the Single Electricity Market (SEM) in Ireland. The Committee considered the draft Regulations when they were initially laid as proposed negative instruments, and recommended an upgrade of all five instruments to the affirmative procedure on the ground that they give rise to policy issues that are likely to be of interest to the House, suggesting that the House may wish to debate the instruments in the round.5 The Committee notes that the proposed changes are complex and technical and do not appear to present significant policy or regulatory changes. It is also clear, however, that while none of the instruments stand out individually, they have been laid before Parliament as a package, and, as such, are important: the proposed changes are necessary to enable UK energy markets to operate effectively if there is no agreement with the EU, and they touch on issues of strategic significance, such as security of gas supplies, the trading and balancing of electricity across borders and, in particular, continuity of the SEM in Ireland.

Draft Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019

10.As HM Treasury (HMT) makes clear in the Explanatory Memorandum (EM) to these draft Regulations, the Financial Services and Markets Act 2000 (FSMA) is a key part of the UK’s legislative framework for financial services regulation. FSMA and related secondary legislation6 define the “regulatory perimeter”, setting out the activities and firms that fall within the scope of UK financial services regulation. In its current state, the legislation functions on the basis that the UK is a Member State of the EU and forms part of the EU’s single market for financial services. Many provisions set out the scope of regulated activities by reference to those activities as defined in EU law. This instrument will amend many of the definitions used in FSMA and related secondary legislation so that they reflect the UK’s position as a standalone regulatory regime outside of the single market for financial services.

11.FSMA itself is some 300 pages in length. In section 6 of the EM, HMT explains that these draft Regulations amend not only FSMA but also 18 statutory instruments which relate to that Act. It is therefore not surprising that the draft Regulations themselves run to some 80 pages. In the EM, HMT says that the instrument is expected to have a minimal impact on business (though a formal impact assessment had not been published when the Regulations were laid). We hope that HMT has not under-estimated the challenge which financial services firms will face in understanding such a large raft of amendments to the core legislation for the sector. We obtained additional information from HMT about the extent to which stakeholders were consulted on drafts of this instrument. We are publishing that information at Appendix 1.

Draft Merchant Shipping (Standards of Training, Certification and Watchkeeping) (Amendment) (EU Exit) Regulations 2019

12.European Directives7 provide for the automatic mutual recognition of seafarer certificates issued by European Economic Area (EEA) States and establish a process for EU-wide recognition of certificates from third countries. This instrument will enable the UK to continue to recognise EEA seafarer certificates that it currently recognises. The UK will also recognise the certificates from those non-EEA countries that are approved by the EU and recognised by the UK immediately before exit day. These Regulations also introduce a mechanism whereby the Secretary of State may recognise additional parties, or remove recognition, by assessing compliance with the requirements of the International Maritime Organization Convention on Standards of Training and Watchkeeping for Seafarers. As of 2016, there were 3,410 seafarers with EU/ EEA member states’ endorsement to work who had obtained their original Certificate of Competency in the UK. The Department for Transport acknowledges that, in the event of ‘no deal’, EU recognition of UK certificates “will be at the discretion of each Member State.” When this instrument was laid as a proposed negative, the Committee recommended that it should be upgraded to the affirmative resolution procedure to enable the House to have the opportunity to debate the potential impact on UK seafarers.

Homes and Communities Agency (Transfer of Property etc.) Regulations 2019 (SI 2019/36)

13.These Regulations are part of the Government’s programme of disposing of surplus public-sector land to the private sector for housing development.8 In 2015, the Government appointed the Homes and Communities Agency (HCA) (trading as Homes England) as its land disposal agency in England, outside of London. This enables the HCA to prepare that land for release to market, and these Regulations specify the public bodies whose designated property, rights or liabilities can be transferred to the HCA.9 The Secondary Legislation Scrutiny Committee (SLSC) previously drew this policy to the attention of the House10 and noted that, in February 2017, the Ministry for Housing, Communities and Local Government (MHCLG) published the first annual report on the “Public Land for Housing programme 2015–20” which contained an undertaking that a further report would be published in July 2017.11 No further report has been published, and no reference has been made to this commitment in the Explanatory Memorandum (EM) to these Regulations. We asked MHCLG why this was the case, and they explained that:

“the intention is to publish a PSL [Public Sector Land] Programme Progress Report during 2019 to provide an update on the programme covering the period since the Annual Report was published in February 2017. This progress report will include monitoring data on sites sold under both the 2011-15 programme and the current 2015-20 programme.”

