Draft Recognition of Professional Qualifications and Implementation of International Recognition Agreements (Amendment) Regulations 2023
(5 months, 2 weeks ago)
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The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)
I beg to move,
That the Committee has considered the draft Recognition of Professional Qualifications and Implementation of International Recognition Agreements (Amendment) Regulations 2023.
It is a pleasure to serve with you in the Chair, Sir Mark. This statutory instrument, which was laid before the House on 17 October 2023, will implement the recognition of professional qualifications provisions contained in the UK’s free trade agreement with Norway, Iceland and Liechtenstein—the European economic area European Free Trade Association states.
The regulations place a duty on UK regulators to recognise comparable professional qualifications obtained in Norway, Iceland and Liechtenstein. They provide certainty for professionals with qualifications from those countries who want to be recognised by UK regulators and work in the UK. UK professionals also benefit from reduced barriers when having their qualifications recognised in Norway, Iceland and Liechtenstein. This is good for business and good for jobs.
First, I will give the background. The UK signed a free trade agreement with Norway, Iceland and Liechtenstein in July 2021. Chapter 12 of the agreement outlines a comprehensive system for the recognition of professional qualifications between the parties. Under the agreement, UK regulators are required to recognise comparable professional qualifications obtained in Norway, Iceland and Liechtenstein, and regulators in Norway, Iceland and Liechtenstein are required to recognise comparable professional qualifications obtained in the UK. The UK must meet the terms of the agreement by 1 December 2023.
When negotiating the agreement, the Government sought to strike a balance between providing continuity with the previous EU-derived arrangements and minimising the burden on regulators. These provisions, on recognition of professional qualifications, are important for boosting trade in professional services and for supporting professionals to enter the UK labour market.
The regulations will implement the terms of the agreement into domestic law, and place a duty on UK regulators to recognise comparable professional qualifications obtained in Norway, Iceland and Liechtenstein. To do this, the Government are using powers contained in section 3 of the Professional Qualifications Act 2022, and this is the first use of those powers. Enshrining the system in legislation is necessary to ensure that the UK fulfils its obligations under international law. Without the regulations, some regulators will not have the necessary legal powers to meet the requirements of the agreement.
The regulations will come into force at the same time that the EU-derived system for recognition of professional qualifications ends. Separate commencement regulations were recently made to revoke the previous system, and those come into effect on 1 December. That will ensure clarity and a smooth transition from the old system to the new for regulators and professionals.
Turning to the specifics of the regulations, they place a duty on all regulators of professions across the UK to recognise comparable professional qualifications obtained in Norway, Iceland and Liechtenstein. They also give regulators the powers to recognise those qualifications. Regulators will be required to treat qualifications from Norway, Iceland and Liechtenstein in accordance with the system set out in the regulations.
That system does four things: it requires regulators to recognise comparable professional qualifications; it enables regulators to refuse to recognise comparable professional qualifications, where certain conditions are met; it prescribes compensatory measures that regulators can require a professional to take in certain circumstances; and, finally, it prescribes a procedure for applications to obtain recognition. Taken together, that means that professionals benefiting from the agreement will have a clear, predictable and timely route to practise a profession in the UK.
I should also note that the regulations contain amendments to UK and devolved legislation. Those tidy up the UK statute book by removing references to related EU-derived legislation. I should inform the House that after the regulations were laid on 17 October, a correction slip was issued to address a minor formatting issue in regulation 3(1): the definition of “medical regulator” started at paragraph (d) instead of (a). That has been corrected and the corrections have been incorporated into the HTML version on legislation.gov.uk.
Regardless of those requirements, it remains the responsibility of individual regulators to set standards for their professions and decide who meets the standards. I want to assure the Committee that the Government are continuing to protect regulators’ autonomy, as prescribed by the Professional Qualifications Act. Regulators remain the experts for their professions under the regulations.
In January 2023, the former Department for Business, Energy and Industrial Strategy ran a targeted consultation with regulators covered by the agreement, fulfilling the requirements under the Professional Qualifications Act. My Department sought regulators’ views on the implementation approach and draft regulations. Respondents were generally supportive. My officials engage extensively with regulators on their feedback. Some regulators indicated that their existing sectoral legislation was insufficient to enable them to comply with the agreement. We have therefore included amendments to sectoral legislation in the regulations for a small number of professions.
This is a UK-wide SI. The Government are using concurrent powers in the Professional Qualifications Act to implement the agreement in areas of devolved competence. This approach has been taken after careful consideration and extensive engagement with the devolved Governments over the past year.
It is necessary for the regulations to cover all of the UK for two reasons. First, all regulators across the UK must be covered by legislation for the UK to be compliant with the agreement. Secondly, UK-wide legislation ensures that all regulators have the necessary legal powers to put the new system in place. That approach means that the experience of professionals with qualifications from Norway, Iceland and Liechtenstein seeking recognition in the UK will be predictable and consistent across the four nations. Importantly, it also means that those professionals will have legal recourse if a regulator fails to comply with the agreement.
In June 2023, the Department for Business and Trade ran a consultation with the devolved Governments. The consultation sought views on the implementation approach and regulations. We published the report on the consultation on 13 October 2023, as required by the Professional Qualifications Act. Amendments submitted by the devolved Governments were incorporated into the regulations. In their responses, the Scottish and Welsh Governments opposed the UK Government exercising the concurrent powers in the Professional Qualifications Act without their consent. Although our preferred approach has always been to secure the agreement of the devolved Governments, we decided to proceed without their full agreement to the instrument.
When the UK’s free trade agreement with Norway, Iceland and Liechtenstein was signed in 2021, it was clear that it contained provisions that would provide legal certainty and continued market access for professionals. The regulations bring into force the recognition of professional qualification systems contained within this agreement, meeting our obligations under international law. I commend the draft regulations to the House.
Sarah Jones (Croydon Central) (Lab)
It is a pleasure to serve under your chairmanship, Sir Mark. I am pleased to contribute to this important topic on regulations relating to the free trade agreement that the UK made with Norway, Iceland and Liechtenstein in 2021, bringing the FTA’s recognition of professional qualifications into domestic UK and devolved law.
