Thirteenth Report Contents

Instruments of interest

Draft Companies, Limited Liability Partnerships and Partnerships (Amendment etc.) (EU Exit) Regulations 2019

12.The purpose of these draft Regulations is to ensure that the UK’s company law framework can operate effectively after a possible ‘no deal’ exit from the EU. While the Department for Business, Energy and Industrial Strategy (BEIS) says that the instrument aims to preserve the company law framework unchanged as far as possible and appropriate, the information provided in the Explanatory Memorandum (EM) suggests that some of the proposed changes appear to be more significant. A key proposal in the draft Regulations is to end the preferential treatment currently afforded in some aspects of UK company law to businesses from the European Economic Area (EEA). Amongst other changes, the instrument proposes to revoke provisions that enable the current regime for mergers between UK companies and companies in EEA countries. BEIS estimates that around 50 cross-border mergers are carried out under this regime every year. Other proposed changes would involve a loss of voting rights and a loss of the ability to make distributions for certain EEA businesses after a one-year transition period following exit. Despite the significance of these proposals, the EM provides only limited information on the expected impact of these changes on shareholders and other relevant stakeholders. The EM also says that to minimise sensitivities ahead of negotiations with the EU, only the Law Society was consulted. The Committee recommended an upgrade of these Regulations to the affirmative procedure when they were initially laid before Parliament as a proposed negative instrument, because of the significance of the changes and the lack of information provided on their expected impact.4 The Committee remains concerned that the Department has not provided more extensive information to assist Parliament in its scrutiny of these draft Regulations.

Draft Farriers and Animal Health (Amendment) (EU Exit) Regulations 2019

13.This instrument proposes to end the preferential treatment of farriers who have a professional qualification from a country in the European Economic Area (EEA) and wish to work in the UK. Under the proposals, EEA qualified farriers will be subject to the same registration conditions as farriers from the rest of the world after the UK’s withdrawal from the UK. The proposal does not affect the rights of those EEA farriers already registered to practise in the UK, and transitional arrangements ensure that those who are in the process of registering with the Farriers Registration Council (FRC) on exit day will have their application (and any related appeal) considered under the rules as they applied before exit day. The Department for Environment, Food and Rural Affairs says that after the UK leaves the EU, the EU will no longer recognise UK qualifications, and that it would not be appropriate to provide more favourable treatment to EEA countries unilaterally. The Department has told us it expects the impact of the changes to be negligible: there is not a shortfall of farriers, with only 11 farriers with EEA qualifications registered by the FRC to practise in Great Britain, out of a total of around 2,900 farriers. This is in contrast to veterinary surgeons where the Department is also ending the mutual recognition of qualifications, but where there is a greater dependency on professionals from the EU.

Draft Plant Health (Amendment) (England) (EU Exit) Regulations 2019

Draft Plant Health (EU Exit) Regulations 2019

14.The purpose of this set of two draft Regulations is to ensure that retained EU plant health legislation in England, which implements current EU protective measures against the introduction and spread of organisms harmful to plants or plant products, remains effective in a possible ‘no deal’ exit from the EU. According to the Department for Environment, Food and Rural Affairs (Defra), the draft Plant Health (EU Exit) Regulations 2019 replicate the EU’s current common list of regulated pests and plant material for England, Wales and Northern Ireland, with equivalent legislation being taken forward separately in Scotland. The purpose is to facilitate a UK internal market for regulated plant material while protecting biosecurity. The draft Regulations also propose to replace the current concept of EU ‘Protected Zones’ for areas that are free from plant pests and where imported plant material must meet higher plant health standards, with the World Trade Organisation’s similar concept of “Pest Free Areas”. The draft Plant Health (Amendment) (England) (EU Exit) Regulations 2019 set out the arrangements for import controls of plants and plant products from the EU and Switzerland which will replace the current EU plant passport regime after exit. Defra explains that, as required under the International Plant Protection Convention, plant materials entering the UK from the EU will require a phytosanitary certificate issued in the country of export. To maintain the flow of goods, however, they will not be physically checked and stopped at the border, on the understanding that biosecurity risks will not change immediately on exit. Instead, businesses will need to pre-notify Defra of any imports and documentary and identity checks will be carried out remotely and a fee will be charged. Businesses wishing to import regulated plant material from third countries via the EU after exit will also need to pre-notify arrival of such material to Defra and, in addition, facilitate physical plant health checks. These checks will take place at their own premises, rather than at ports, to enable frictionless trade. The premises will need to be authorised by Defra and provide specified inspection facilities. We have asked the Department for additional information about the new authorisation process which we are publishing at Appendix 1.

Universal Credit (Restriction on Amounts for Children and Qualifying Young Persons) (Transitional Provisions) Amendment Regulations 2019 (SI 2019/27)

Universal Credit (Restriction on Amounts for Children and Qualifying Young Persons) (Transitional Provisions) (Amendment) Regulations (Northern Ireland) 2019 (SR 2019/3)

15.These Regulations implement the first of the modifications to Universal Credit announced by the Department for Work and Pensions on 11 January 2019.5 In amending earlier instruments,6 they alter transitional provisions which would have meant that claims for Universal Credit made after 1 February 2019 would only have received payment for a maximum of two children. The effect of the amendment made by these Regulations is that families with three or more children will continue to receive an additional amount in Universal Credit for all children born before 6 April 2017. The limit will now only apply to those households claiming Universal Credit which had a third or subsequent child after the limit came into effect. The cost of this policy change is estimated to be £250 million over the next five years and an estimated 15,000 families per year will benefit from the change.7

4 6th Report, Session 2017–19 (HL Paper 236)

5 See Written Statement, 11 January 2019, HLWS1211.

6 Universal Credit (Transitional Provisions) Regulations 2014 (SI 2014/1230) and the Universal Credit Regulations 2013 (SI 2013/376).

7 Universal Credit (Restriction on Amounts for Children and Qualifying Young Persons) (Transitional Provisions) (Amendment) Regulations (Northern Ireland) 2019 make the same change in Northern Ireland (SR 2019/3).

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