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Twelfth Report Contents

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Twelfth Report

Instruments drawn to the special attention of the House

Draft Criminal Justice Act 1988 (Offensive Weapons) (Amendment, Surrender and Compensation) Order 2024

Date laid: 25 January 2024

Parliamentary procedure: affirmative

This Order would introduce a ban on certain types of ‘zombie-style’ knives and machetes, which the police have described as “weapons of choice for youths with criminal intentions”. The instrument defines closely the types of weapons that would be banned, but this could lead those likely to use the weapons simply to find other types of knife, not subject to the ban, that are equally dangerous. The Home Office should remain vigilant on this point and reconsider its approach if necessary. The fact that the ban only extends to England and Wales may also undermine its effectiveness.

The draft Order includes a surrender and compensation regime for those currently owning these weapons lawfully. While potentially a welcome initiative, the Explanatory Memorandum (EM) initially did not mention this part of the policy at all. The EM has since been revised and relaid, but questions remain about how the surrender policy will be communicated to the (non-mainstream) target market. The Home Office also failed to publish the Impact Assessment (IA) alongside the policy, contrary to best practice. When the IA became available, it made clear that the administrative cost of the surrender and compensation scheme would be more than twenty times the amount of compensation paid out. Moreover, the Home Office is only expecting nine additional convictions each year. The House may wish to enquire whether these estimates from the IA have been given due weight when deciding whether and how to proceed with the policy.

In considering the instrument, we identified an error in the Home Office’s press release on the policy, which incorrectly said that, following the ban, “anyone in possession of one of these knives will face time behind bars”. We set out the correct sentencing policy below and note that the Home Office itself expects only a small number of convictions and a low probability of receiving a custodial sentence on conviction. We understand that the Government is keen to progress this legislation quickly, but that should not come at the expense of providing full and accurate information to Parliament and the public.

This draft Order is drawn to the special attention of the House on the ground that the explanatory material laid in support provides insufficient information to gain a clear understanding about the instrument’s policy objective and intended implementation.

Background

1.This Order would add certain types of ‘zombie-style’ knives and machetes, which the Home Office describes as looking “menacing” and not having a practical use, to the list of offensive weapons for the purposes of the Criminal Justice Act 1988. This would make it an offence to possess, import, manufacture, sell, or otherwise supply such a weapon. The Order also contains provisions to allow current owners of these weapons to surrender them in a secure and orderly way and to provide owners with compensation.

2.The Home Office states that the primary policy objective is to support public safety. In the Explanatory Memorandum (EM) to the Order, the Home Office reports that there has been an increase in the number of such weapons used in criminal offences, and that “the availability, aesthetic appeal and low cost of these weapons have made them one of the weapons of choice for youths with criminal intentions”.

How are ‘zombie-style’ weapons defined?

3.The draft Order defines precisely the weapons that would be banned. The EM summarises them as follows:

“‘Zombie style knives and machetes’ typically have both serrated and cutting edges, as well as other features such as spikes, holes and/or multiple sharp points [ … ] The legislation in this instrument will ban knives and machetes over eight inches in length that contain these features.”

4.The Government’s response to a 2023 public consultation provided pictures of examples of weapons that would, and would not, be prohibited.1 Items of historical importance are not captured by the ban.

5.A majority of respondents to the consultation opposed a ban on zombie-style weapons, primarily because of concerns that it would infringe upon the legitimate activities of those wishing to use machetes as tools. The Government reiterated that this was not its intent. The Home Office stated that it was confident the definition in the draft Order would “allow the majority of people who use machetes as tools for legitimate reasons to be able to continue to do so, and those who use knives that are captured by the ban for legitimate reasons will be able to find an appropriate alternative.” The Government also argued that the definition was necessary to provide an appropriate level of clarity to enforcement agencies, sellers, importers and owners.

6.In 2016, the Government prohibited ‘zombie’ knives, which were defined as having both plain and serrated cutting edges and having “images that suggested that the weapon was to be used for violence”.2 However, the present EM states that, following the 2016 ban, the same or similar knives have remained on sale but without the images. This draft Order is intended to close this “loophole”.

7.We asked the Home Office whether those likely to use the weapons to be prohibited would, in the same way as after the 2016 legislation, simply find other weapons, not subject to the ban, but that are equally dangerous. The Home Office recognised that such evasion may occur, stating:

“It is likely that this will happen, but this is inevitable unless we were to ban all knives or anything with a blade or point in all contexts, which is disproportionate and not something Ministers are minded to do”.

8.Some press commentary in the area has described swords, that would not qualify as offensive weapons under the Order, as a “remaining loophole” that should also have been closed.3 The Home Office believes this would not be appropriate. For example, the article quoted the Rt Hon. Chris Philp MP, Minister of State (Home Office) as stating that the use of swords was “very, very rare” and the EM reported that during discussions with the police, “swords were not raised as a specific concern”. Nevertheless, the Home Office stated that it would keep this area under review.

9.We understand that, in defining the newly prohibited weapons as it has, the Home Office has attempted not to capture knives and machetes used legitimately. However, there may be a degree of arbitrariness in where the line has been drawn. We encourage the Home Office to remain vigilant to the effects of the legislation. One possibility is that new forms of weapon, that do not fall under the precise conditions of this ban, will become more prevalent, as happened after the 2016 ban on zombie knives. If this does occur, the Home Office should consider whether the approach of legislating for very specific types of weapon remains appropriate.

Surrender and compensation regime

10.The Order would allow those who own zombie-style weapons prior to the ban to surrender their items in a “secure and orderly way” and to receive compensation, recognising that “it is right and fair to compensate lawful owners for surrender of their property”. The standard compensation amount for each surrendered weapon will be £10, though applicants will be able to claim that the value of their weapon exceeds this amount (for example, by providing a purchase receipt). The Home Office stated that the standard value was set following consultation with weapons experts, and that “looking at current prices for the zombie style knives currently in the market, we believe £10 remains about right”. No compensation will be paid if a person’s total claim is less than £30.