The Minister will be pleased to know that the Opposition will not vote against the regulations this morning. Having qualified professionals contributing to the economic success and social fabric of our country is crucial. The UK’s public, private and voluntary sectors are greatly enriched by the contribution of overseas professionals, including thousands from Norway, Iceland and Liechtenstein.
Foreign workers are also vital in the context of the well-documented shortages that this country has suffered in drivers, carers, nurses, doctors and vets, and in hospitality and farming. Perhaps the most well known is the contribution of overseas professionals to the NHS, in which nearly one in five workers comes from overseas. We are hugely grateful to those key workers, especially for their efforts during the pandemic. Without a system of recognition of professional qualifications, the contribution of many thousands of key workers would be impossible. However, it is important to note that the recognition of overseas qualifications is not a silver bullet to end skills shortages in the UK; it neither could nor should be the long-term answer.
The regulations are largely non-contentious, but I have a few questions for the Minister. First, on the UK labour market, are there any particular staffing gaps in the UK that the Government hope to address with this measure? Do they expect the new recognition of professional qualifications system to have any bearing on immigration levels? Will the Minister outline which sectors may be most affected by the changes?
Secondly, on the regulators of professional qualifications, enabling regulators to recognise qualifications drives up standards of practice, gives confidence to UK employees and consumers and improves contracts for workers. The public rightly expect the UK’s high standards of health, public safety and consumer protection to be maintained, and the quality and expertise of our regulators underpins that professionalism. The Department for Business and Trade acknowledges that some regulators may be required to change some of their processes as a result of this measure, but if a full impact assessment has been carried out, it has not been made public. Will the Minister therefore outline whether the Government assessed the extent of the requirements, and will he outline the areas where their impact will be most severe?
The Government also acknowledge that some additional costs may fall on regulators as a result of these changes, but they have put no figures on what they might be. Will the Minister outline whether an assessment has been made of what those additional costs will be? Do regulators need additional funding and resources to deal with them, or will they be expected to pass on any costs?
Finally, on transparency, in the explanatory memorandum the Government said that their consultation with regulators, which the Minister referred to, received “generally supportive” feedback but, as the Secondary Legislation Scrutiny Committee report highlighted, that consultation has not been published. Does the Minister agree that, in the interests of a transparent process, it is important for the Government to publish that consultation, and that they should publish future consultations in advance of presenting such statutory instruments to the House?
The Opposition want to promote opportunity, trade and standards through the recognition of professional qualifications. We have no overall objections today, but I would be grateful if the Minister can address those concerns.
Jesse Norman (Hereford and South Herefordshire) (Con)
I have no objection at all to this legislation, which seems excellent, but I have a question for the Minister. Section 6.2 of the explanatory memorandum refers to F-gas. Will he tell the Committee what F-gas is? Does he share my view that terms should not be introduced into legislation without being appropriately defined? Will he ask his officials to look at the quality of explanatory memorandums as a result? They are obviously designed to educate the Committee, so it is important that it is clear what the terms mean. This issue has additional salience because of the work being done across the two Houses to improve the quality of explanatory memorandums for statutory instruments.
Richard Graham (Gloucester) (Con)
On the points made by the hon. Member for Croydon Central about helping to fill gaps in the NHS, the care system and so on, will the Minister clarify and perhaps confirm that the real beneficiaries of the recognition of professional qualifications in relation to the European Free Trade Association are likely to be not doctors and nurses, but financial professionals from the UK working in Liechtenstein, other professionals—engineers and so on—working in Norway, and a broad range of those from Iceland working here and vice versa? This instrument is therefore not really related to the needs of the NHS, but is more about other professional qualifications.
Kevin Hollinrake
I thank hon. Members for their remarks. Several points have been made, and I will try to answer them to the best of my ability. As I set out, the instrument implements the provisions of the UK’s free trade agreement with Norway, Iceland and Liechtenstein relating to the recognition of professional qualifications.
On the shadow Minister’s points, it is clearly up to employers to decide where their skills gaps are, and the provisions of the agreement can be used to fill those positions. Certainly, she can check the list of professions covered in the agreement on gov.uk. My hon. Friend the Member for Gloucester is right that the regulations relate to a range of professionals—they are not just limited to the NHS, education or anything else—but, as I say, it is up to employers to determine their skills needs and how they fill those gaps. Our points-based immigration system will be unaffected by these provisions.
On costs, as the hon. Member for Croydon Central is aware, regulators already have a requirement to recognise professional qualifications from the EU, so there should not be any further cost burdens. According to the work we have undertaken, the costs will be minimal. We did a de minimis impact assessment, and it showed no significant impact on business or public bodies.
I apologise to my right hon. Friend the Member for Hereford and South Herefordshire. F-gas stands for fluorinated gas. He is quite right that we should avoid abbreviations wherever possible to make the documents we put in front of the Committee as accessible as possible.
The UK-wide application of this instrument will ensure that the UK is fully compliant with its international obligations in the free trade agreement. It will also provide consistency across the statute book and clarity for professionals from Norway, Iceland and Liechtenstein wanting to work in the UK, and vice versa. I once again thank Members for their contributions, and I commend the regulations to the House.
Question put and agreed to.
Draft Health Care Services (Provider Selection Regime) Regulations 2023
(5 months, 2 weeks ago)
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The Minister of State, Department of Health and Social Care (Andrew Stephenson)
I beg to move,
That the Committee has considered the draft Health Care Services (Provider Selection Regime) Regulations 2023.
It is a pleasure to serve under your chairmanship, Mr Efford. I will begin by setting out the policy context for the regulations. The House will know that the challenges we face as a country are changing, and the NHS is changing to address them. We have an ageing population, an increase in people with multiple health conditions, and persistent inequalities in health outcomes. We must respond to those challenges. To do so, we need to provide an empowering framework that allows the NHS to combine the value of competition with collaboration, to best promote the interests of patients. These regulations do that. They will establish a provider selection regime from 1 January 2024.
