Fourteenth Report Contents

Instruments of interest

Draft Buckinghamshire (Structural Changes) (Modification of the Local Government and Public Involvement in Health Act 2007) Regulations 2019

22.On 1 November 2018, the Secretary of State for the Ministry of Housing, Communities and Local Government (MHCLG) announced the intention to implement a proposal from Buckinghamshire County Council (BCC) to create a single unitary council: this would replace the existing two tiers in which services are divided between Buckinghamshire County Council and the four district councils of Aylesbury Vale, Chiltern, South Bucks and Wycombe.12 In the Explanatory Memorandum (EM) to these Regulations, MHCLG says that they modify provisions relating to local authority structural and boundary change in the Local Government and Public Involvement in Health Act 2007 (“the 2007 Act”) as they apply to councils in Buckinghamshire. The modifications will enable Orders to be made under the 2007 Act to give effect to BCC’s proposal for the establishment of a single unitary council. MHCLG says that it intends to lay a draft Buckinghamshire (Structural Changes) Order 2019 as soon as practicable.

23.In the EM, MHCLG makes it clear that views about the future shape of local government in Buckinghamshire are divided. What is termed “an independent engagement programme on unitarisation” was carried out on BCC’s behalf between 31 March and 19 May 2017. The findings, published in September 2017,13 reported that 2,861 representations had come from members of the public: 87% of these supported unitarisation in principle, but, while 35% of all representations supported a single unitary council, 47% favoured two unitary authorities.14 MHCLG comments that, having had regard to all the evidence, the Secretary of State is satisfied that, whilst both proposals meet the criterion for a “good deal of local support”, only the proposal for a single unitary council satisfies the criteria for “improving local government” and for “being a credible geography”; and that in any event the proposal for a single unitary council is better able to meet the criteria overall.15

Draft Equine (Records, Identification and Movement) (Amendment) (EU Exit) Regulations 2019

24.The purpose of these draft Regulations, laid by the Department for Environment, Food and Rural Affairs (Defra), is to address deficiencies in retained EU legislation in relation to the identification of horses and other equines, including by so-called ‘horse passports’ and microchips. Defra says that the instrument is needed to ensure that the current system can operate effectively after EU exit, supporting high standards of equine biosecurity, enforcement, food safety, fraud prevention, animal welfare and trade. The Committee considered these draft Regulations when they were initially laid before Parliament as a proposed negative instrument. The Committee found that a ‘no deal’ exit could lead to considerable additional costs and administrative requirements in relation to an estimated 42,000 movements of horses between the UK and the EU per year, including additional blood tests and the need to pass through Border Inspection Posts in EU Member States. While noting that the additional costs and administrative requirements would not be a result of the instrument itself but of a ‘no deal’ withdrawal from the EU, the Committee nevertheless recommended the instrument for an upgrade to the affirmative procedure to provide the House with an opportunity to debate these issues.16

Draft Equivalence Determinations for Financial Services and Miscellaneous Provisions (Amendment etc) (EU Exit) Regulations 2019

25.EU financial services legislation enables the European Commission (“the Commission”) to determine that a third country’s regulatory and supervisory regime is equivalent to the EU’s corresponding regulatory framework. The Commission makes jurisdiction-level equivalence decisions in relation to third country regimes, and the European Supervisory Authorities (ESAs) provide technical advice to the Commission and make ‘recognition’ decisions or authorisations that apply to specific firms within those third countries.

26.In the event of ‘no deal’ with the EU, the functions of the Commission will be transferred to HM Treasury (HMT). The role of providing technical advice which is currently undertaken by the ESAs will be transferred to the Bank of England, Prudential Regulation Authority and the Financial Conduct Authority (the UK Financial Regulators). The ESAs’ functions for making firm-level ‘recognition’ decisions will also be transferred to the UK Financial Regulators through other HMT EU Exit instruments.