11.The initial EM made no mention of the surrender and compensation regime. We consider that this is potentially a significant part of the policy. The Home Office revised and relaid the EM to explain this element, but it should not have required our intervention for the EM to do so.

12.The Home Office has not given reasons why there is a minimum claim of £30. We are concerned that this will discourage those with fewer than three weapons from surrendering them, therefore reducing the number of knives that might be removed from circulation by the scheme and undermining the aim to provide lawful owners with compensation.

Impact assessment

13.The EM stated that a full Impact Assessment (IA) for the policy will be published “after the laying date”. We have been clear, repeatedly, that impact information should be available at the time the instrument is laid, to facilitate scrutiny, except in genuine emergencies.4 When we asked why the IA was not published alongside the instrument, the Home Office replied that “the entire scheme was expedited at the request of Ministers”.

14.This is not a sufficient explanation for the absence of the IA. Under the new Better Regulation Framework, it is legitimate for the Government to lay an instrument in advance of its IA to address an emergency situation, but in this case the EM must explain what is being done and why.5 This EM contained no such information and, given that the Order would not come into force until the end of June, it is unclear how it can be an emergency. In its response to our End of Session report, the Government acknowledged the importance of impact information,6 and we reiterate that this includes making IAs available at the time an instrument is laid.

15.Following our requests, the Home Office published the IA. This contains information such as that (using central estimates):

• The number of knives expected to be surrendered is 472.
• The administrative cost of the compensation scheme is £300,000; but total compensation expected to be paid is only £14,000.
• There will only be nine additional convictions per year as a result of the policy.
• There is expected to be a “negligible” impact on annual prison places due to the small number of convictions, a low probability of receiving a custodial sentence on conviction (6.5%) and a short average custodial sentence length.

The information in the IA is striking in suggesting that the impact of the policy will be small and that the administrative costs of the surrender scheme are more than twenty times the amount of compensation expected to be paid out. The House may wish to enquire whether these estimates from the IA have been given due weight when deciding whether and how to proceed with the policy.

Familiarisation

16.A related aspect of the policy that was missing from the EM was how the Government intends to ensure that the legislative changes, and the surrender scheme, are publicised to those who need to be aware of them. This would include manufacturers and retailers, as well as those who currently own such weapons.

17.We asked the Home Office about its plans in this area. The Home Office replied that it has “already engaged” retailers, distributors and manufacturers, including through the consultation, and that it was working with the Department for Business and Trade to communicate the changes in the law. For existing owners, the Home Office said that:

“We are intending to run an awareness campaign of the changes in the law and the Surrender and Compensation scheme ahead of the scheme launching. We will issue guidance for the public, which will be published in gov.uk with instructions on how to surrender and claim compensation. This is in line with the scheme run in relation to the Offensive Weapons Act 2019, which worked well.”

18.By their nature, those currently owning zombie-style weapons may not be easy to identify or to contact. We encourage the Home Office to consider, drawing on previous examples of surrender schemes, whether any less conventional means of communication may be appropriate in order to improve the success of the policy.

19.In any case, this kind of practical information about how the policy will be implemented, particularly where the target audience is not mainstream, is important in assessing the policy and should have been included in the EM.

Sentencing

20.In the press release accompanying the draft Order,7 published on 25 January, the Home Office stated that “[t]he full ban will come into in force in September, after which anyone in possession of one of these knives will face time behind bars” (our emphasis). However, in the press article referred to above, Minister Philp was quoted as saying that he had “resisted pressure” for mandatory jail sentences for first-time knife offenders, and that it was “right to allow judges to use their discretion about whether to lock up first-time offenders, with mandatory sentencing reserved for second offences”.

21.We asked the Home Office about the apparent contradiction between these two statements. The Home Office admitted that the press release was incorrect and should have stated that anyone in possession of these knives may face time behind bars. The Home Office clarified that the sentencing policy was that “a person guilty of possession of a knife in public for a second or subsequent offence face custodial sentence of at least 6 months in prison (adults) or at least 4 months detention and training order (16 and 17 yrs old).”

22.It is regrettable that the press release was misleading in containing a factual error on a significant aspect of the policy, and that this was not subsequently picked up by anyone at the Home Office. Following our further request, the press release was corrected today (6 February 2024). However, this was 12 days after we pointed out the issue. The House may wish to enquire why these changes have taken so long and whether the Home Office has reviewed its sign-off procedures to ensure the same thing does not happen again. We also question whether the emphasis in the original press release on custodial punishment was consistent with the IA’s statement that the impact on prison places would be “negligible”.

Legislation applies only to England and Wales

23.As law and order is a devolved policy area, this legislation would apply only in England and Wales. We asked the Home Office what discussions it had had with the Devolved Governments and what plans they had. The Home Office replied:

“We have discussed the legislation with the devolved administrations in Northern Ireland and Scotland and we understand that they are considering whether their governments would like to legislate in this matter.

In the past, the governments in both Northern Ireland and Scotland mirrored England and Wales legislation in this area and we hope that on this occasion the devolved administrations will also follow suit.”

24.We note a risk that, if the ban only comes into force in England and Wales, it could simply lead to illegitimate supply lines from Scotland or Northern Ireland. We encourage the Home Office to monitor this and liaise further with the Devolved Governments as necessary.

Conclusion

25.The information provided with this draft Order was missing key elements and we identified a significant factual error in the accompanying press release, which was only corrected after 12 days. We understand that ministers are keen to progress this legislation quickly, but that should not come at the expense of providing full and accurate information to Parliament and the public.

26.The additional information available in the IA about the expected numbers of convictions and knives removed from the street, and the administrative cost of the compensation scheme, raises questions about the effectiveness and value for money of the policy. We wonder whether appropriate weight was given to this impact information in the formulation and design of the policy and the House may wish to enquire further on this point. We note that a key aim of the newly revised Better Regulation Framework guidance is to give greater weight to consideration of impacts earlier in the policymaking process; this draft Order may be a good example of the need for such a change.