In 2019, engagement across the NHS identified that use of the current procurement rules presented a bureaucratic barrier to bringing NHS organisations and partners together. The NHS wanted a framework that would allow it to be flexible in different scenarios; that allowed for competition, without defaulting to it; and that supported the increased need for alignment of services, so that we can join up care for patients. The Government developed this legislative framework in the light of those requests. In June 2019, the Health and Social Care Committee agreed that that was the right approach to
“ease the burden procurement rules have placed on the NHS, ensuring commissioners have discretion over when to conduct a procurement process”.
As colleagues from across the health system have emphasised, we must seek a balance. We want a system-driven approach to planning services, but recognise the importance of provider diversity for innovation and value. That is why my officials have worked closely with a broad range of colleagues and organisations across the system, including commissioners and providers of health care services, to prepare this statutory instrument. That work included extensive consultation. In 2021, NHS England published a consultation on the detail of the policy behind this instrument. Some 420 responses were received from NHS representative bodies and individuals, and 70% of respondents agreed or strongly agreed with the detailed proposals set out in that consultation. The Department of Health and Social Care published a further consultation in 2022 that aimed to inform the detail of our regulations.
Our voluntary impact assessment shows that in the most likely scenarios, this instrument will deliver a saving to the NHS by reducing bureaucracy. It is difficult to provide a precise figure ahead of the monitoring of any such regime, but Members who have read the impact assessment will be aware that our central estimates suggest that savings of up to around £230 million a year are possible.
Of course, as many Members will know, getting the balance of a framework right, so that it promotes the best culture and behaviour on the ground, is tricky. I am glad, therefore, that our engagement with stakeholders has resulted in an agreement to establish an independently chaired panel for contested decisions made under this regime.
Legislation and guidance are only part of the story of how the new legislation will influence outcomes. That is why my Department is committed to monitoring and evaluating this new regime from its implementation.
To summarise, this instrument reflects engagement and careful balancing to present commissioners with the right options for procurement, so that they can go about finding the most collaborative, value-adding solutions that will work for patients. I commend the regulations to the Committee.
Preet Kaur Gill (Birmingham, Edgbaston) (Lab/Co-op)
It is a pleasure to serve under your chairship, Mr. Efford. I begin by reflecting on the story of these regulations. That goes back to the David Cameron era of reforms that came into force with the Health and Social Care Act 2012. Those flagship Conservative reforms turned the concept of competition into the organising principle in our NHS. They turned competition from one of the ways that the NHS was meant to operate into pretty much the only way to run the NHS. As that Bill went through Parliament, Labour argued that relevant authorities should have the flexibility to award contracts. We warned against excessive private involvement in the NHS and said that the marketisation of the NHS would act as a barrier to integration—which is crucial for our ageing population, who often have multiple conditions—and would ultimately lead to a worse service for patients. We were vindicated.
The NHS that the Government inherited from Labour in 2010 was judged by the Commonwealth Fund as the best and—crucially, when we consider the regulations—one of the most efficient healthcare systems in the world. A decade on, the NHS is in the middle of the worst crisis in its history, with the highest waiting times and lowest patient satisfaction. It has been left without the staff, equipment or modern technology needed to ensure that patients can be treated on time, and it has slid down the international rankings to the middle of the pack. Competition may have been the watchword of the Government’s NHS reforms, but in reality, the only competition it meant was a race to the bottom. Even the current Chancellor admitted that the reforms led to ridiculous fragmentation, wasteful bureaucracy and a worse service for patients.
The new provider selection regime is an opportunity to correct a decade-long mistake, and to move the NHS away from competitive retendering by default and towards the emphasis on collaboration and integration that Labour called for all along. I will not go so far as to call this another case of the Government pinching our ideas, given what a long struggle it has been to get to this point, but it is a chance to draw a line under a failed Conservative experiment. That is why I and the Opposition will support the new regime today.
The new regulations are an extension of the Health and Care Act 2022. As the Minister outlined, they are intended to provide relevant authorities with greater flexibility to award contracts, and they set out the key criteria that they must take into account when choosing the process to follow. More people now live with multiple long-term conditions and need support from several different services at the same time, so it is vital that services have the flexibility to work together more effectively and provide joined-up, co-ordinated care that meets their needs.
The Government were previously wedded to outsourcing services to private companies and to the flawed notion that financial competition drives up clinical quality, when in reality it has been a barrier to integration. That undermined the NHS in the years before the pandemic, but then we saw a new scandal emerge and staggering levels of waste and cronyism, represented most potently by the infamous VIP lane for covid contracts. A recent report by Transparency International UK stated that a fifth of covid contracts awarded by the Government contained red flags indicating possible corruption. An analysis by The New York Times found that roughly half of the 1,200 contracts it analysed, worth some £17 billion, went to companies run by friends and associates of Conservative party politicians.
I raise that issue because it highlights just how important it is that we get these regulations right. The rampant reliance on outsourcing and the waste and cronyism we have seen under this Government need to come to an end. Labour is clear that every penny of the public’s money should be spent wisely. That does not mean endless financial competition, and certainly not any more opaque backroom deals. We recognise that the independent sector has a role to play in the NHS if a service cannot be provided by a public body, because the capability or capacity is not there. Labour will always put patients first, which is why in the short term we will use spare capacity in the independent sector to treat NHS patients and bring waiting lists down as we reform and strengthen NHS-delivered services and capacity for the future.
I turn to the specifics of the regulations. I welcome the increased emphasis on provider quality and patient outcomes in the new provider selection regime. It is right that providers will be evaluated not only on their capacity to deliver services, but on their track record of achieving positive results for patients. That change should foster a culture of continuous improvement among healthcare providers. Does the Minister agree that authorities should engage with service users to accurately assess and develop services to meet their communities’ needs? Will he say why no such stipulation is included in the regulations?
