9th Report Contents

Instruments of interest

Draft Warm Home Discount (Scotland) Regulations 2022

28.These draft Regulations propose the continuation of the Warm Home Discount scheme (“the WHD scheme”) in Scotland until 31 March 2026, mirroring an earlier instrument10 which proposed the extension of the scheme in England and Wales. The WHD scheme was introduced in 2011 and requires electricity suppliers to provide benefits to customers who are in, or are at risk of, fuel poverty. The costs are then passed on to domestic customers.

29.The Department for Business, Energy and Industrial Strategy (BEIS) says that under the Scotland Act 2016, the Scottish Government has devolved powers to design and implement a WHD scheme for Scotland, while the exercise of these powers requires the agreement of the Secretary of State, and some powers remain reserved, including determining the overall spending envelope. The Scottish Government has asked the UK Government to legislate for the continuation of the WHD scheme in Scotland.

30.The spending envelope in Scotland will increase proportionately in line with the overall increase for Great Britain to £44.65 million, with the value of the main rebate increasing from £140 to £150, as in England and Wales. BEIS says that the WHD scheme in Scotland will largely mirror the scheme previously in place across Great Britain in 2021/22. In total, around 280,000 households will receive a rebate under the WHD scheme in Scotland.

Remote Observation and Recording (Courts and Tribunals) Regulations 2022 (SI 2022/705)

31.Temporary provisions in the Coronavirus Act 2020 permitted the remote observation of public hearings in most courts and in the unified tribunals system. The scheme was successful and was extended for six months after the lapsing of the Coronavirus Act on 25 March 2022 by SI 2022/36211 to allow primary legislation to be prepared to make the arrangements permanent.

32.New section 85A of the Courts Act 2003 (as inserted by section 198 of the Police, Crime, Sentencing and Courts Act 2022) introduces a wider and more flexible scheme. These Regulations specify the proceedings where remote viewing may be used, and that they can be video or audio, in person, remote or hybrid. Private proceedings remain private, and in public cases it remains for the judge to decide on a case-by-case basis if remote viewing is in the interests of justice. The overarching prohibition on recording or publishing court activities remains for all other cases.

33.We were surprised that these new Regulations were implemented using an urgent procedure that brought the legislation into force within 24 hours when the temporary arrangements were available for another three months. On request the Ministry of Justice has provided its rationale for doing so (published at Appendix 2) but we are not convinced. In particular we dispute the assertion that speed is justified because the Act was carefully considered: this Committee has seen many examples where the principles agreed in an Act have proved controversial once the details of implementation have been published in the statutory instrument. We therefore expect departments to always observe the required scrutiny periods except in genuine emergencies.

Direct Payments to Farmers (Advance Payments and Activation of Payment Entitlements) (Amendment) (England) Regulations 2022 (SI 2022/706)

34.This instrument allows the Department for Environment, Food and Rural Affairs (Defra) to pay farmers in England in any claim year up to 50% of their Direct Payments under the Basic Payment Scheme (BPS)12 before the usual payment window begins on 1 December, and before 16 October, the current date for advance payments. Defra says that bringing forward advance payments will help farmers deal with cash flow pressures as a result of rising costs for fertiliser, feed, fuel and energy. The intention is to pay Direct Payments in two instalments each year for the remainder of the agricultural transition period until 2027.

35.The 50% advance payment is to be paid from the end of July 2022, without the requirement for eligibility checks. The remaining payment will be made from December once the eligibility checks have been completed. Defra told us that while the overpayment risk is very low, in the few cases where the checks show that there has been an overpayment, the Rural Payments Agency (RPA) will use existing mechanisms to intercept the overpayment from other scheme payments due to the farmer or will seek recovery. Defra also said that the RPA will apply penalties in some circumstances, depending on the nature of the non-compliance. For example, if a farmer overdeclared their land by more than 2 hectares or 3% of their eligible area, a penalty would be applied, and the size of the penalty would depend on the size of the overclaim.

36.The instrument also ensures that land which is entered into some of the Government’s new land management schemes remains eligible for BPS payments from the 2022 claim year if it had been used to claim Single Payment Scheme (SPS) payments (the predecessor to BPS payments) in 2008. Defra says that, without this change, farmers may be discouraged from taking part in the new land management schemes.