Draft Windsor Framework (Constitutional Status of Northern Ireland) Regulations 2024

Draft Windsor Framework (UK Internal Market and Unfettered Access) Regulations 2024

Date laid: 31 January 2024

Parliamentary procedure: affirmative

These two sets of draft Regulations propose to implement key aspects of the agreement between the Government and the Democratic Unionist Party which forms the basis for the restoration of power-sharing in Northern Ireland (NI). Building on the Windsor Framework, the instruments seek to reaffirm, in domestic law, NI’s constitutional status as part of the UK and ensure unfettered access for NI businesses to the whole of the UK internal market. The instruments are part of a package of measures that includes further secondary legislation, a wide range of guidance, a new Internal Market Assessment that will be embedded into the existing process for Regulatory Impact Assessments, and the establishment of new bodies to have oversight of the new arrangements and promote UK internal trade. Given the complexity of the interaction of two regulatory systems in NI, we note the importance of the forthcoming guidance to provide clarity to businesses and other stakeholders on how the new arrangements should be applied in practice. We also consider that engagement and consultation with the Devolved Governments on the planned further measures and, in particular, with all communities in NI would help promote understanding of, and support for, the new arrangements across all parts of the UK.

The draft Regulations are drawn to the special attention of the House on the ground that they are politically or legally important and give rise to issues of public policy likely to be of interest to the House.

27.These two sets of draft Regulations propose to implement key aspects of the agreement between the Government and the Democratic Unionist Party which forms the basis for the restoration of power-sharing in Northern Ireland (NI). The instruments seek to reaffirm in domestic law NI’s constitutional status as part of the UK and ensure unfettered access for NI businesses to the whole of the UK internal market.

28.The instruments are part of a wider package of fiscal, policy and legislative measures. A Command Paper, Safeguarding the Union,8 sets the context and describes in detail how the Government intends to strengthen “the UK Internal Market and the Union in the long term, while ensuring the whole of the UK can benefit from the freedoms delivered by Brexit”. The Government says that its approach builds on the “progress under the Windsor Framework” but also responds to the “deeply held concerns that have been expressed” about the framework since it was agreed with the EU in February 2023.9

29.The House of Commons debated and approved the instruments on 1 February.10 The debate in the House of Lords has been scheduled for 13 February.

Draft Windsor Framework (Constitutional Status of Northern Ireland) Regulations 2024

30.This instrument proposes amendments to both primary and secondary legislation to “recognise in domestic legislation that the Windsor Framework is without prejudice to the existing constitutional status of Northern Ireland as part of the United Kingdom, and Parliament’s existing power to legislate for Northern Ireland”. The instrument further seeks to reaffirm “the vesting of executive power in Northern Ireland in His Majesty”, and that this “authority is exercised by the Government or the Northern Ireland Departments and Ministers, in accordance with law”.

31.In addition to this legal reaffirmation, the instrument proposes a prohibition on the Government from ratifying any agreements with the EU which would create new alignment with EU law in NI that would result in a regulatory border between Great Britain (GB) and NI. The instrument would further require that, before entering into an agreement with the EU in relation to NI, a Minister must lay before Parliament a written statement explaining why the agreement would not create a new regulatory border. The Government says that this will help to “future-proof” the effective operation of the UK internal market. A regulatory border may cover, for example: customs matters; the movement of goods; technical regulations, assessments, certificates, approvals and authorisations; and VAT and excise.

32.The instrument also proposes a “statutory transparency obligation” to Parliament. Under this obligation, when introducing a Bill which affects trade between NI and GB, the Minister would be required to make a statement, before Second Reading, to confirm that the legislation would not have a “significant adverse effect on trade” between NI and GB, and, where such assurance cannot be given, set out why the Government nevertheless wishes to proceed with the Bill. The instrument does not include a definition or threshold of what constitutes a “significant adverse effect on trade”; the Northern Ireland Office (NIO) told us that “it will be a matter for Government departments to assess and determine a Bill’s impact on trade with Northern Ireland in accordance with the legal duty, on the basis of the policy issues at hand”.

33.Asked about the potential adverse impact of secondary legislation, which has been the legislative vehicle for many of the current trade arrangements between NI and GB,11 the NIO said that the transparency obligation applied to primary legislation only. However, NIO pointed to the Command Paper which refers to new Internal Market Assessments which will require “proper consideration of where new regulation could lead to red tape or barriers for trade between the constituent parts of the UK and within our internal market”. The aim of the Internal Market Assessments is to “embed proper scrutiny of any adverse impacts on the smooth functioning of the internal market, including between Northern Ireland and Great Britain, in the consideration of new regulatory measures”.12

34.The Internal Market Assessments will be embedded into the existing process for Regulatory Impact Assessments (IAs). A relevant adverse impact may be, for example, incentives for trade diversion or barriers to businesses placing goods on the market in any part of the UK, in addition to direct costs to businesses. We welcome that the Government will publish guidance, and that the new Internal Market Assessments will be scrutinised by the Regulatory Policy Committee and will be available publicly to support Parliamentary scrutiny.

35.The instrument further proposes to clarify that the law which applies in NI is subject to the democratic oversight of the NI Assembly through the Stormont Brake,13 and through the democratic consent mechanism which may be used by the NI Assembly where the EU seeks to amend or replace existing EU goods legislation under the Windsor Framework. The Secretary of State explained during the debate in the House of Commons that these provisions would “end any presumption that there is any form of automatic and unchecked dynamic alignment with European goods rules. Section 7A of the European Union (Withdrawal) Act 2018, the so-called pipeline of EU law, is now expressly subject to the operation of vital democratic safeguards that the Northern Ireland Assembly, when sitting, will be able to exercise, including the Stormont brake.”14 The Government says that it will publish further detail on the operational arrangements for the use of the Stormont brake.15

36.Finally, the instrument proposes a process and timetable to ensure that any issues or recommendations raised in relation to the operation of the Windsor Framework in an independent review, which was initiated by a consent vote in the NI Assembly, are presented to the Government, scrutinised by Parliament and the NI Assembly and raised by a Minister in the Withdrawal Agreement Joint Committee.