The emphasis on quality and outcomes, and the inclusion of transparent performance metrics and patient feedback, are also welcome. Transparency is key to avoiding the cronyism that we saw during the pandemic. Will the Minister address the concern raised by the NHS Support Federation and others that prior notice of how commissioners plan to award a contract is reduced under the new regulations? Only in the most suitable provider process and the competitive process will the public know of the commissioner’s intentions to begin the decision-making process, meaning that many decisions will take place with no notice to the public. Does that not risk disempowering patients?
The Opposition also support the recognition of the value of providing continuity of care, allowing commissioners to prioritise providers providing good quality care over time instead of having to resort to competitive retendering by default. I know that that flexibility will be welcomed by commissioners right across the NHS, which is reflected in the 70% support among respondents to the consultation. Does the Minister agree that with this flexibility must come greater accountability, and that quality data will be critical to that?
My hon. Friend the Member for Ilford North (Wes Streeting) recently set out Labour’s plans to make sure that people can see how their local providers are performing and the progress being made towards our targets to empower patients and put their experience at the centre of the service. Does the Minister not agree that the NHS should be accountable to the many, not just the well-informed few, and that this is a critical aspect of the culture shift we need to drive innovation and continuous improvement?
The aspect of the new regulations with perhaps the greatest potential is the flexibility to innovate that they provide to commissioners. Last week, I had the pleasure of meeting Professor Sam Everington, the former chair of the Tower Hamlets clinical commissioning group and a GP at the Bromley by Bow Centre, which has been doing groundbreaking work with its multidisciplinary team providing community-based care. Professor Everington told me, for example, how one local doctor, sick of seeing young boys turning up on his operating table with stab wounds, set up a charity to follow up those admissions and help those boys to prevent further knife crime. They reduced repeat hospital admissions from 30% to 1%.
These partnerships are game-changing, but they do not happen enough and they have not been consistently incentivised by the current model. Can the Minister say how the new regulations will encourage integrated care systems to consider a diversity of providers, including voluntary and community sector organisations, to play a role in delivering innovative health and care services? Where is the Government strategy to ensure that, where innovation is working at a local level, the right incentives and resources are there to ensure that it is adopted elsewhere, bringing the best of the NHS to the rest of the NHS?
Can the Minister explain why it has taken so long to bring these regulations forward? The Health and Care Act received Royal Assent 19 months ago. In the meantime, these regulations have suffered several disruptive delays, leaving commissioners and providers alike in limbo, creating uncertainty and undoubtedly increasing costs for the taxpayer. What support are the DHSC and NHSE providing to commissioners in integrated care boards, trusts and other relevant authorities to ensure that these regulations are implemented quickly and smoothly? Can the Minister say how his Department will ensure that the regulations are monitored and reviewed, especially so that commissioners are supported in knowing which procurement process to follow, and when? Does he know what progress NHSE has made to establish the independent oversight panel to resolve complaints on choice and procurement issues? That will be critical to managing disputes and reducing the cost to the taxpayer from cases going to judicial review.
I note that a job advert for the role of chair of the provider selection regime review panel has just closed. Part of their role will be to recruit and review panel members and to establish and maintain its process. Can the Minister confirm that this will be ready for when the regulations come into force? Can he assure me that there will be no risk of corporate capture of this panel leading to conflict of interest?
The Opposition support the new provider selection regime as a break from the failed reforms of the last decade. As more people are living with multiple long-term conditions and need support from several different services at the same time, it is vital that services have the flexibility to work together and provide joined-up, co-ordinated care. If implemented successfully, we hope that the new regime will simplify health procurement, saving time and money. I look forward to the Minister’s response.
Adam Holloway (Gravesham) (Con)
While the shadow Minister makes some genuinely very interesting points, the idea that there were lots of Conservative donors making huge amounts of money through contracts at times such as the covid crisis cannot keep going unchallenged. One of the examples that is often held up is a constituent and close friend of mine, Samir Jassal. I think he gave £2,000 to my campaign in 2010, and served as a councillor in the Painters Ash ward. His partnership got many millions of pounds-worth of personal protective equipment contracts. It is utterly preposterous to think that my right hon. Friend the Member for West Suffolk (Matt Hancock) rang up a bloke who once gave money to my campaign and was a councillor in Painters Ash, going, “Oi, mate. You gave a bit of cash to Adam Holloway a few years ago. Would you like a 10 million quid contract?” It is preposterous.
There are proper examples of waste—I am not disputing that at all—but the other thing I will point out is that this was a time when the entire world was screaming out for the same bits of kit. We had factories in China and people from every country on Earth, basically, trying to get rid of pallet loads of it. These supposed covid profiteers were actually entrepreneurs who did something that neither I nor the civil service could have done. The fact that lots of them happened to have met people in the Conservative party is perhaps a tribute to the fact that those in the Tory party are more likely to know the entrepreneurs and wealth generators of this country than my friends in the Opposition.
Margaret Greenwood (Wirral West) (Lab)
I shall move on directly with my remarks, I think. Although I am not a member of this Committee, I have a long-standing interest in this area, and I am grateful for the opportunity to raise some of my concerns about the regulations. I would be grateful if the Minister could respond to my questions.
On direct award process C, it would seem that in the event that a contract is currently held by a private sector organisation, there may be very little chance of the service being brought back into the public sector. That may include situations where, while the service may be being delivered to an adequate standard, the fact that it is being done by a private company is drawing expertise in related areas away from the NHS. That may have an adverse impact on other related NHS services and particularly on our ability to deliver comprehensive services.
The Government say that they are not privatising the NHS, but the World Health Organisation defines privatisation as
“a process in which non-government actors become increasingly involved in the financing and/or provision of health care services”.
That has happened and is happening.
It is not clear from the regulations that the most suitable provider process could not lead to a situation where the contract for a service that is currently provided by an NHS provider is given to a private company. I would be grateful if the Minister gave a clear assurance that the most suitable provider process will not lead to the replacement of NHS providers by private or other independent sector organisations when their contracts are up for renewal. If he cannot give that assurance, the regulations are surely a matter of serious concern for NHS staff and their unions, and indeed, in relation to the very future of the NHS as a universal and comprehensive public service.
