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Twenty Second Report Contents

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Instruments of interest

Draft Contracts for Difference (Miscellaneous Amendments) (No. 2) Regulations 2025

7.This instrument would extend the Contracts for Difference (CfD) scheme, the Government’s main mechanism for supporting low carbon electricity generation, to existing large-scale biomass electricity generators. The Department for Energy Security and Net Zero (DESNZ) explains that large-scale biomass generators, converted from coal, currently contribute around 5% of the UK’s electricity generation, but that after government support for some of these generators expires in 2027, there will not be enough incentives for them to continue generating electricity, leading to security of supply risks. This instrument would enable continued support for the Drax power station in Yorkshire, by far the largest biomass generator in the UK, and for any other existing large-scale generators if they provide value for money and meet the eligibility criteria. According to the DESNZ, alternatives to large-scale biomass generators are limited given their scale and dispatchability (that is electricity generation that can be programmed on demand to meet market needs) and the timescales involved. The DESNZ says that maintaining biomass electricity generation will increase resilience and support security of supply, and that the CfD scheme offers better value for money than other support schemes, such as the Renewables Obligation.3 The instrument would enable bespoke CfD contracts to be agreed for the period 2027–2031 and allow the sustainability obligations in CfD contracts with individual biomass generators to be modified, but not reduced, to reflect any potential changes arising from “wider government sustainability work”.

8.We note that during a recent consultation on a potential future mechanism to support the transition of large-scale biomass generators to using carbon capture and storage technology, many responses disagreed with the description of biomass generation as low carbon.4 The UK does not have sufficient forest to meet biomass demand and depends on imported wood, the majority of which is a byproduct of the US timber industry. The DESNZ says that the instrument is “consistent with the government’s wider strategic approach to the role of biomass set out in the Clean Power 2030 action plan”.5

Draft Whiplash Injury (Amendment) Regulations 2025

9.These Regulations would increase the prescribed amounts (‘tariffs’) of damages payable for pain, suffering and loss of amenity for road traffic accident whiplash or related injuries. The tariffs would increase by inflation, as measured by the Consumer Price Index, in the period since their initial introduction in 2021.6

10.The uprating system contains an unusual feature (the ‘buffer’) whereby tariffs are set not at current prices but at those including expected inflation over the next three years, using Bank of England inflationary forecasts. Asked whether a comparable arrangement has been used in other legislation, the Ministry of Justice (MoJ) told us that it was “not aware” of any other equivalent statutory mechanism. The MoJ explained that the arrangement deals with a “unique situation” as whiplash or related injuries are “the only case type” in which, under primary legislation, damages are covered by a fixed tariff with set statutory reviews built in. Under this mechanism, claimants receiving payments at the start of the period are overpaid in real terms, with this effect diminishing over time. The MoJ said that this system minimises the risks of claimants being undercompensated. We note that the corollary is that those paying claims (insurance companies and, ultimately, motor insurance policyholders) will be overpaying.

11.Following a review of the whiplash tariff, a report by the Lord Chancellor7 concluded that while the existing tariff mechanism was sufficient, its values should be updated to account for inflation since 2021. We regret that the report contains an inaccurate claim that the tariff arrangements could lead to a “cycle of delayed compensation”, as claimants would be advised to wait to settle until after the next tariff increase. Questioned about this, the MoJ apologised and acknowledged that this argument related to policy options that were discussed at an earlier stage, and that the MoJ “erroneously didn’t clarify this position in the report” before publication. The MoJ confirmed that under the tariff and under these Regulations, injuries will continue to be linked to the specific date of the accident, so that there will be no risk of a “cycle of delayed settlements”.

