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Twenty First Report Contents

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Instruments of interest

Draft Contracts for Difference (Sustainable Industry Rewards) Regulations 2024

90.The purpose of this instrument is to introduce Sustainable Industry Rewards (SIRs) into the Contracts for Difference (CfD) scheme,31 the main renewable energy support scheme in Great Britain. The Department for Energy Security and Net Zero (DESNZ) explains that developers of low carbon technologies (such as solar, wind and geothermal) currently require a Supply Chain Plan (SCP) statement to access the CfD scheme. This instrument proposes to replace SCPs with SIRs for all offshore and floating offshore wind developers applying to the CfD. According to DESNZ, this is in response to SCPs having become less effective for offshore wind projects, as global supply chain costs have soared, and market pressures have inhibited long-term investments and more sustainable procurement choices “in favour of a race to the bottom in terms of costs and standards”.

91.Under these Regulations, SIRs are to provide extra revenue support to offshore and floating offshore wind applicants if they either invest in new factories in deprived areas closer to deployment zones to shorten supply chains, or if they choose more sustainable supply chain companies to build their projects. The extra support through SIRs is to be allocated via a competitive process before the main CfD auction, for CfD allocation rounds 7 to 9. CfD allocation round 7 is scheduled for 2025.

92.The instrument is supported by an Impact Assessment (IA) which is the first IA that we have considered that uses the new template under the revised Better Regulation Framework.32 We note, however, that this particular instrument was outside the scope of independent scrutiny by the Regulatory Policy Committee because levy-based measures, such as the CfD scheme, are excluded from the Framework. The Government says that the revised Framework aims to encourage the assessment of a wider range of impacts, such as on trade, innovation and net zero: we found Chapter 6 of the IA particularly helpful on that score. As noted in a recent Report,33 we will review whether the changes are delivering on their promises once sufficient examples of impact information under the revised Framework have been published.

Draft Procurement Regulations 202434

93.The intention of the Procurement Act 2023 (“the Act”) was to overhaul and update arrangements for the £300 billion UK public procurement market following the UK’s departure from the EU. It placed particular emphasis on simplification and transparency. These Regulations provide definitions and the operational detail to implement the Act:

• They set out provisions for an improved ‘noticing’ regime, covering the full lifecycle of public procurement, from planning through to contract expiry.
• They aim to embed transparency so that the spending of taxpayers’ money can be properly scrutinised.
• Other provisions: set out how contracting authorities should obtain specified information from suppliers; provide further detail on how certain organisations and contracts are to be regulated; extend the Act to cover devolved Scottish procurement in certain circumstances (reg 47); and disapply the Act in relation to healthcare procurement (reg 43).

The reforms also aim to open up public procurement to new entrants such as small businesses and social enterprises so that they can compete for and win more public contracts.

Registration and Inspection of Education, Children’s Services and Skills (Fees and Frequency of Inspections) (England) (Amendment) Regulations (SI 2024/315)

94.Amongst other changes, these Regulations increase by 20% the fees paid by most children’s social care providers to the Office for Standards in Education, Children’s Services and Skills (Ofsted) for regulation and inspection. The Department for Education (DfE) states that the fees paid by most providers do not cover Ofsted’s costs (but where providers are already at full cost recovery level, increases will be capped at the full cost rate).

95.To move closer to full cost recovery, increases of 10% have been applied every year since 2010, with the exception of 2020–21 and 2021–22 when fees were frozen due to the pandemic. However, DfE states that this year a 10% increase would have been inadequate because it would have moved providers further away from full cost recovery. DfE told us that this was primarily due to an unfunded 4.5% pay award for Ofsted staff and that a 4.5% overall increase in Ofsted’s costs is more, in pound terms, than a 10% increase in its fees, because fees are a significantly smaller number than costs.

96.DfE states that fees are a very small part of most providers’ overall costs; for example, the largest children’s homes pay £8,629 per year. DfE also told us that even after this year’s increase, only around 17% of providers will be paying full cost. DfE says that full cost recovery for all providers could be achieved by 2029–30 with a year-on-year 20% increase to fees, but that this would be subject to future Regulations.