The most suitable provider process involves the awarding of a contract to providers because the relevant authority can identify the most suitable provider. I am concerned that the “most suitable provider” is a very wide and poorly defined notion. The term “suitable” is subjective and could be very much determined by which criteria the relevant authority chooses to give priority to. Given that ICBs are being required to make average efficiency savings of 5.8% this year, it is not difficult to imagine that a relevant authority may feel the need to prioritise the criterion of value above all else, and value is to do with the cost of what it is getting.
It is feasible that that may lead to a reduction in the quality of services provided over time and to a greater number of private sector organisations being awarded contracts, since they can cut costs by paying staff rates below those set out under “Agenda for Change”. With reference to the key criteria that relevant authorities must take into account when awarding contracts, will the Minister set out clearly that they do not expect them to select the criteria of value as the top priority and that all the other criteria must be considered as at least equal to it?
Although there is room in the process for providers that are aggrieved that they have not been given a contract to make written representations to the relevant authority, what opportunity will be given to the public and Members of this House to raise concerns on behalf of their constituents about decisions to award or not award a contract to a particular provider?
On the issue of data, the Royal College of Nursing has pointed out that some independent sector providers are not subject to the same requirements for data collection, reporting or publication as NHS providers. It states that procurement processes should be mindful of that and not make decisions that are likely to weaken access to provider reporting or opportunities for scrutiny. How does the statutory instrument address that?
The Royal College of Nursing also highlighted an area of concern in previous procurement regimes: that service contracts can be awarded to providers that have no expertise in delivering the type of healthcare provision for which they seek a contract. The RCN argued that procurement decision-making processes should include safeguards to ensure that providers can demonstrate sufficient expertise in delivering the required services and in managing clinical risk, and that concerns can be raised and independent scrutiny provided. Is the Minister satisfied that safeguards are in place to ensure that providers that are given contracts will have expertise in delivering the type of healthcare provision that the contract is for?
The regulations would not be necessary had the Conservative Government not introduced, back in 1991, the purchaser-provider split in the NHS, thus moving away from a publicly run and publicly owned national health service to an NHS that sits within a health marketplace, with all the additional costs, bureaucracy and inefficiencies to which that gives rise.
The regulations do not make the NHS the preferred provider. The Government have failed to deliver on that. They could have supported the very sensible amendment tabled by my hon. Friend the Member for Leeds East (Richard Burgon) during the passage of the Health and Care Act, which would have provided for a presumption in favour of contracts being awarded to NHS trusts and NHS foundation trusts, and made provision for meaningful public consultation where integrated care boards propose to award any contract for those services to any body other than an NHS trust or NHS foundation trust. That is the spirit that the draft regulations should embody but sadly do not.
Without the NHS as the preferred provider, I am concerned that existing levels of privatisation will be locked in and that privatisation may increase. I hope that, as a result of the regulations, the award of contracts will promote and strengthen the position of the NHS, so that we can continue to enjoy the expertise of professionals who are able and employed to deliver a comprehensive and universal national health service. I ask the Minister for his assurances on the points that I have raised.
Andrew Stephenson
I thank hon. Members for their contributions and I will try to address as many of the points as possible in the time allowed.
I thank the shadow Minister, the hon. Member for Birmingham, Edgbaston, for her support for the regulations. She talked about greater accountability and transparency, which are vital to the process. We feel that they are ingrained in the regulations, but if there is anything more that we can do to ensure that that is the outcome of the process, we are keen to work with her on that.
I have been assured by my officials that good progress is being made in putting together the independent panel, but I am keen to see it in place in good time for the commencement of the regulations. The shadow Minister asked about service user involvement in the procurement process. As she may know, commissioners must follow NHSE guidance on people and communities, which guides how commissioners must involve patients and the public in commissioning healthcare services. That advice is available online if Members want to see more details.
We probably disagree about some of the controversy around the procurement of PPE during the covid pandemic. Let me be clear that the draft regulations apply only to the arrangement of healthcare services that are delivered to patients. That does not include the procurement of goods or other services, which will continue to be procured under the wider rules in the Procurement Act 2023 from October next year.
At the same time, let me reassure hon. Members that every effort was made to quality-assure the products that the Government procured during the pandemic. Estimates of demand relied on a reasonable worst-case scenario in a very fast-moving situation, and of course the reasonable worst-case scenario was that we would need to purchase significant amounts of PPE. Despite the enormous challenge, we conducted due diligence on more than 19,000 companies, and only around 2,600 companies made it through that initial process. All offers, regardless of the route through which they were identified, underwent rigorous assessment, and, importantly, the source of the offer did not affect the way that the offer was treated. To protect patients and staff, the Government spent £12 billion on PPE for the covid response, which was a time when we needed to act fast to protect the public. Of that, only 3%, or £673 million-worth, was not fit for use.
Moving forward, we have established a contract dissolution team to maximise the value obtained from PPE contracts. The team is reviewing contracts that did not perform, either wholly or in part, to find ways to allow the PPE to be used, replaced or refunded. Our current trajectory should see the Department recovering significant amounts of money.
I turn to the contribution of the hon. Member for Wirral West and her concern about the so-called privatisation of the NHS. I recognise that that issue comes up in debates time and again. To discuss the point properly, we must recognise that the independent sector includes a broad range of organisations, all of which have an important role to play in the day-to-day delivery of NHS services. It includes the work of charities, social enterprises and cutting-edge independent diagnostic centres, each of which has its own role to play in the NHS to ensure that patients receive the best possible care—I was pleased that the shadow Minister acknowledged that.
Margaret Greenwood
I thank the Minister for making that point. He is talking about charities, but he must recognise that where a private provider is delivering NHS services, the money has to go to shareholders. That money could be spent on patient care. He can talk about charities, but that is not what I am talking about, as he knows. He is probably going to get on to this now, but can he give a clear assurance that the most suitable provider process will not lead to the replacement of NHS providers by private or other independent sector organisations when the contracts come up for renewal?