37.Asked whether the EU’s agreement was needed for these changes, the Cabinet Office responded:

“The UK and EU of course remain in close contact on an ongoing basis about the implementation of the Windsor Framework. The Foreign Secretary and NI Secretary both spoke to Executive Vice-President Šefčovič on the day the measures were set out, as set out on GOV.UK.16 But these are commitments that arise from discussions between the UK Government and parties in Northern Ireland.”

Draft Windsor Framework (UK Internal Market and Unfettered Access) Regulations 2024

38.This instrument proposes amendments to ensure the operation of the UK internal market, in particular the unfettered access of so-called qualifying Northern Ireland goods (QNIGs)17 to the GB market. It does so primarily by extending arrangements which currently prohibit UK customs and regulatory checks and processes for QNIGs which move directly from NI to Great Britain (GB), so that QNIGs moving from NI to GB indirectly via the Republic of Ireland (ROI) are also covered. The Cabinet Office says that this extension would reflect the economic importance of the ROI route to NI businesses: a significant proportion of goods moving from NI to GB do so through ROI to reduce overall journey times to Wales or southern England.

39.In response to concerns raised by NI businesses, the instrument also proposes to amend the current definition of QNIGs, so that it would not be applied to goods originating outside of NI and with no connection to NI. This is to “more squarely focus the benefits of unfettered access on Northern Ireland traders”. The Cabinet Office explains that:

“The current definition of qualifying Northern Ireland goods means goods in free circulation in Northern Ireland will qualify so long as they are not under a customs procedure or in an authorised temporary storage facility. Under Northern Ireland’s full access to the EU Single Market, goods from the EU can freely enter Northern Ireland but should not be merely routed through Northern Ireland into Great Britain for the purpose of avoiding import controls in Great Britain. The regulations strengthen anti-avoidance provisions, so goods moved for the purpose of avoiding checks and controls will not be granted status as qualifying Northern Ireland goods. Similarly - for SPS [sanitary and phytosanitary] purposes - only agrifood goods despatched from registered Northern Ireland food and feed operators will be qualifying Northern Ireland goods, with all other goods non-qualifying and subject to SPS checks, controls and processes.”

40.The Cabinet Office says that guidance will be issued to clarify how the new definitions should be applied in practice. The instrument empowers the Secretary of State to issue further guidance to assist authorities in the exercise of their duty “to have special regard” to the need to: maintain NI’s place in the UK internal market; respect NI’s part of the UK’s customs territory; and facilitate the free flow of goods between GB and NI.

41.We asked whether any of the measures, in particular the indirect free movement of QNIGs from NI to GB via ROI, required the approval of the EU. The Cabinet Office responded:

“The Windsor Framework agreed with the EU removed the requirement to provide export declarations, or any equivalent information, for businesses moving goods from Northern Ireland to Great Britain. No further approval from the EU is required for these measures, it is a matter for UKG [the UK Government] - though we nonetheless engage regularly with the EU on the Windsor Framework arrangements. We also continue to work closely with the Irish Government on the implementation of the Border Target Operating Model in relation to checks on goods arriving from Ireland, including in relation to ensuring unfettered access for qualifying Northern Ireland goods.”

42.While the instrument seeks to ensure unfettered access of NI goods to the GB market, we asked about the access of GB goods to the NI market and whether such goods would have to meet any EU law applying in NI. The Cabinet Office responded:

“The package [ … ] will ensure the smooth flow of goods within the UK internal market system as intended. In particular, in relation to the entire UK internal market, we are:

• Expanding the range of goods able to move within the internal market system, meaning millions more agri food products every year move on the basis of UK food and drink safety standards;
• Agreeing joint UK-EU legal text that would allow agri-food goods imported into NI to benefit from UK, not EU tariffs, and additionally allowing NI to benefit from UK FTAs [Free Trade Agreements];
• Establishing a new Independent Monitoring Panel to ensure the Framework is not gold-plated with onerous and unnecessary regulation during implementation;
• And ensuring that a new risk management approach is put into effect so that in practical terms the only checks conducted will be on the basis of risk and intelligence.”

43.The response makes clear that important elements of the Government’s new approach are work in progress. It also reflects the complexity of the post-Brexit arrangements in NI where two separate regulatory systems will continue to interact. The Command Paper refers to this interaction, stating that the labelling of certain food products, for example, “is a visible indication of an important underlying legal reality - British food safety and marketing standards apply to those goods on sale in Northern Ireland, whilst across the international land border in Ireland, EU rules will apply”. We welcome the Government’s commitment to publish guidance on many of the measures set out in the Command paper; this should be done at the earliest opportunity to provide clarity to businesses and other stakeholders on how the new arrangements should be applied in practice.

Next steps

44.The Command Paper sets out a wide range of additional measures that the Government intends to introduce. These include legislation to repeal all statutory duties relating to the ‘all-island economy’, and a further statutory instrument, the Windsor Framework (Marking of Retail Goods) Regulations 2024, the purpose of which will be to extend requirements for ‘not-for-EU’ labelling which currently apply only to goods on the market in NI to the rest of the UK from October 2024. The aim is to remove a potential disincentive for businesses and traders to place goods for sale on the NI market. The Government says that because its small size, some suppliers may have decided to remove products from the NI market. The planned extension of labelling requirements to GB will seek to maintain consumer choice in NI, as suppliers will not have to establish different production lines to be able to sell goods in GB as well as NI. The policy will be subject to public consultation.18

45.Further measures set out in the Command Paper include the establishment of:

• a new Independent Monitoring Panel to provide oversight of the implementation of the new arrangements, so that Government and other authorities “are held to account for delivering it in a pragmatic, proportionate way without gold plating”;
• Intertrade UK, a new body to promote trade within the UK; and
• a UK East-West Council, which will bring together representatives from government, business and the education sector from NI and GB “to identify opportunities for deepening connections” between NI and the rest of the UK in areas such as trade, transport, education and culture.