12.The Explanatory Memorandum (EM) stated that respondents to a consultation on the tariff were “generally supportive”. In relation to the buffer, the EM said only that “views differed”. In fact, more than 90% of respondents (29 out of 32) said that the buffer was not effective. Asked why this had not been reported in the EM, the MoJ said that the 90% figure “would be misleading without significant additional context”, which was that the reasons for believing the buffer to be ineffective varied: those representing claimants were in favour of annual reviews to protect against unexpected inflation, while those representing defendants felt the buffer artificially increased levels of compensation and undermined cost savings. While it is technically true to say that “views differed”, the overwhelming majority of respondents said that the buffer was not effective. This information should have been in the EM, which should provide a balanced view of the arguments for and against a policy, along with a summary of the Government’s response.

13.We received a submission from the Motor Accident Solicitors Society (MASS) which criticised that the introduction of the tariff and the Official Injury Claims (OIC) portal which is used to submit claims “has damaged access to justice, is not working for the benefit of consumers and has failed in many of its objectives”. The submission argues that the tariff was set too low from the beginning and that awards have been eroded since 2021, while settlement times have increased, and savings for policyholders have been less than forecast. The MoJ’s response highlights that the question of using a fixed tariff was settled “following extensive debates in both Houses during the passing of the Civil Liability Act 2018 by Parliament” and points to the inflationary impact of “unique economic circumstances” in the period between 2021 and 2024. The MoJ also emphasises that there was “demand for the greater choice the service provides with over 105,000 unrepresented claimants choosing to run their own claim via OIC between 31 May 2021 and 28 February 2025”. We have published the submission and MOJ’s response in full on our website.8

REACH Fees and Charges (Amendment of Commission Regulation (EC) No 340/2008) Regulations 2025 (SI 2025/299)

14.This instrument amends the fees that businesses have to pay if they apply for the registration of or authorisation to manufacture, import or use any substance regulated under UK REACH, the UK’s regime for the registration, evaluation, authorisation and restriction of chemicals. UK REACH was introduced to replace the EU chemicals regulatory regime (EU REACH) after Brexit.9 UK REACH is managed by the Health and Safety Executive (HSE) with support from the Environment Agency (EA); it applies in Great Britain (GB), whereas, under the Windsor Framework, EU REACH continues to apply in Northern Ireland (NI). The new fees will apply from 1 April 2025.

15.The Department for Environment, Food and Rural Affairs (Defra) explains that the current fees were inherited from EU REACH and do not reflect the actual costs of carrying out the regulatory activities under UK REACH or align with HM Treasury’s rules on Managing Public Money (MPM). According to Defra, the main imbalances are an over-recovery of fees for the registration of substances and an under-recovery of fees for processing authorisations; this imbalance is addressed by the new fees. The Explanatory Memorandum (EM) refers to an overall beneficial impact for industry and includes Annexes with a helpful comparison of the current and new fees. The Department told us that the changes are expected to lead to an overall reduction in cost for businesses of £38.9 million over a six-year cost recovery period (2025/26 to 2030/31). While Defra emphasises the uncertainty of forecasting future activity under UK REACH, we consider that it would have been helpful to include the total impact figure in the EM to indicate the scale of the expected cost reduction. We asked the Department about the impact of the different fees and regulatory regimes in GB and NI. Defra responded:

“If a GB business wanted to register a new substance in order to have access to both the GB (UK REACH) market and the NI (EU REACH) market then it would need pay a registration fee under both REACH regimes. An existing NI registration under EU REACH has no validity in GB. However, under UK REACH, provisions have been made for imports of existing NI chemical substances into GB that mean that the need for full registration with HSE is replaced with a more light touch notification which does not incur a registration fee unless it is a new substance that is being registered. No concerns have been raised by industry stakeholders about the impact of the changes we are making to the UK REACH fees to either GB companies placing substances on the GB market or vice-versa.”