Andrew Stephenson
The most suitable provider process is designed with the NHS to give the right level of flexibility for the NHS. Commissioners can choose how to balance the key criteria, so value is used alongside the other criteria set out in the process. I know the hon. Lady has come to many debates over the years and said that the Government are privatising the NHS. In 2013-14, 6.1% of total health spending was spent on the purchase of healthcare from the independent sector. In 2021-22, the figure was 5.9%, so the idea that we are privatising the NHS is just nonsense. I want to ensure that that is on the record.
Adam Holloway
To me, this is complete nonsense. It is absolutely ridiculous to say that if a private provider does something, the profits go to shareholders and are not reinvested in the NHS. The hon. Member for Wirral West is basically saying that the means of production should be entirely in the hands of the state. What about when we buy tanks? Do we say that we should make the tanks ourselves and not let evil BAE Systems shareholders take the profits? It is preposterous.
Andrew Stephenson
My hon. Friend put that eloquently and made a very good point.
The shadow Minister, the hon. Member for Birmingham, Edgbaston, mentioned one of her recent visits, so I want to put on the record one of my recent visits. Just last week, I visited University College London Hospitals NHS Foundation Trust, which opened a Macmillan Cancer Centre in 2012. It is a diagnostic centre that treats a wide range of cancer and non-cancer conditions, and it is integrated with the Macmillan support and information service for patients and their carers and families. To me, that is integration in action, which is what we are looking at today. The statutory instrument recognises the important role that all providers play by treating none of them differently, irrespective of whether they are a statutory NHS body, an independent social enterprise or a charity. Indeed, the Committee knows that the NHS already relies on a diversity of providers, because what is most important is doing what is right by patients.
I hope I have provided sufficient answers to the questions raised by hon. Members today. The regulations are necessary to enable the transformation that the NHS needs to deliver better joined-up services, and I commend them to the Committee.
Question put and agreed to.
Draft Resolution of Central Counterparties (Modified Application of Corporate Law and Consequential Amendments) Regulations 2023
Draft Financial Services and Markets Act 2023 (Resolution of Central Counterparties: Partial Property Transfers and Safeguarding of Protected Arrangements) Regulations 2023
Draft Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023
(5 months, 2 weeks ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Economic Secretary to the Treasury (Bim Afolami)
I beg to move,
That the Committee has considered the draft Resolution of Central Counterparties (Modified Application of Corporate Law and Consequential Amendments) Regulations 2023.
The Chair
With this it will be convenient to consider the draft Financial Services and Markets Act 2023 (Resolution of Central Counterparties: Partial Property Transfers and Safeguarding of Protected Arrangements) Regulations 2023 and the draft Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023.
Bim Afolami
I will lay out three sets of draft regulations. First, I will address the two statutory instruments that relate to the expanded resolution regime for central counterparties, otherwise known as CCPs, which is how I will refer to them. The regulations make necessary technical and consequential legislative changes and provide legal protection for certain contractual arrangements to ensure that the regime operates as intended.
Resolution is the framework for managing the failure of certain financial institutions. Within that framework, the Bank of England is the UK’s resolution authority and leads on resolution processes once instigated. The UK’s existing resolution regime for banks and building societies was introduced in 2009. That was partially extended to CCPs in 2014. A new bespoke and expanded regime for CCPs was created this year under schedule 11 to the Financial Services and Markets Act 2023, recently passed in this House.
CCPs are firms that provide clearing services for large volumes of financial trading activity. They sit between buyers and sellers and guarantee the terms of a trade. They are systemically important pieces of market infrastructure. Without them, the financial system cannot function effectively. The failure of a CCP, and the resulting loss of its clearing services, could lead to serious consequences for financial markets, financial stability and public funds.
The UK’s expanded resolution regime will enhance the Bank of England’s resolution powers, and ensure that the UK is aligned with international standards on CCP resolution. To implement the expanded CCP resolution regime fully, the Government must lay a number of statutory instruments, two of which are in Committee today.
The draft regulations on the modified application of corporate law and consequential amendments make the necessary changes to certain existing legislation to ensure that the expanded CCP resolution regime can function as intended. The modifications have two principal impacts. First, they mirror changes to company law that apply within the bank resolution regime. Secondly, they make wider consequential amendments broadly to ensure that certain consequences for CCPs in the resolution process are consistent across the existing and expanded regime. That maintains continuity with the existing resolution regime for CCPs.
Turning to the second set of draft CCP regulations, schedule 11 to the Act gives the Bank of England the power to make partial property transfer and write-down instruments when resolving a CCP. The partial property transfers and safeguarding of protected arrangements regulations will ensure that the statutory instruments do not affect protected arrangements that underpin the effective operation of financial markets, including set-off and netting arrangements.
Netting is one of the mechanisms through which a CCP reduces risk in financial markets. Multiple financial obligations are aggregated to calculate a net obligation amount. That means that losses in one position, on one trade, can be offset with gains in another position, in another trade. Given the importance of that function to the operation of clearing services, the draft safeguarding regulations ensure that set-off and netting arrangements are protected when the Bank of England uses its property transfer powers. That is particularly relevant for partial property transfers, where the Bank of England can transfer all or some of the rights and liabilities of a CCP.
The Bank of England also has the power to write down liabilities, meaning that it can cancel, modify or change a security, or the form of an unsecured liability owed to the CCP. The draft safeguarding regulations also restrict the Bank of England in making write-down instruments in cases where there are protected arrangements, such as those relating to netting. In doing so, the regulations ensure that usual market practice continues and that disruption to financial markets is minimised when the Bank of England takes action, while also providing certainty for market participants as to how they will be treated during resolution proceedings. Together, these regulations ensure that a resolution can be conducted as effectively as possible, while reducing the impact on normal market functions.
Now I come to the third and final set of regulations. These regulations, which relate to the payment and electronic money institutions special administration regime, otherwise catchily known as PSAR, will expand the application of the existing insolvency arrangements for electronic money and payment institutions, so that they apply to firms in Northern Ireland and Scottish limited liability partnerships, otherwise known as LLPs, as they already do in England and Wales, as well as for companies in Scotland.