46.We specifically note a commitment for the Government to “develop guidance for use across the Home Civil Service, the Diplomatic Service and Government agencies on the Belfast (Good Friday) Agreement and successor agreements. The guidance, alongside bespoke training, will reinforce the requirement for ministers and officials across Government to develop the skills and understanding to grasp and communicate the full context of Northern Ireland’s political agreements - in all their dimensions and reflecting the important balance contained within them - and the importance of upholding, respecting and communicating them in their totality.”19 The House may wish to ask the Minister for further explanation of the Government’s plans for the development of this important guidance, and of the interaction of these instruments and the further measures outlined in the Command Paper with the Good Friday Agreement.

47.Asked about timing of the further measures, the Cabinet Office said that the Government “will begin immediate work as part of this deal to give effect to the new UK internal market system and the Independent Monitoring Panel arrangements to oversee its smooth operation and will set out details in due course”.

Conclusion

48.These instruments are part of a wider package of measures. We note that important elements of the Government’s approach are work in progress and that while the aim is to simplify and strengthen trade between NI and the rest of the UK, the arrangements are nevertheless complex, with two separate regulatory systems continuing to interact in NI. We welcome the Government’s commitment to produce guidance on many of the measures; this should be done at the earliest opportunity to provide clarity to businesses and other stakeholders on how the new arrangements should be applied in practice. The Government should also engage with the Devolved Governments on the planned further measures and, in particular, with all communities in NI to promote understanding of, and support for, the new arrangements across all parts of the UK.

School and Early Years Finance and Childcare (Provision of Information About Young Children) (Amendment) (England) Regulations 2024 (SI 2024/66)

Date laid: 22 January 2024

Parliamentary procedure: negative

Amongst other measures, this instrument sets the parameters which local authorities (LAs) must use when deciding how to distribute the grant paid by central government to fund schools and early years (pre-school) provision for 2024–25. For schools funding, the Government is continuing to reduce LAs’ flexibility, with the aim of moving, over a number of years, to a system whereby each school’s funding is determined directly through national formulae without substantial local adjustment. For early years, the 2024–25 allocations and parameters cover the expansion of free childcare announced at the March 2023 budget and being introduced from April 2024. We asked the Department for Education (DfE) to comment on reports that there may be insufficient childcare places available to deliver these entitlements. DfE said it was “confident in the health of the childcare market and that sufficient places will be available” and that it was “working closely with all LAs” to deliver them. The House may wish to enquire further on the steps the Government is taking to ensure that parents who are entitled to the new aspects of childcare provision are able to access them in practice. We also report below relevant background information that was missing from the Explanatory Memorandum on the value of the grants for schools and early years provision.

These Regulations are drawn to the special attention of the House on the ground that they are politically or legally important or give rise to issues of public policy likely to be of interest to the House.

Background

49.Amongst other measures, these Regulations provide instructions on how local authorities (LAs) are to allocate their education and pre-school childcare (“early years” (EY)) budgets in the 2024–25 financial year.

50.Currently, central Government provides funding for LAs for schools, principally through the Dedicated Schools Grant (DSG). This part of the DSG is determined by the National Funding Formula (NFF), which calculates notional school-level funding allocations based on factors such as the number of pupils and the levels of ‘high needs’ in the area and aggregates these allocations to provide LAs’ total DSG funding. However, LAs are then able to make decisions on how they distribute their DSG to individual schools, within constraints applied by the Government.

51.The DSG also provides LAs with funding for early years provision, based on the places actually delivered by the LA. Again, LAs have some discretion over how they allocate that funding, within parameters set centrally.

52.These Regulations provide the parameters that LAs must abide by when allocating their schools and early years funding for 2024–25. The instrument does not set the overall levels of funding, either for schools or for EY. The levels of NFF funding for 2024–25 were announced in October 2023.20 For EY, the hourly funding rates were announced in November 2023.21 Indicative funding allocations for individual LAs were published on 19 December 2023.22

Schools funding

53.As described above, LAs currently have some flexibility about how each school’s budget is determined. However, the Government’s intention is to move to a ‘direct’ NFF, whereby each school’s funding is determined directly through national formulae without substantial local adjustment. 2024–25 will be the second year of transition towards the direct system, and the Government is again reducing the extent to which LAs can diverge from the NFF in their allocations. Changes for 2024–25 include on the ‘split sites’ factor, the adjustments for growing or falling school rolls and the ‘London fringe’ adjustment. The Department for Education (DfE) has not yet set a date at which direct NFF will be implemented in full, but states that, in practice, over two-thirds of LAs already “mirror” the NFF in their local formulae.

54.DfE says that the NFF will provide an average per pupil increase in funding of 1.9% for mainstream schools in 2024–25. We asked DfE how this was justified, given that recent inflation rates have been significantly higher. DfE replied:

“Overall, the core schools budget (which includes funding through the mainstream schools NFF, but also includes high needs funding, additional funding for schools to meet the costs of the 2023 teachers’ pay award, and funding for disadvantaged pupils through the Pupil Premium, as well as some other smaller elements of funding) will rise to over £59.6 billion in 2024–25, which will be the highest ever level in real terms per pupil as measured by the GDP deflator.”

