Second Report Contents

Instruments of interest

Draft Contracts for Difference (Electricity Supplier Obligations) (Amendment) Regulations 2024

108.The purpose of this instrument is to enable future payments to be made to natural gas-fired power plants which are fitted with carbon capture usage and storage technology (power CCUS). According to the Department for Energy Security and Net Zero (DESNZ), power CCUS will be needed to provide non-weather-dependent on-demand low-carbon electricity, strengthen energy security and reduce reliance on unabated fossil fuels. Any future payments would be made through Dispatchable Power Agreements (DPA) under the Contracts for Difference scheme, the Government’s main mechanism for supporting low-carbon electricity generation and would be funded through a levy on electricity suppliers which may pass on the costs of the levy to their customers.

109.While the Explanatory Memorandum does not refer to these costs, the Impact Assessment (IA) states that any price increase would be “small”, adding that a cost analysis has not been provided “as any accurate approach to estimation would reveal the government’s expectation around the value of the DPA payments and they are still to be negotiated”. Given public concerns about high energy bills, we asked the Department for further information. The DESNZ explained that the purpose of the IA was to consider the cost effectiveness of implementing the policy rather than the final impact on consumers, but the Department provided an indicative cost estimate of £5-£15 per year for an average household electricity bill. The DESNZ emphasised the uncertainty of any cost estimates and highlighted that without power CCUS, alternative scenarios would have higher system costs. The Department’s full response is included in Appendix 2 .

Draft Financial Services and Markets Act 2000 (Ombudsman Scheme) (Fees) Regulations 2024

110.The Financial Ombudsman Service (FOS) considers customer complaints against financial services firms. These Regulations would allow FOS to charge fees to Claims Management Companies (CMCs) and legal professionals bringing cases to the FOS on behalf of complainants. The aims include: recognising that such intermediaries gain an economic benefit from bringing a case (typically, a share of any redress paid); and improving behaviour amongst some CMCs—for example, by reducing the volume of poorly evidenced complaints. HM Treasury notes that consumers always have the option of bringing complaints directly to FOS, without using an intermediary company.

111.The Financial Services and Markets Act 2023 enabled these changes by allowing the Government to add to the list of persons to whom the FOS can charge fees, with the express intention that FOS could levy fees on intermediaries. However, the final decision on whether to levy such fees, and at what level, is left to FOS. In May 2024, FOS consulted34 on a proposal that the fee should be £250, but reduced to £75 if FOS finds in favour of the claimant. FOS argued that the changes should not result in increases to the fees paid by consumers, because CMCs are subject to a price cap (introduced in 2022 as part of the Financial Conduct Authority’s existing supervision of CMCs), with most CMCs already charging at this maximum level, and the cap would not be increased in response to the new fees.

Human Medicines (Amendments relating to the Windsor Framework) Regulations 2024 (SI 2024/832)

112.When the Northern Ireland Protocol was agreed, medicines were included in Annex 2 to the Protocol, which meant that EU medicines regulations applied in full in Northern IreIand. This caused regulatory barriers to the supply of medicines from Great Britain to Northern Ireland. In addition, the application of the EU’s Falsified Medicines Directive created a further disincentive for suppliers, because it applied specific packaging, barcoding and scanning requirements in Northern Ireland but not in Great Britain.

113.Facilitated by the Windsor Framework, from 1 January 2025, these Regulations reestablish a UK-wide licensing regime overseen by the Medicines and Healthcare products Regulatory Agency (MHRA). This regime includes novel medicines, such as cancer medicines, which previously had to be authorised for use in Northern Ireland by the European Commission. The EU rules around Falsified Medicines are permanently disapplied in Northern Ireland, meaning that the same medicinal products, in the same packs with the same labels, will be available across the whole UK, although all medicines on the UK market will have to be labelled as ‘UK Only’.

M6 Motorway (Junctions 21a to 26) (Variable Speed Limits) Regulations 2024 (SI 2024/841)

114.A report by the House of Commons’ Transport Select Committee in November 2021 raised a number of safety concerns about the operation of smart motorways.35 The then Secretary of State for Transport accepted all the report’s recommendations including suspending the rollout of further smart motorways until five years’ worth of safety data had been collected. In April 2023, the Government announced that no new smart motorways would be built.36 Two schemes that were nearly complete at the time were excepted: these Regulations enable the variable speed limits that are essential to the operation of the second of those schemes.

115.Our 5th Report of Session 2022–2337 was sharply critical of the regulations for the first excepted scheme because the Explanatory Memorandum (EM) made no mention of the Transport Committee’s report or the safety concerns. In contrast, the EM to the current Regulations sets out all the issues clearly, noting, for example, that this 10 mile section of the M6 will now include 22 Emergency Areas all spaced within the three quarters of a mile maximum recommended by the Transport Committee, and Stopped Vehicle Detection will be in place when it opens.