The payments and e-money sectors have expanded rapidly over the last decade. As the sector has grown, the Government have become concerned that the application of standard insolvency procedures to the failure of these firms was leading to negative outcomes for customers. In order to manage these risks, in 2021 the Government legislated for a special administration regime to provide for the prompt return of client assets should such a firm fail. This regime was delivered through the Payment and Electronic Money Institution Insolvency Regulations 2021 and the accompanying rules. Those regulations established the special administration regime in England and Wales, and for companies in Scotland.
This regime created special administration objectives, which an administrator will have to follow when conducting an administration of a payment or electronic money institution. These objectives are to ensure the return of customer funds as soon as practicable, ensure timely engagement with payment systems operators, the Payment Systems Regulator, the Treasury, the Financial Conduct Authority and the Bank of England, either to rescue the institution as a going concern or to wind it up.
One further statutory instrument is required to ensure that the regime can effectively apply to Scottish LLPs and to firms in Northern Ireland. The distinct nature of both Scottish and Northern Irish insolvency law required this SI to be prepared to a different timetable than the original regulations—so, this is effectively a tidying-up measure in that regard—in order to ensure that the regime can operate effectively under both legal frameworks.
In conclusion, by expanding the application of the regime to the relevant firms in Northern Ireland and to Scottish LLPS, these regulations will ensure that we have robust arrangements to manage the potential insolvency of payments and electronic money firms throughout the United Kingdom.
James Murray (Ealing North) (Lab/Co-op)
It is a pleasure to serve on this Committee with you as Chair, Mr Paisley, and to make brief remarks in relation to these three statutory instruments on behalf of the Opposition.
I begin by thanking the Minister for outlining the detail of the regulations. Throughout the debates on the Bill that became the Financial Services and Markets Act 2023, it was my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq), as shadow Economic Secretary to the Treasury, who set out the Opposition’s support for reforms designed to minimise the financial stability risks that central clearing parties, or CCPs, pose to individuals and businesses in the UK, which will be achieved through the introduction of a new CCP resolution regime, as the Minister has set out.
I am glad to confirm that we in the Opposition support the three statutory instruments that we are considering today, which relate to the delivery of legislative reforms that we supported in the Financial Services and Markets Act 2023. We support the regulations put forward today in their attempt to make sure that contractual arrangements crucial to a CCP’s operation are adequately protected when the Bank of England exercises resolution powers, as well as making sure that necessary company law modifications and amendments are made.
The Opposition also support the regulations put forward to expand the supervisory powers of the FCA over payment firms and electronic money institutions following the UK’s departure from the EU. Although our support is clear, I have a few questions for the Minister about how the FCA’s significantly expanded remit will be delivered in practice.
When the Minister responds, I would be grateful if he could set out what the Government are doing to make sure that the FCA’s greater powers are accompanied by greater accountability. Could he also explain what steps the Government are taking to make sure that additional FCA requirements on payment firms and EMIs are proportionate and that they do not hamper innovation in the UK’s world-leading payments sector?
Thank you, Mr Paisley.
Sarah Owen (Luton North) (Lab)
On a point of order, Mr Paisley. I just want some clarification, if I may, as to why there is a suspended Member of the Conservative party sitting on the Government side of this Committee today and whether that is, in fact, in order?
The Chair
I understand that any Member can join the Committee at any time and sit anywhere they wish. The only rules and the only seat reserved is the Treasury Bench. Thank you for raising the point. Minister, do you wish to respond to the points that have been raised?
Bim Afolami
I thank all hon. Members for their consideration of the regulations. To address the points made by the hon. Member for Ealing North, in relation to accountability and proportionality, which are a summary of his points, it is important for the Committee to recognise that, in conceptual terms, the regulations do two principal things. First, it is a tidying up exercise to bring together an intention passed as part of the Financial Services and Markets Act 2023 under schedule 11 and to deliver on that. That has the support. Secondly, it is to do that as a last, backstop measure, because we hope the powers will never need to be used. It is done as a means of making absolutely sure, in the event that it was critically necessary, that the Bank of England has the relevant powers. That is its purpose.
In relation to the broader points around accountability, I look forward to working with the hon. Member in my time in post to broadly strengthen Parliament’s accountability over all regulators, as he set out. As for proportionality, it is worth saying that there is a requirement, when the powers are in place, for the Bank of England to consult and work with the Treasury in the rare event that they would be used.
Question put and agreed to.
DRAFT FINANCIAL SERVICES AND MARKETS ACT 2023 (RESOLUTION OF CENTRAL COUNTERPARTIES: PARTIAL PROPERTY TRANSFERS AND SAFEGUARDING OF PROTECTED ARRANGEMENTS) REGULATIONS 2023
Resolved,
That the Committee has considered the draft Financial Services and Markets Act 2023 (Resolution of Central Counterparties: Partial Property Transfers and Safeguarding of Protected Arrangements) Regulations 2023.—(Bim Afolami.)
DRAFT PAYMENT AND ELECTRONIC MONEY INSTITUTION INSOLVENCY (AMENDMENT) REGULATIONS 2023
Resolved,
That the Committee has considered the draft Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023.—(Bim Afolami.)
Draft Plant Protection Products (Miscellaneous Amendments) Regulations 2023
(5 months, 2 weeks ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister for Food, Farming and Fisheries (Mark Spencer)
I beg to move,
That the Committee has considered the draft Plant Protection Products (Miscellaneous Amendments) Regulations 2023.
The regulations were laid before the House on 23 October. The judicious use of pesticides is an important part of a farmer’s toolbox to manage pests, weeds and diseases. This instrument amends legislation in order to temporarily extend and reinstate EU exit transitional arrangements, to maintain availability and choice of pesticide products in Great Britain. Transitional arrangements allow farmers to buy and use certain seeds treated with a pesticide authorised for that use in an EU country, but not in Great Britain. That arrangement is due to end this year on 31 December.
