Second Report Contents

Instruments of interest

Draft Credit Transfers and Direct Debits in Euro (Amendment) (EU Exit) Regulations 2018

1.The Single Euro Payments Area (SEPA) was launched and is maintained by the European banking and payment industry, represented by the European Payments Council. In the Explanatory Memorandum (EM) to these draft Regulations, HM Treasury (HMT) says that the SEPA enables quick and efficient Euro payments; and that EU Regulation 260/201 (the SEPA Regulation)1 establishes business rules for businesses conducting cross-border payments in Euro within the EEA, covering areas such as ensuring that Payment Service Providers (PSPs–mostly banks) can be directly contacted by other PSPs looking to make a Euro payment to them; and also the message format of the payment. HMT says that these draft Regulations propose making amendments to ensure that the SEPA Regulation continues to operate effectively at the point at which the UK leaves the EU. It states that the retention and amendment of this piece of EU law is “designed to maximise the likelihood of the UK remaining a member of the SEPA as a third country.” The instrument also gives HMT powers, by a negative statutory instrument, to amend the technical requirements annexed to the SEPA Regulation, and to revoke these Regulations in the event that the UK is not able to remain a member of the SEPA. These powers are not subject to any sunset provision.

2.We obtained further information from HMT about the background to its statement about membership of SEPA. The Department has now told us that “currently the UK is a member of SEPA by virtue of being a member of the EU. After the UK leaves the EU, the UK will have to apply to join as a third country in order to remain as part of SEPA. Applications from third countries are determined by the European Payments Council by reference to its published criteria for third-country participation.2 These criteria include that relevant provisions of EU law, which include inter alia the SEPA Regulation, are ‘effectively represented’ in the domestic law of the applicant state. If the SEPA Regulation were not (a) retained by the European Union (Withdrawal) Act and (b) amended by this SI, then it would be difficult for the UK to show that effective representation, which in turn would jeopardise the success of the UK’s application.” At our request, HMT is revising the EM to the Regulations to make this background clearer.

Draft Deposit Guarantee Scheme and Miscellaneous Provisions (Amendment) (EU Exit) Regulations 2018

3.Deposit Guarantee Schemes (DGSs) protect depositors of banks and other credit institutions in the event that they are unable to repay deposits due. If this situation arises, DGSs protect depositors up to defined levels and provide compensation to depositors, removing the need to seek to recover their money through insolvency proceedings. The UK’s DGS is the Financial Services Compensation Scheme (FSCS). In 2014, the Deposit Guarantee Schemes Directive (DGSD)3 created a harmonised system of DGSs across the EU to ensure that depositors are adequately protected. Certain provisions of the DGSD were transposed into UK law through the Deposit Guarantee Scheme Regulations 2015.4

4.In the Explanatory Memorandum to these Regulations, HM Treasury (HMT) says that the instrument corrects deficiencies in retained EU law arising out of the UK’s withdrawal from the EU.5 In particular, the Regulations propose to transfer from EU institutions to the Prudential Regulation Authority (PRA) the power to set the maximum compensation payable by the FSCS. The PRA will have the power to review, adjust and set the deposit coverage level with approval from HMT. We obtained additional information from HMT about the way in which this power might be used, which we are publishing at Appendix 1.

Statement of Changes to Immigration Rules (HC 1534)

5.These Statements tend to make a range of changes to the immigration requirements. The main purpose of this latest edition is to:

Animal Health and Welfare (Miscellaneous Amendments) (England) (EU Exit) Regulations 2018 (SI 2018/1033)

6.These Regulations aim to ensure that English law, which implements current EU requirements for the welfare of animals on-farm, during transport and at the time of killing, remains effective after the UK leaves the EU. The Department for Environment, Food and Rural Affairs (Defra) explains that in addition to correcting technical deficiencies arising from the UK’s withdrawal from the EU, the instrument will end the mutual recognition of certificates of competence for slaughtermen that have been issued in another Member State. This is in line with an announcement by the European Commission from November 2017 that UK-issued certificates of competence will no longer be recognised in the EU following the UK’s withdrawal, irrespective of the outcome of current negotiations.7 Defra explains that the policy change will affect fewer than 200 people who are currently working in slaughterhouses, and that this group accounts for around 3% of all slaughtermen registered in England and Wales. According to Defra, they will need to apply for a UK certificate of competence at a cost of around £225 if they wish to continue to work in England. Defra also says that the Regulations do not change any of the monitoring and enforcement requirements in relation to the welfare of animals at the time of killing. We note the Department’s assurance that the number of slaughtermen affected by the Regulations is small. We remain concerned, however, that this group will have to apply and pay for new certificates of competence at considerable cost simply to continue working in their current jobs. The Committee will monitor carefully whether the Government uses the same approach in other sectors.