Biocidal Products (Health and Safety) (Amendment and Transitional Provision etc.) Regulations 2024 (SI 2024/352)

97.Biocides are products and substances which are intended to kill or otherwise control harmful organisms. They are used to protect people and animals, preserve goods, stop pests such as insects or rodents and control viruses, bacteria and fungi. Common examples are disinfectants, wood preservatives and rodenticides. The Health and Safety Executive (HSE) states that these Regulations enable a transition to more modern test methods which do not require testing on live animals. The instrument also introduces a requirement to test for specific toxicological effects for which no reliable tests previously existed.

98.We have received a submission from the Green Alliance relating to some of the overarching policy issues, in particular potential divergence from the EU regulatory system and the Northern Ireland internal market. HSE has provided a comprehensive response, and both documents are published on our website.35

Countryside Stewardship (England) (Amendment) Regulations 2024 (SI 2024/391)

99.This instrument increases the payment rates for some Countryside Stewardship (CS) management activities, all of which make environmental improvements. The Department for Environment, Food and Rural Affairs (Defra) explains that CS agreements provide funding for farmers and others to make environmental improvements through activities such as: conserving and restoring wildlife habitats; managing flood risk; creating and managing woodland; reducing water pollution; and hosting school visits. CS agreements last for five, ten or 20 years.

100.The increases follow a review of prices for the 2024 harvest year. They will be for CS agreements which started on 1 January 2021 or 1 January 2022 under the Countryside Stewardship (England) Regulations 2020. The increases will align the rates with those paid under CS agreements which started under retained EU law (2016–2020) or under the Agriculture Act 2020 from 1 January 2023 onwards.

101.We have received a short submission from Wildlife and Countryside Link which suggested that the instrument could have introduced more effective and ambitious incentives to achieve environmental improvements in the context of the broader strategic plan to deliver environmental targets alongside food production. Defra replied that it was currently exploring how to “ensure that our land-based environment and climate targets are met in a cost-effective and equitable manner, while also maintaining food production”. The Department added that it was “committed to introduce a regular cycle of reviews of scheme actions and prices over a rolling 3-year period, starting in 2025” to keep prices up to date, while also “responding to farmer feedback and evidence to maintain progress towards our outcomes”. The submission and Defra’s response are available on our website.36

Immigration, Nationality and Passport (Fees) (Amendment) Regulations 2024 (SI 2024/398)

102.These Regulations increase the fees charged for a range of visa, nationality, Border Force, and passport application services. The Government’s intention is to raise the level of income generated through such fees and to move further towards the aim of a “substantially self-funding migration and borders system”. Changes include:

• Increasing fees for most passport applications and renewals by 7.5%. The Home Office told us that total income from passport fees was around 16% lower than the associated costs in 2022–23, and that the Government’s “long-term intention” is “to continue to move towards full cost recovery on an incremental basis”.
• Increasing certain work and visit visa fees that could not be raised in the last (autumn 2023) round of increases, because they were at their maximum levels. The Home Office has since increased those maxima.37
• Substantial increases to fees for some nationality services, such as citizenship ceremonies (rising by 63%) and copies of nationality certificates (by 60%). The Home Office told us that the fee for a ceremony was last increased in 2007 and that for a copy certificate in 2018, and that both remain at or below their unit cost.
• A 20% increase in the fee for Limited Leave to Remain applications, which could not be implemented with other related fees in autumn 2023 because of “technical issues” that have now been resolved.

Proceeds of Crime Act 2002 (References to Financial Investigators) (England and Wales and Northern Ireland) (Amendment) Order 2024 (SI 2024/425)

103.Amongst other measures, this Order adds the Public Sector Fraud Authority to the public sector bodies that have access to powers under the Proceeds of Crime Act 2002, and increases the powers of four existing bodies: the Security Industry Authority; the Food Standards Agency; the Environment Agency; and the Department for Work and Pensions. The Home Office states that the changes are necessary to ensure that “the investigative bodies of organisations are equipped with the right powers […] to investigate, disrupt and recover the proceeds of crime”. Powers also include searching for suspect property.

104.We asked the Home Office what steps these bodies are required to take to ensure proper use of these powers. The Home Office told us that there were “many safeguards” in place. These depend on how “invasive” the powers being exercised are, but may include a requirement for prior approval from a senior manager or from a Crown Court judge. There are also Codes of Practice on the exercise of functions and a court may take account of any failure to comply with a Code. It is essential that such safeguards exist and operate effectively. Whilst acknowledging the different context, the evidence presented to the Post Office Horizon IT Inquiry is a reminder of the importance of public bodies using their powers appropriately.

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