55.The House may wish to enquire further on the overall adequacy of LAs’ schools funding, especially in light of recent reports of significant deficits in education budgets.23

Early Years funding and capacity

56.The EY allocations include funding to cover the expansion of free childcare announced at the March 2023 budget.24 The Regulations also extend many of the additional features of existing EY funding, including the Early Years Pupil Premium (EYPP), available to parents in receipt of certain benefits, and the Disability Access Fund, to the new cohorts. For the EYPP, LAs will now be able to provide it at or above a rate of 68p per hour, whereas previously they had no flexibility to provide anything other than the set amount (initially 60p per hour in 2023–24, then increased to 66p in September 2023). LAs would have to fund any such higher expenditure from their existing budgets.

57.The Explanatory Memorandum (EM) to the Regulations recognises that there may be “sufficiency issues” in the provision of services for two-year-olds. Following press coverage of the possibility that there will not be enough nursery staff and childminders available to deliver the expansion of childcare,25 we asked DfE whether it was confident that sufficient two-year-old places will be available in April, and nine-month-old places in September. We also asked about reports that providers still did not know how much they would be paid for the additional services, making it difficult for them to plan for the expansion.26 DfE responded:

“The hourly funding rates at which the DfE will fund LAs for delivering early years entitlements provision in 2024–25, via the Dedicated Schools Grant, were published on 29 November 2023 and indicative funding allocations for individual LAs were published on 19 December 2023. As with previous years, the regulations require LAs to inform providers of their initial budgets for all the early years entitlements by 31 March 2024. We are encouraging LAs to complete this process as far ahead of the deadline as possible, to give providers sufficient time for business planning. [ … ]

Regarding sufficiency, under section 6 of the Childcare Act 2006, LAs are responsible for ensuring, so far as is reasonably practicable, that the provision of childcare is sufficient to meet the requirements of working parents in their area. Further, section 7 of the Childcare Act 2006 and regulations made under section 2(1) of the Childcare Act 2016 place duties on LAs to secure free early years provision of the prescribed description for each young child in their area who is under compulsory school age and is of the prescribed description. Further information on the duties on LAs and guidance on how they discharge them is detailed in the Early Education and Childcare statutory guidance.27 [ … ]

The DfE has regular contact with each LA in England about their sufficiency of childcare and any issues they are facing. Where LAs report sufficiency challenges, we discuss what action the LA is taking to address those issues and where needed, support the LA with any specific requirements through our childcare sufficiency support contract.

Funding allocated to LAs for early years is demand-led, i.e. DfE funds for the places actually delivered by LAs. DfE adjusts LA funding allocations based on actual take-up as recorded by LAs (and schools for school-based settings) on annual censuses (and in 2024–25, via additional termly headcounts, for the new entitlements). We adjust the final funding allocations for LAs based on the census figures.

Ministers are confident in the health of the childcare market and that sufficient places will be available. This was addressed in the House of Commons in an Urgent Question on 22 January 2024.28 The DfE is working closely with all LAs on the delivery of the childcare expansion as announced at the Spring Budget last year.”

58.These Regulations also seek to address possible shortfalls in supply by giving LAs the power to apply to the Secretary of State to disregard a requirement to fund provision for disadvantaged two-year-olds at least equally to the provision for two-year-olds of working parents—thus enabling LAs to pay more for standard two-year-old places, to meet demand. DfE said that such requests will only be considered in limited circumstances, for example where there are sufficiency issues locally.

59.The House may wish to enquire further on the steps the Government is taking to ensure that parents who are entitled to the new areas of childcare provision are able to access them in practice and that sufficient funding is available.

Costs of the measures

60.These Regulations do not themselves give rise to costs, as their purpose is to set out the requirements on how local authorities should determine funding allocations provided by the DSG. Nevertheless, we consider that the total costs are important background information. They should have been in the EM, and we request that DfE includes the data in the EM accompanying next year’s instrument. DfE provided us with the following figures, comparing funding in 2024–25 with the previous year:

Table 1: DfE grants to LAs for schools and EY provision, 2023–24 and 2024–25

£ million	2024–25	2023–24
Three- and-four-year-old universal and additional hours entitlements (1)	3,730	3,352
Two-year-old entitlements (2)	1,517	413
Under two-year-old entitlement (3)	650	n/a
Early Years Pupil Premium (4)	70	40
Disability Access Fund (5)	40	21
Maintained Nursery School supplementary funding (6)	85	70
Total Early Years funding (total of (1) to (6))	6,091	3,897
Total Dedicated Schools Grant allocation	62,173	57,139

Notes

• In 2023–24, two-year-old entitlement was for disadvantaged children only. In 2024–25 it is for both disadvantaged two-year-olds and two-year-old children of working parents.
• 2023–24 figures are based on the initial DSG allocations published in November 2023. 2024–25 figures are based on the indicative DSG allocations published in December 2023.
• Maintained Nursery School supplementary funding is not directly relevant to the query but is included as it is a component within the early years block.

Education (Student Fees, Awards and Support) (Amendment) Regulations 2024 (SI 2024/85)

Date laid: 25 January 2024

Parliamentary procedure: negative

These Regulations include setting the annual increase in the maximum amount of student maintenance loans, which are designed to reduce barriers to participation in further education, at 2.5% for the academic year 2024–25. As in previous years, the uprating is based on forecast inflation. We note that DfE continues to use a discredited measure of inflation for this purpose.

Between 2020–21 and 2022–23, actual inflation was significantly higher than the forecasts used in the upratings for those years had predicted. As a result, the real-terms value of the student loan has fallen, by as much as 22% on one measure. These Regulations make no attempt to reverse this erosion of purchasing power, and so the policy intention of these upratings, that students should not suffer a real reduction in their income, has not been met over this period. However, restoring the real value of loans could cost as much as £681 million in 2024/25 and £967 million in 2025/26.