Coasting Schools (England) Regulations 2022 (SI 2022/720)

37.This instrument amends the definition of when a school in England is found to be ‘coasting’, a finding which allows the use of intervention powers. Under the current rules, intervention only takes place if Ofsted has judged a school to be inadequate, or if there has been a breakdown in a school’s governance or financial management (regardless of the school’s Ofsted rating). Under the new rules, a school will fall within the coasting definition if it was judged as ‘requiring improvement’ at its most recent Ofsted inspection, and if it was also judged as ‘requiring improvement’, ‘satisfactory’ or ‘inadequate’ at the previous inspection, including any judgements given to a predecessor school.

38.The Department for Education (DfE) says that some schools are struggling to provide a ‘good’ standard of education (as rated by Ofsted) but are currently outside the scope of intervention, and that the change to the coasting definition made by this instrument is consistent with the original intention behind the legislation, which was to enable intervention in schools where pupils are not fulfilling their full potential.

Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) (No.2) Order 2022 (SI 2022/726)

39.This instrument amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (“the RAO”) to remove from regulation loans which have been secured on a variety of high-value assets, such as a private wealth portfolio or an art collection, and that have been taken out to purchase property rights. According to HM Treasury (HMT), this reinstates an exemption that existed before the EU’s Mortgage Credit Directive 2014 was transposed into UK law.

40.HMT says that in practice, the exemption means that the regulatory framework set out in the Financial Services and Markets Act 2000 and the RAO as well as the protections offered to consumers of regulated credit agreements by the Consumer Credit Act 1974 will not apply to relevant mortgage loans. Under the exemption, a borrower could, for example, enter into a loan with a firm that is not regulated or authorised by the Financial Conduct Authority (FCA) and therefore not subject to the FCA’s consumer protection rules, and the FCA would not be able to take enforcement action against the firm in relation to any losses suffered by the borrower.

41.HMT says that the exemption will be limited to high-net-worth individuals (HNWIs) who are UK residents (those who have spent at least 183 days in the UK during a continuous period of 365 days) to ensure that those benefitting from the exemption have contributed to the UK economy. While the RAO does not include a definition of when someone qualifies as a HNWI, HMT told us that according to FCA guidance, to benefit from the exemption, a borrower must declare that they have received a net income of not less than £150,000 during the previous financial year, and/or have held net assets with a total value of not less than £500,000 throughout the previous financial year.

42.Asked about the rationale for the exemption, HMT told us that the “Government’s position is that regulation in this area should only be applied where absolutely necessary”, adding that HNWIs “can choose to benefit from this exemption, as they are significantly more financially resilient than the average borrower and have access to their own legal and financial advice regarding credit transactions. Therefore, they do not require the level of protection that a regulated credit agreement would provide them with.”

43.The instrument also clarifies that, when the Money and Pensions Service and its delivery partners provide free pension guidance, these functions are exempt from regulation.

Official Controls (Plant Health) (Frequency of Checks) Regulations 2022 (SI 2022/739)

44.These Regulations enable the appropriate authority to determine the frequency rates of plant health checks (physical and identity checks) for certain plants and plant products that enter Great Britain (GB) from a third country. The Department for Environment, Food and Rural Affairs (Defra) explains that under the new regime changes to the frequency of plant health checks will be made depending on the level of plant health risk posed to GB. The new regime will apply equally to imports from non-EU countries and high-priority goods from EU member States, Switzerland, and Liechtenstein. Defra says that the Scottish and Welsh Devolved Administrations have given their consent to the instrument.

45.While the Regulations set out the methods that will be used to determine the frequency of plant health checks, the actual frequency rates will be published online by the appropriate authority. The rates will be reviewed annually but may be increased temporarily at any time if the competent authority considers this necessary. An earlier instrument13 introduced the fees that will be charged under the new regime.

10 Draft Warm Home Discount (England and Wales) Regulations 2022, Secondary Legislation Scrutiny Committee, 2nd Report (Session 2021–22, HL 6).

11 Coronavirus Act 2020 (Delay in Expiry: Inquests, Courts and Tribunals, and Statutory Sick Pay) (England and Wales and Northern Ireland) Regulations 2022 (SI 2022/362).

12 Direct Payments are the main income-support schemes for farmers under the EU’s Common Agricultural Policy. In England they are currently paid through the Basic Payment Scheme. The payments are being phased out over a seven-year transition period until 2027.

13 Draft Plant Health etc. (Miscellaneous Fees) (Amendment) (England) Regulations 2022, Secondary Legislation Scrutiny Committee, 5th Report (Session 2022–23, HL 28).

© Parliamentary copyright 2022