14.The Government previously said they wanted to use the sale of surplus NHS land to deliver more homes specifically for nurses and similar professionals (known as the “Homes for Nurses” scheme). In response to its 17th Report, the SLSC received a letter from Lord O’Shaughnessy, the then Parliamentary Under Secretary of State at the Department for Health and Social Care (DHSC), explaining that the Government will give “a right of first re-fusal for NHS staff on affordable housing built on sold surplus NHS land.”12 We asked MHCLG how they are progressing with the “Homes for Nurses” policy and they explained:

“DHSC, working with partners including MHCLG and Homes England, is continuing to provide support and challenge to NHS trusts (who own the land) to deliver the policy. This includes providing specialist support to trusts on the ground; including delivery in the conditions attached to transformation funding; and working with One Public Estate and the GLA to support some specific London sites and develop tools for national use. DHSC believe good progress has been made so far. A number of trusts have committed to offering their staff first refusal on a total of over 300 affordable homes. DHSC are in discussion with a number of other trusts about implementing the policy. Given build-out timelines, it will be some time before the housing is available and we can know how many staff have taken up the offer.”

15.We wrote to Kit Malthouse MP, Minister of State for Housing at MHCLG, asking for a fuller explanation for the delay in publishing a further report on the land disposal programme, and seeking comments on why the EM did not refer to this delay. We also asked for more information about NHS trusts’ approach to offering their staff affordable homes. We have received a reply from the Minister which, we regret to say, appears to us to be perfunctory and fails to answer the questions we raised to our satisfaction. Should this negative instrument be the subject of a motion and debated in the House, Members may wish to press the Minister further on this important matter. We are publishing the correspondence at Appendix 2.

Animal Breeding (Amendment) (EU Exit) Regulations 2019 (SI 2019/117)

16.The purpose of this instrument is to ensure that the UK’s zootechnical legislation and regulatory regime remain aligned with EU requirements after EU exit, with the aim of providing certainty for industry and allowing trade in live breeding pedigree animals and germinal products, such as semen and embryos, to continue. The Department for Environment, Food and Rural Affairs (Defra) explains that the instrument does not make any policy changes and that a transfer of legislative powers from the European Commission (“the Commission”) to the appropriate ministers in the UK will be taken forward in a separate instrument under the affirmative procedure. Government guidance on animal breeding13 suggests that in a ‘no deal’ scenario, UK breeding organisations involved in the trade of purebred livestock and germinal products would no longer be recognised in the EU, unless they can demonstrate equivalence to EU standards and are listed as third country breeding bodies. In the guidance, Defra also says that it will submit applications for breeding organisations to be recognised by the EU. We asked the Department about the progress with this application process. Defra told us that:

“We are due to submit our application mid-February. We do not know the precise legal position on when the EU may consider our application but this may not be until after EU exit in any event. [The] failure to get listed as an approved third country breeding operation will not prevent exports, though it may reduce demand for the livestock or germinal products of that breeding business. The application should not take long to process because there is no assessment or investigation conducted by the Commission. Defra and the Devolved Administrations have worked closely with selected stakeholder organisations and provided updates on progress. The process of obtaining information in support of third country listing began in October 2018 and we are confident we will have the necessary information about each breeding organisation to submit an application in good time.”

3 Department for Environment, Food and Rural Affairs, Air quality plan for nitrogen dioxide (NO2) in UK (2017) (July 2017): [accessed 7 February 2019].

4 Air Cargo Carrier from a Third Country.

5 12th Report, Session 2017-19 (HL Paper 263).

6 Notably, the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001
(SI 2001/544), and the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529).

8 The aim of the Public Land for Housing Programme 2015-20 is for government departments to sell surplus land with capacity for at least 160,000 homes by 2020.

9 Buckinghamshire Healthcare NHS Trust, Dorset Healthcare University NHS Foundation Trust, Gateshead Health NHS Foundation Trust, Hampshire Hospitals NHS Foundation Trust, Newcastle upon Tyne Hospitals NHS Foundation Trust and Southern Health NHS Foundation Trust.

10 Secondary Legislation Scrutiny Committee, 17th Report, Session 17-19 (HL Paper 71)

11 Covering the period from October 2016 to March 2017.

12 Secondary Legislation Scrutiny Committee, 19th Report, Session 17-19 (HL Paper 78).

13 Department for Environment, Food and Rural Affairs, Breeding animals if there’s no Brexit deal (19 December 2018): [accessed 7 February 2019].

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