We were disappointed by the information DfE provided to facilitate parliamentary scrutiny and public understanding of these Regulations. The Explanatory Memorandum (EM) was lacking basic information on why the policy was chosen, and a key piece of supporting material, the Equality Impact Assessment (EIA), which contained some criticisms of the policy, was not laid at the same time as the instrument. Even when published, the EIA was not made easy to access. We reiterate that an EM should include an explanation of the “why” as well as the “what” of the policy and should address any known concerns. We hope that the new format of the EM, described in the Government’s response to our Work of the Committee in Session 2022–23 report and which will become mandatory from 1 April 2024, will help in improving the quality of such explanatory material.29 All relevant supporting information should also be laid at the same time as the instrument. We expect DfE to review and improve its approach when it lays the equivalent instrument for the 2025–26 uprating.

These Regulations are drawn to the special attention of the House on the ground that the explanatory material laid in support provides insufficient information to gain a clear understanding about the instrument’s policy objective and intended implementation.

Background

61.Amongst other changes to financing for students in higher and further education, these Regulations introduce the annual increase in the maximum amount of further education maintenance loans, intended to cover living costs. Students can also apply for loans to cover tuition fees, but they are not the subject of this instrument.

62.The Department for Education (DfE) has said that the rationale for providing loans and grants to students is that, without Government intervention, a lack of access to finance would represent a barrier to participation in higher and further education.30 DfE concluded that without state assistance, only those students who could fund the costs of their studies through private means would be able to participate in higher education.

Explanation of the uprating

63.The Regulations provide that maximum maintenance loans will increase by 2.5% in 2024–25 compared with 2023–24. Regrettably, the Explanatory Memorandum (EM) to the Regulations, the purpose of which is to explain both what the policy is and why it has been chosen, contained no information on the rationale for the 2.5% increase. At our request, the EM was revised and relaid to include a footnote explaining the approach, but this should not require our intervention. The EM was deficient in this respect; when the equivalent instrument is laid next year, the EM should contain a prominent explanation of DfE’s reasoning and methodology.

64.In response to our questions, DfE stated that the 2.5% uprating is based on the Office for Budget Responsibility’s (OBR) latest forecast for the rate of inflation for the first quarter (Q1) of 2025, being roughly mid-way through the 2024–25 academic year, and that the inflation index used was the Retail Prices Index excluding Mortgage Interest Costs (RPIX).31

65.RPI-based measures of inflation are outdated: the UK Statistics Authority has said that it “continue[s] to urge the Government and others to cease to use the RPI. It would be wrong for the Government to continue to use a measure of inflation which it itself accepts is flawed”.32 When we reviewed the equivalent instrument last year, DfE told us that it was using RPI to promote consistency as the same index is also used in other parts of the student loan system. However, in our report on those Regulations, we noted that it was open to the Department to change the reference index more widely and suggested that DfE consider whether its continued use of RPIX was appropriate.33 In response to our question this year on whether it had indeed considered using other measures, DfE replied:

“The alternative of using a CPI forecast instead of RPIX for 2024/25 would have resulted in students receiving less support. The equivalent forecast CPI figure for the first quarter of 2025 published by the OBR in its November 2023 ‘Economic and Fiscal Outlook’ Supplementary Economy Table is 2.3%, lower than the 2.5% RPIX forecast for the same quarter. The Department has used the latest available forecast for RPIX.

The Office for National Statistics is reforming RPI in 2030, bringing the methods of CPIH into RPI. Annual RPI inflation has historically been around 1 percentage point higher than CPIH.”

66.This response does not address the principle of why DfE is still using a measure that the Government itself describes as “flawed”: the House may wish to enquire further.

Upratings not keeping up with past and current inflation

67.We note that the 2.5% uprating for 2024–25 follows increases of 3.1% for 2021–22, 2.3% for 2022–23 and 2.8% for 2023–24,34 based on inflation forecasts at the times the upratings were announced. As the table below shows, the increases for 2021–22 and 2022–23 were well below actual inflation rates in those years, whether inflation is measured by DfE’s preferred measure, RPIX, or the Office for National Statistics’ preferred measure, the Consumer Price Index (CPI):

Table 2: Rates of increase of maximum student maintenance loans compared to two inflation measures, 2020–21 to 2023–24

%	Maximum student maintenance loan	RPIX	CPI
2020–21 to 2021–22	3.1	9.3	7.0
2021–22 to 2022–23	2.3	11.3	9.3
2022–23 to 2023–24	2.8	2.8	2.8
2023–24 to 2024–25	2.5	n/a	n/a

Note:

Average inflation rates for 2020–21 to 2021–22 and 2021–22 to 2022–23 are calculated as the difference between the average index for these measures between September and August of each period. For 2022–23 to 2023–24, the inflation measures are the change between September 2023 and December 2023 (the latest available).35

68.In its Equality Impact Assessment (EIA) to the changes, DfE stated that the aim of increasing the maximum level of student support by forecast inflation was to “ensure that students do not suffer a real reduction in their income”.36 However, the EIA recognised that the discrepancy between forecast and actual inflation means that the Regulations do not deliver this aim in practice. For example, the EIA stated that “a 21.6% uplift in 2024/25 would be required to maintain the value of maximum loans and grants for living and other costs in real terms as measured by RPIX using 2020/21 as the baseline and a 15.5% uplift would be required as measured by CPI.”

69.The EIA commented further that “a 2.5% increase to grants and loans for 2024/25 may lead to a further erosion of students’ purchasing power and will not provide any catch up of the real terms losses already seen by students in the 2023/24 academic year”. The assessment concluded that, overall, “these proposed changes will have a negative impact for students”.

70.We asked DfE why the uprating is considered adequate, given the erosion in the real-terms value of loans. DfE replied:

“Decisions on student finance have had to be taken to ensure the system remains financially sustainable and the costs of higher education are shared fairly between students and taxpayers, not all of whom have benefited from going to university [ … ].

The loan for living costs is a contribution towards a student’s living costs while attending university rather than covering those costs in full, with the highest levels of support paid to students from the lowest income families who need it most.