116.So far, three years’ worth of safety data has been published.38 A separate comparison of accidents on the roads before and after the smart motorway adaptions notes that most smart motorway schemes have seen a reduction in serious injury rates:39

“Based on available data so far, most ALR [All lane running], DHS [Dynamic Hard Shoulder] and controlled motorway schemes (25 out of 37) have seen a reduction in PIC [Personal injury collision] rates after they were constructed both against the before and the counterfactual. Most schemes (32 out of 37) have also seen a reduction in FWI [fatal and weighted injury] rates. This has also been the case for most schemes (29 out of 37) for the KSI [killed and seriously injured] rates.”

117.This implies that (depending on category of injury) between 13% and 32% of schemes have not seen improvements in their serious injury rates: the House may wish to pursue the safety of existing smart motorways further with the Minister.

Medicines (Gonadotrophin-Releasing Hormone Analogues) (Emergency Prohibition) (Extension) Order 2024 (SI 2024/868)

118.This made affirmative instrument extends, for another three months, the ban on dispensing private prescriptions and those issued in European Economic Area countries for certain drugs to be used to suppress puberty in under 18s. The original Order40 was in force from 3 June to 2 September 2024 in Great Britain: this new Order extends the same restrictions until 26 November 2024 and also covers Northern Ireland. The prohibition was made because the independent review of gender identity services for children and young people, the Cass Review,41 found that the use of these medicines for the treatment of gender dysphoria or gender incongruence was not supported by a reliable evidence base. After careful consideration, the new Secretary of State has decided to renew the banning Order and to consult on making these restrictions permanent. The Department told us that it had issued a targeted consultation to circa 100 representative organisations of those potentially impacted by a permanent order on 20 August 2024. The consultation will run for six weeks until 1 October 2024.

Draft Pensions Regulator’s Defined Benefit Funding Code of Practice 2024

119.This revised Code for Defined Benefit Pensions follows up Regulations laid earlier this year.42 In particular, the revised Code recognises that most of the 5,000 defined benefits schemes are now closed with maturing assets worth approximately £1.3 trillion. The law now explicitly requires these schemes to have a Funding and Investment Strategy setting out how members’ benefits are to be funded over the long term. We are pleased to note that the Code has been subject to extensive consultation and clarified to assist the industry in complying with The Pensions Regulator’s expectations, as we remain concerned about the cumulative burden of so much regulation on schemes. Once in force, the Code will replace the 2014 version of the Code,43 for valuations with effective dates on or after 22 September 2024.

120.The Code is required to lay before Parliament in draft for 40 days before it can be brought into effect. Because of Dissolution, there will be a gap between the date when the requirements of the previous Regulations start applying and when the revised Code can come into force. We have been told by the Department for Work and Pensions that The Pensions Regulator will communicate with affected schemes and take a reasonable regulatory approach to them.


34 Financial Ombudsman Service, ‘Charging Claims Management Companies and other professional representatives: Consultation paper’ (23 May 2024): https://www.financial-ombudsman.org.uk/files/324432/Consultation-charging-claims-management-companies-and-other-professional-representatives.pdf [accessed 27 August 2024].

35 House of Commons Transport Committee, Rollout and safety of smart motorways (Third Report, Session 2021–22, HC 26).

36 GOV.UK, ‘All new smart motorways scrapped’ https://www.gov.uk/government/news/all-new-smart-motorways-scrapped [accessed 29 August 2024].

37 House of Lords Secondary Legislation Scrutiny Committee, M56 Motorway (Junctions 6 to 7) (Variable Speed Limits) Regulations 2022 (Fifth Report, Session 2022–23, HL paper 28) called attention to M56 Motorway (Junctions 6 to 7) (Variable Speed Limits) Regulations 2022 (SI 2022/607).

38 National Highways, Smart motorways stocktake : Third year progress report September 2023 (September 2023) p 44 onwards: https://nationalhighways.co.uk/media/rarb00qi/smart-motorways-third-year-progress-report-final.pdf [accessed 27 August 2024].

39 National Highways, Smart motorways – scheme safety (June 2023) p 4: https://nationalhighways.co.uk/media/m0hjg0j0/before-vs-after-safety-analysis-for-all-smart-motorways-final.pdf [accessed 27 August 2024].

40 Medicines (Gonadotrophin-Releasing Hormone Analogues) (Emergency Prohibition) (England, Wales and Scotland) Order 2024 (SI 2024/727) mentioned in Secondary Legislation Scrutiny Committee, (1st Report Session 2024–25, HL Paper 3) final item.

41 Cass Review, ‘Final Report’ https://cass.independent-review.uk/home/publications/final-report/ [accessed 27 August 2024].

42 The Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024 (SI 2024/462) See also Secondary Legislation Scrutiny Committee, Thirteenth Report of Session 2023–24, (13th Report, Session 2023–24, HL Paper 65).

43 The Pensions Regulator, ‘Funding defined benefits’ https://www.thepensionsregulator.gov.uk/en/document-library/code-of-practice/funding-and-investment/funding-defined-benefits [accessed 27 August 2024].




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