16.We received a submission from CHEM Trust which raised a range of concerns, including about the resources available for managing UK REACH given the expected overall cost reduction for industry. Defra responded that the new fees were in line with MPM rules requiring that full costs are recovered only for the specific regulatory activities for which fees are charged, and that there will be new fees, for example to recover costs for the UK REACH IT Service and for the EA’s work supporting HSE in processing applications for authorisations. The submission also questioned the Department’s decision not to publish the draft accounts and forecasts relating to UK REACH activities for the coming year. Defra responded that while the HSE provided the draft annual accounts and forecasts to UK, Scottish and Welsh Government Ministers for sign-off, the Department was “not required” to publish the information and had “no plans to do so”. We accept that there is no publication requirement, but we consider that it would have been helpful to publish financial information given the absence of an impact assessment for this instrument and the public interest in UK REACH, and to increase transparency in relation to the resourcing of the regulatory regime.

17.Broader concerns raised in the submission about the policy approach under UK REACH go beyond the fee changes made by this instrument. The Department said that Ministers were “still considering the future direction of chemicals policy, including UK REACH”, and that the Department was continuing its “wider ongoing engagement with CHEM Trust, other NGOs [Non-Governmental Organisations] and industry”. We have published the submission and Defra’s response in full on our website.10

Court and Tribunal Fees (Miscellaneous Amendments) Order 2025 (SI 2025/351)

18.This instrument includes changes to a wide range of fees across the court and tribunal system. In the majority of cases, fees are being increased by inflation, as measured by the Consumer Price Index. Some fees are not being increased, for reasons including preserving access to justice for vulnerable users and where the fee is a proportion of the claim value.

19.In 24 cases, the fee level is being reduced. This follows a review by the Ministry of Justice (MoJ) into the costs of providing court services. We commented on the review in our 18th Report, regarding an instrument that would restate three fees so that they could be above the revised cost of providing the service.11 We noted then that the MoJ intended to reduce the other fees found to be above cost. This instrument contains those reductions.

20.We observe that, overall, the fee changes are expected to increase income by £9 million to £12 million, compared to total fees of £743 million and overall running costs for the courts system of £2.6 billion in 2023/24. The increase in income is therefore less than inflation, resulting in increases in the extent to which the taxpayer must contribute to the system to preserve access to justice.

21.We regret that there was an error in the original Explanatory Memorandum (EM), which referred to 29 fees, of which three had been restated and 24 were being reduced. The EM has been revised to refer to 27 fees in total, but this continues the pattern that we have seen in this session of basic mistakes in EMs; there is a further such instance in relation to the Motor Vehicles (Driving Licences) (Amendment) (No. 3) Regulations 2025 elsewhere in this report.

Social Security Benefits Up-rating Regulations 2025 (SI 2025/352)

22.This instrument makes amendments consequential to the annual uprating of social security benefits.12 Among other things, it increases the amount that recipients of Carer’s Allowance can earn, as announced in the Autumn Budget 2024,13 and prevents the State Pension uprating applying to some recipients of the State Pension who reside overseas. The State Pension is only uprated for recipients overseas where there is a legal requirement to do so, such as where the UK has a reciprocal agreement with a country that provides for uprating.14 The Department for Work and Pensions (DWP) estimates that around 40% of overseas recipients of the State Pension (437,000 people) do not receive the uprating, and we understand that their State Pension remains at the rate they first received. The DWP says the policy on uprating the State Pension for overseas recipients has been in place for over 70 years, with priority being given “to those living in the UK when drawing up expenditure plans for additional pensioner benefits”.

23.We received a submission from the End Frozen Pensions Campaign. The submission and the DWP’s response are published in full on our website.15 The submission argues that the policy creates a “dual State Pension system” whereby two people who have made the same level of contributions during their working lives, enabling them to qualify for the full State Pension, may receive different levels of State Pension depending on the country they have moved to. In response, the DWP said that National Insurance contributions paid in any year fund benefit expenditure in that same year, and that contributions paid have “never been connected in any way to the indexation of State Pension payable abroad”. The DWP added that the policy has been challenged in, and upheld by, several UK courts and the European Court of Human Rights. It also said that successive UK Governments have honoured their legal obligations to uprate the State Pension for overseas recipients where required to do so.