Misuse of Drugs (Amendments) (Cannabis and Licence Fees) (England, Wales and Scotland) Regulations 2018 (SI 2018/1055)

7.These Regulations allow a restricted use of a “cannabis-based product for medicinal use in humans”. The Regulations set a precise three-part definition and, to be permitted for therapeutic use, products must meet all three elements of it. Any cannabis-based substance falling outside of this definition (for example, a cannabis-based product classified as a medicine but produced for recreational use) will remain a “controlled” Class B drug under Schedule 1 of the Misuse of Drugs Regulations 2001 (the 2001 Regulations). These products can only be prescribed by a medical practitioner and, on medical advice, such products may not be administered by smoking. Nor does the change in the legislation alter the rules around the cultivation of cannabis plants, which still require a licence under Regulation 12 of the 2001 Regulations to be undertaken lawfully. The limited use of cannabis products in this way has been allowed following cooperation between the Home Office and the Department of Health and Social Security. Reviews were conducted by both the Chief Medical Adviser8 and the Advisory Council on the Misuse of Drugs9 to inform the policy. Evidence about the effects of cannabis-based medicines in clinical use will be collected and a further review conducted by summer 2019.

Police, Fire and Crime Commissioner for Northamptonshire (Fire and Rescue Authority) Order 2018 (SI 2018/1072)

8.This instrument transfers responsibility for the governance of fire and rescue services from Northamptonshire County Council (NCC) to the Police, Fire and Crime Commissioner for Northamptonshire and establishes a new Northamptonshire Commissioner Fire and Rescue Authority to carry out those functions. It is not the first of these transfers of fire service responsibilities to the local Police and Crime Commissioner (PCC). This transfer is, however, made against the well-publicised background of the NCC’s financial difficulties. A review by the Chair of the National Fire Chiefs’ Council in March 2018 into the existing Northamptonshire Fire and Rescue Service (NFRS) concluded that:

“there is no immediate concern for public safety, but it is not clear how much longer this will remain to be the case–especially with further year-on-year reductions on the horizon by NCC. The circumstances of NFRS must change in the immediate future for my assurance to remain. Becoming a PCC fire and rescue authority will remove NFRS from the concerns regarding the County Council resources and financial position, allowing NFRS a better chance to stabilise itself as a precepting authority.”

1 Regulation 260/201 establishing technical and business requirements for credit transfers and direct debits in euro and amending Regulation (EC) No 924/2009.

2 European Payments Council, Criteria for participation in the SEPA Schemes for communities of banks or financial institutions outside the European Economic Area (EEA), 1 March 2018:–03/EPC061-14%20v3.0%20Criteria%20for%20Participation%20in%20SEPA%20Schemes_0.pdf [accessed 23 October 2018].

3 Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit guarantee schemes Text with EEA relevance, (OJ L 173/149, 12 July 2014)

4 Deposit Guarantee Scheme Regulations 2015 (SI 2015/486).

5 Except for Part 2, which makes amendments to bring certain shares in credit unions within the meaning of “deposit” in the Deposit Guarantee Scheme Regulations 2015.

6 See also Allocation of Housing and Homelessness (Eligibility) (England) (Amendment) (No. 2) Regulations 2018 (SI 2018/1056) which make “Calais children” eligible for social housing and homelessness assistance if they are habitually resident in the Common Travel Area.

8 Department of Health and Social Care, Independent report: Cannabis scheduling review: part 1, 3 July 2018: [accessed 22 October 2018].

9 Advisory Council on the Misuse of Drugs, Correspondence: Advice on scheduling of cannabis-derived medicinal products, 19 July 2018: [accessed 22 October 2018].

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