Financial support may be provided by the student’s parents or partner. But there are several other sources of funding available for students. These could be part-time employment, savings, university bursaries and scholarships and Local Authority support such as the Higher Education Bursary.

The timetable for implementing and legislating for changes to student support prevents us from making ‘in-year’ changes to support to address increases or reductions in actual inflation.”

71.While some students may have access to some other sources of funding, this will not be the case for all. We conclude that the upratings applied to maintenance loans have not fulfilled DfE’s stated purpose for them, which is to ensure that students do not suffer a real reduction in their income.

72.The EIA found that certain groups, including women, mature students, those on low incomes and ethnic minority students would be particularly adversely affected by the real-terms decrease in the value of loans over recent years.

Hardship funding

73.In the EIA, the Government stated that it had made a total of £286 million of “student premium and mental health funding” available for 2023–24. This compares with just over £8 billion of total maintenance support loans per annum in recent academic years.37 DfE told us that the hardship and mental health support allocation for 2024–25 would be published by the Office for Students “in advance of the start of the relevant academic year”.

Implications for the public purse

74.Higher levels of maximum student loans lead to higher costs to taxpayers because not all of the loans are repaid. We asked the DfE how much the 2.5% upgrade would cost the public finances, relative to: (i) no increase at all; (ii) the increase that would be required to restore the real value of maximum living cost loans to that of 2020–21, based on CPI; and (iii) the amount that would be necessary to compensate for the difference between forecast and outturn inflation for 2021–22, 2022–23 and 2023–24, based on RPIX. DfE provided us with the following estimates, which are in present value terms (in other words, discounting future streams of income and costs to a single figure), and which suggest that restoring the real value of student maintenance loans to their 2020/21 level would have significant implications for the public finances:

• The planned 2.5% increase costs £74 million in 2024/25 and £107 million in 2025/26 compared to freezing the level of loans in cash terms.
• A 15.5% increase, to restore the real terms value of loans to 2020–21 based on CPI, would (relative to the planned 2.5% increase) cost an additional £496 million in 2024/25 and £690 million in 2025/26.
• A 21.6% increase, to compensate for the difference between forecast and outturn RPIX inflation since 2020–21, would (relative to the planned 2.5% increase) cost an additional £681 million in 2024/25 and £967 million in 2025/26.

Information provision

75.The information provided by DfE to support the instrument was inadequate in several respects.

76.First, the first EM that DfE laid was simply a cut and paste of the equivalent from last year’s instrument, without updating any of the key information (such as the applicable academic year and the amount of the uprating). DfE replaced this EM rapidly, but this is a basic error that should not have been made.

77.Second, as described above, the initially relaid EM contained no explanation for why the changes being implemented–in particular, the 2.5% increase–had been selected.

78.Third, the EIA, which provides important information on the impact of the instrument and, as described above, is in some respects critical of the policy, was not laid at the same time as the instrument and was not summarised in or linked to from the EM. Instead, the EM said only that the EIA “is being published on the GOV.UK website in January 2024 after these regulations are laid” and that a hard copy would be available on request from the department. In fact, the EIA was published the day after the instrument was laid.

79.Fourth, an EM should acknowledge and address significant concerns about the policy, which in this case would include those raised in the EIA. The EM did not contain this information and DfE did not provide any reasons for this omission. Nor did it provide any reasons why the instrument could not have been published one day later, or the EIA one day earlier, with appropriate references and links between the two, to ensure that all information was easily accessible to the reader.

80.At our request, the EM was revised and relaid again, to include a link to the EIA (as well as to include an explanation of why the 2.5% uprating was chosen). However, making such important information readily available should not require our intervention. When DfE lays the instrument to set the maximum loans for 2025–26, we expect the accompanying EIA to be available, be summarised and linked to in the EM, and be included on the ‘More resources’ page on legislation.gov.uk. Alternatively, an explanation should be included in the EM as to why that is not the case.

81.Fifth, the EM’s description of the consultation process and the impact assessment was also cursory. On consultation, the EM said that “there is no statutory requirement to consult”. It further stated that “drafts of the instrument had been sent to the Student Loans Company (SLC) for their review and comment”, but did not discuss the SLC’s feedback. In response to our questions on the SLC’s views, DfE said that “where required, changes to drafting were made to ensure the SI fully met policy intent”. We have stated previously that a wider consultation may be suitable, even where there is no statutory requirement;38 an EM should explain why this was not appropriate in any particular case. We have also encouraged greater openness about any feedback received.

82.On impact, the EM said that “the impact on the public sector is minimal” and that “an Impact Assessment [IA] has not been prepared for this instrument because there is no significant impact on business and this SI relates to the maintenance of existing regulatory standards” (for which there is an exemption from the requirement to produce an IA). We are not clear why the ‘existing regulatory standards’ exemption applies in this case and, anyway, the EM should have included data on the impact to the public sector (such as that set out in the section on the implications for the public purse, above).

83.We encourage DfE to review its approach to providing consultation and impact information prior to laying the equivalent instrument for the 2025–26 uprating.

Conclusion

84.These Regulations include the annual uprating of the maximum level of student maintenance loans for 2024–25. As in our report on the equivalent instrument last year, we note that the uprating does not attempt to restore any of the loss of real-terms value in these loans since 2020–21. The policy intention that students should not suffer a real reduction in their income has therefore not been met over this period. We also repeat concerns about DfE’s methodology, particularly the use of a discredited measure of inflation.

85.In addition, we are disappointed by DfE’s overall approach to providing information to facilitate parliamentary scrutiny and public understanding of these Regulations. This is particularly evident in the absence of basic information in the EM, and in the separation of the Regulations from their EIA. We reiterate that an EM should include an explanation of why the policy approach has been taken and should acknowledge and address any concerns raised about the policy. All relevant supporting information should also be laid at the same time as the instrument. We expect DfE to review and improve its approach for the equivalent instrument for the 2025–26 uprating.

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