24.The submission claims that the majority of affected recipients receive a State Pension of £60 per week or less, compared to the full Basic State Pension that is worth £176.45 per week in 2025/26. Asked what assessment it has made of the impact of the policy on affected recipients, the DWP said that “no recent assessment has been made or is planned”. Given the policy has been in place for many years, the House may wish to ask the Minister if they have considered updating their assessment.

25.The submission also claims that awareness of the policy is low, with 86% of affected recipients being unaware that their State Pension would not be uprated when they left the UK. In response, the DWP said information about the policy is published online16 and further advice can be obtained from the International Pensions Centre. The House may wish to ask the Minister what further action could be taken to increase awareness of the policy.

Motor Vehicles (Driving Licences) (Amendment) (No. 3) Regulations 2025 (SI 2025/356)

26.This instrument increases the notice period which candidates are required to give when cancelling a category B (car) practical driving test from three to ten working days, without losing the fee paid. The change is intended to reduce the number of wasted test appointments; the Driver and Vehicle Standards Agency (DVSA) says it is difficult to make test appointments available to other candidates with three working days’ notice. The DVSA told us that the average waiting time for a car practical driving test in February 2025 was 21.3 weeks (almost five months). It says this is, in part, caused by learner drivers, who are not yet ready to take their test, booking appointments because they have heard that waiting times are high. We asked how many test appointments the change will avoid wasting. The DVSA replied that in 2023/24, around 232,000 tests were cancelled with between three and ten working days’ notice, and that it anticipates “some” of these tests could be made available to other candidates. This change is part of a wider package of measures aiming to reduce the waiting time to seven weeks by December 2025.17

27.As well as reducing wasted test slots, the original Explanatory Memorandum (EM) stated that the change is also designed to encourage better candidate preparedness but did not explain how. Asked about this, the DVSA said it is making this change “not to increase candidates’ preparedness”. At our request, the DVSA has revised the EM, but we regret that it got such basic information wrong in the EM. We commented on similar examples of basic errors in explanatory material in three of our most recent reports, and there is a further instance elsewhere in this report.18 In each case, it has required our intervention to ensure that EMs are accurate on basic points; this is an unsatisfactory and concerning trend.

Immigration, Nationality and Passport (Fees) (Amendment) Regulations 2025 (SI 2025/363)

28.These Regulations contain a number of changes to fees associated with immigration services and the issuing of passports, with the aim of generating additional income from users of the migration and borders system and reducing reliance on taxpayer funding. Many of the immigration fees, for example an increase in the cost of Electronic Travel Authorisations, were foreshadowed by an earlier instrument, on which we commented in our 16th Report.19

29.Amongst other provisions, the Regulations revise the fees for the English language proficiency and qualifications equivalency services provided by Ecctis Limited (“Ecctis”) on the Home Office’s behalf. We brought two earlier instruments, that corrected the situation whereby these fees had been charged without the necessary statutory authority, to the special attention of the House in our 3rd and 14th Reports of this session.20 These Regulations follow the signing of a new contract with Ecctis. The changes include the removal of the cheapest and most frequently used service, the standalone English language proficiency service, which means that the fees for most customers will rise from (in effect) £147.50 to £210. The Home Office states that this is to cover the cost of enhanced fraud checks, given that there is “strong evidence” that around 5% of applications include documents that are not genuine. The Home Office also notes that there are other ways in which applicants can meet the English language requirement. As in another related instrument,21 the Home Office reports that Ecctis has made a commercial decision not to include a profit margin on the new contract with the Home Office.

30.The Regulations also increase the fees for standard and priority passport services by around 7%, again with the aim of moving closer to cost recovery. The Home Office told us that, in 2023/24, passport fee income was £629 million, compared to overall costs associated with the passport system (including the cost of operating HM Passport Office) of £852 million. We note that passport fee income fell significantly from 2022/23 (£712 million). We asked why this had occurred. The Home Office responded that this was due to unusually high volumes of applications in 2022/23, as a result of latent demand following the travel restrictions during Covid-19, in which significantly fewer applications than usual were made.

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