27.These Regulations also provide Ministers with a temporary power to make equivalence directions and exemption directions for the EU and European Economic Area (EEA) Member States before exit day, but which come into force on exit day. Ministers’ ability to exercise this power will be limited to a period of 12 months from exit day and any direction must be laid before Parliament and published. HMT explains that this power is intended to be used in cases where it is necessary to make equivalence decisions for the EU and EEA member states quickly and efficiently to support UK market activity and the continuity of cross-border business. After this power expires, equivalence decisions made by HMT must be made by regulations subject to the negative procedure.

Draft International Waste Shipments (Amendment) (EU Exit) Regulations 2019

28.Shipments of notified waste17 between the UK and other EU Member States (of which England exported just under four million tonnes to the EU in 2017) are subject to a procedure of prior notification and consent.18 The European Commission has indicated in a notice to stakeholders19 that those notifications will no longer be valid after exit day, but it has set out a process to reapprove existing notifications. The Department for the Environment, Food and Rural Affairs (Defra) has explained that 556 approvals to export notifiable waste are affected, and the associated waste tonnage is just over 25 million tonnes.20 The UK’s competent authorities21 have written to their counterparts in other Member States to agree the continuation of waste shipments after exit. Defra confirmed that, as of 24 January, it has obtained agreement for 545 of 556 approvals to continue in their current form and no new application will be required to allow the export of UK waste to the EU. Defra is awaiting a decision by the Spanish Environment Ministry on 11 UK approvals with an associated tonnage of 68,656 tonnes, or 0.3% of all of the proposed UK exports of notified waste to the EU. It also need to resolve 49 Gibraltar approvals to export waste to Spain.

29.Defra has clarified that the obligations of the EU and its Member States under the Basel Convention (and the Organisation for Economic Co-operation and Development (OECD) Decision on the Control of Transboundary Movements of Wastes Destined for Recovery Operations)22 are met through the EU Waste Shipment Regulations (WSR).23 UK obligations under the Waste Shipment Regulations (WSR) are implemented through the Transfrontier Shipment of Waste Regulations 2007 (TFS Regs). This instrument makes corrections to the WSR and the TFS Regs so that they will remain operable and enable the UK to fulfil its obligations under the Basel Convention and the OECD Decision. When first laid as a proposed negative instrument, the Committee recommended that the Regulations be subject to the affirmative procedure so that the House may consider any potential impact on UK manufacturers.

Draft Livestock (Records, Identification and Movement) (Amendment) (EU Exit) Regulations 2019

30.The purpose of these draft Regulations, laid by the Department for Environment, Food and Rural Affairs, is to ensure that current arrangements for the identification and registration of livestock (cattle, sheep, goats and pigs) can continue to operate effectively after the UK’s withdrawal from the EU, so that livestock remain traceable for the purposes of disease control. Amongst other changes, the Regulations confer directly on Ministers legislative functions and a fee charging power. The Committee considered these draft Regulations when they were initially laid before Parliament as a proposed negative instrument, and recommended an upgrade to the affirmative procedure. The Committee found that, while a fee charging power exists under current arrangements without being used in practice, conferring such a power directly on Ministers may lead to a different approach in the future, and that the House may expect an opportunity to debate this proposal.24

Draft Merchant Shipping (Passengers’ Rights) (Amendment etc.) (EU Exit) Regulations 2019

31.Existing Regulations25 provide that insurance certificates issued by an EU Member State which is not a State Party to the Athens Convention (“the Convention”) will be accepted in the UK as proof of insurance for passenger vessel operators. However, after exit day, the UK will only accept a state certificate as proof of insurance if it has been issued by a State Party to the Convention. The EU Member States which have not ratified the Convention are Austria, the Czech Republic, Hungary, Luxembourg, Cyprus, Estonia, Germany, Italy and Poland: only the last five of these have maritime ports. Where certificates have been issued by these states before exit day, the UK will continue to accept them as proof of insurance until their expiry (they are typically valid for one year from the date of issue). However, after this, the UK will only accept certificates showing proof of insurance from those Member States which are parties to the Convention. Ships which are registered in non-Convention countries and wish to visit the UK must obtain a state certificate from the Maritime and Coastguard Agency (MCA). The Department for Transport (DfT) explains that “analysis by the MCA showed that in 2018 only 21 passenger vessels registered in countries which aren’t a State Party to the Convention called at the UK, 15 of which are Italian, 5 of which are Cypriot, and one German.” We asked the Department whether UK-issued certificates will be recognised in the EU. DfT has stated that:

“certificates are not examined at EU level but rather by individual states’ port control authorities. All EU states which operate port state control will continue to require proof of insurance … however a certificate issued by a State Party under the Convention will satisfy this requirement. The UK is and will remain a contracting State Party to the Athens Convention.”

Draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019

32.This instrument makes a number of changes to rates, limits and thresholds for National Insurance Contributions (NICs). While most of the changes reflect the application of the 2.42% increase in the Consumer Price Index rate (as at September 2018), changes proposed for Class I contributions (employer deductions from employee salaries) also incorporate other factors. In particular, while the minimum annual threshold for paying Class 1 NICs will increase from £8,424 to £8,632, the Upper Earnings Limit (UEL) will rise from £46,350 to £50,000 (in line with the higher rate income tax threshold from April 2019).  On that element of an employee’s salary between the minimum annual threshold and the UEL, NICs are charged at 12%. Widening the salary range between the minimum annual threshold and the UEL by some £3,400 means that an employee earning £50,000 or more will pay an additional £400 in NICs.

Extraterritorial US Legislation (Sanctions against Cuba, Iran and Libya) (Protection of Trading Interests) (Amendment) Order 2018 (2018/1357)

33.The purpose of this Order is to prohibit EU companies and individuals from complying with sanctions imposed by the US on Iran, where such sanctions impact on these companies and individuals outside of the US, and unless the companies and individuals have been authorised exceptionally to comply with US sanctions by the European Commission. The Department for International Trade (DIT) explains that the Order updates the UK’s implementation of Council Regulation (EC) No. 2271/96 (the “Blocking Regulation”) which prohibits EU companies and individuals from complying with extraterritorial sanctions imposed by the US on Cuba, Iran and Libya. The US suspended sanctions on Iran as part of the Joint Comprehensive Plan of Action (JCPOA), in return for Iran agreeing to suspend its nuclear ambitions, but withdrew from the JCPOA in May 2018 and announced that it would reimpose sanctions. In response, the EU updated its Blocking Regulation to include the re-imposed sanctions. DIT says that the Government intend to uphold the policy intent of the Blocking Regulation after EU exit, so that the impact of extraterritorial sanctions on UK trading interests can be mitigated.

12 Commons Written Ministerial Statement, 1 November 2018, HCWS1058

13 Opinion Research Services, Buckinghamshire County Council: Reshaping Council Services Engagement 2017 (September 2017): [accessed 23 January 2019].

14 In January 2017, the district councils had proposed a different option from that put forward by BCC, namely to replace the five existing councils with two new unitary councils: one for the north of the county, covering the existing Aylesbury Vale District Council area; and one for the south, covering Wycombe, Chiltern, and South Bucks District Councils.

15 The criteria for the Government’s assessment of proposals for local government reorganisation were specified in February 2017, in response to a Parliamentary Question. See Written question, 23 February 2017, 65271.

16 8th Report, Session 2017–19 (HL Paper 244)

17 Notified waste comprises hazardous wastes, mixed municipal wastes, mixtures of wastes and wastes which are destined for disposal. Non-notifiable wastes, mainly non-hazardous wastes such as paper or plastic destined for recycling, does not require prior approval from the UK regulators before shipment.

18 According to rules set out in EU Regulations (Regulation (EC) No 1013/2006).

19 Published on 8 November 2018.

20 Defra explain that when Notifiers (exporters) apply for approval to export notified waste, they typically apply for a greater tonnage than they actually anticipate shipping as the final amount shipped will be dependent on market circumstances. So, the 25 million tonnes figure is just the maximum possible permissible amount.

21 The Environment Agency, the Scottish Environment Protection Agency, the Northern Ireland Environment Agency and Natural Resources Wales.

22 Decision C(92)39/FINAL

23 Regulation (EC) No 1013/2006

24 7th Report, Session 2017–19 (HL Paper 239)

25 The Merchant Shipping (Carriage of Passengers by Sea) Regulations 2012 (SI 2012/3152)

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