Treated seeds are crucial for good crop establishment and yield. In Great Britain, £550 million worth of maize is grown annually and 99% of that is protected with a pesticide authorised in the EU. As maize is the main crop for animal feed and a key biogas fuel, the loss of those treated seeds could be devastating for the dairy industry and for energy costs.
The regulations will extend the arrangement for three and a half years, until July 2027. The pesticide used to treat the seeds must have been authorised in an EU country before the end of the implementation period and must remain authorised, to ensure that it has passed through a strict regulatory regime comparable to ours. Although the Government have recently granted emergency authorisations for several maize seed treatments, that is only a short-term solution—it does not provide the certainty that farmers need for the future across a range of seed treatments. That is why the regulations are so important.
The instrument also aims to reinstate access to pesticide parallel products; through the use of parallel permits, transitional arrangements allowed a pesticide authorised in an EU country to be imported until December 2022, as long as it was identical to an authorised product in Great Britain. Farmers have until June 2024 to use the remaining products that they have in store. Due to global events, the cost of pesticide products has increased. The end of this measure could lead to some sectors spending on average almost 20% more for certain products. This is why this measure is needed.
The instrument will allow previous permit holders to reapply for a parallel trade permit, for a maximum of two years. Grace periods may also be granted when a permit expires, allowing existing stocks to be sold for another six months and used for up to a year after that. The period stipulated in the regulations has been carefully considered to support farmers now and to maintain regulatory oversight.
As with treated seeds, we must maintain high standards for public health and environmental protection. All parallel products must be identical to a reference product authorised for use in GB, and will continue to be subject to the Health and Safety Executive’s monitoring and enforcement regime. Through sampling and intelligence-led investigations, our regulator can identify products that are not up to these standards and will remove the permit if that is the case.
To introduce these measures to support our farmers, we are using powers in the Retained EU Law (Revocation and Reform) Act 2023 to revoke and replace key components of secondary retained EU law. Although the measures are temporary, they will help pave the way for long-term solutions by allowing manufacturers time to submit full applications for GB authorisations and pesticide users time to integrate alternative solutions to pest management, which we will continue to support. I hope that hon. Members will support the regulations, which I commend to the Committee.
Daniel Zeichner (Cambridge) (Lab)
It is a pleasure to serve with you in the Chair, Sir Gary, and I thank the Minister for his introduction.
We are all aware that farmers and growers have been grappling with some formidable challenges over the last few years given the sky-rocketing costs of fertiliser, animal feed and energy; tight profit margins; a rocky transition from the common agricultural policy to environmental land management schemes; and a trade and regulatory regime that has thrown up yet more barriers and red tape. Many farmers have had to endure the distress of witnessing damage to crops or livestock due to the devastating recent floods, and too many have suffered from persistent workforce shortages. So I absolutely understand concerns about any prospects of further crop loss due to disease and insect infestation and anxiety about the availability of effective tools to prevent such problems and their financial consequences.
We recognise that the farming and amenity sectors need to plan ahead and adjust to any changes in the pesticides, and seeds treated with pesticides, that they are permitted to use. Indeed, they would probably also welcome news from the Minister today about the long awaited pesticide national action plan. Can the Minister enlighten us about when that is expected?
On the instrument before us today, we appreciate that farmers and growers need access to these products in time for the 2024 growing season and that without these temporary extended permissions, there could be adverse impact on both crop yield and output. As we have heard, maize, which is used extensively for cattle feed and energy generation, would be particularly affected as 99% of all maize seeds are treated with at least one of three plant protection products that do not currently have GB authorisation for use as seed treatments. We read in paragraph 7.2 of the explanatory memorandum that
“Since EU Exit no new seed treatments for maize have been authorised in GB.”
The curious reader might wonder why. The issue begs a bigger post-Brexit question, of course. The fact that there are no UK authorisations points to the highly integrated nature of crop systems across Europe. Maize seed is not produced in the UK, and we therefore have to rely on at least one of our European neighbours—hopefully, given today, not Greece.
Although we support the extension, it is not clear to me or others I have consulted how the period of three and a half years was arrived at for the provisions that allow the import, sale and use of seeds treated with a plant protection product authorised in at least one European Union or European economic area member state prior to the implementation period completion date. I am advised that the standard registration period is 18 months; I think the Minister said in his opening statement that the period had been carefully considered. Will he say a little more about how that three and a half years has been arrived at?
Similarly, we do not object to the reinstatement of trade permits for importing plant protection products that are authorised in the UK for up to two years, so we will not be opposing the instrument. However, an explanation would be helpful—not least because I am told by those in the industry that most parallel importers have moved to product authorisation in the transition period. Again, will the Minister say more?
Regardless, in our view these extensions should be temporary. We strongly urge growers to use this time efficiently and productively to seek alternative solutions to crop protection and we urge manufacturers to develop and submit applications for new alternative products that minimise environmental harm. We are committed to working with farmers and scientists to find alternatives and will follow the scientific advice on the licensing, regulation and impact of pesticides. I ask the Minister for an assurance that the permissions are indeed temporary and to outline the measures that the Government are taking to facilitate and accelerate the development of alternative systems for crop protection.
Let me finish by reminding the Minister that there are concerns about some pesticides, still in use in the UK, that some believe threaten insect and animal life as well as human health, including through carcinogens and/or neurotoxins. With new research, and growing concern about these issues, a number of pesticides have been added to the EU’s list of “substances of very high concern”. That is because they have been found to be carcinogenic or to affect the reproductive system, as well as being persistent in the environment and bioaccumulative.
Bans on chemicals are generally preceded by a listing on the “substances of very high concern” list. The last additions to the UK’s list were made more than three years ago, in June 2020. Since then, the European Chemicals Agency has added 26 substances to its equivalent list. It seems that the UK is falling behind. That is disappointing because the UK played a key role in setting up the EU’s gold standard chemicals regime, yet now we are lagging behind the EU in tracking and regulating harmful substances. Why has the UK failed to add any chemicals to the list of substances of concern, when our EU neighbours have added 26?
The regulations are a temporary fix—they could be deemed a sticking plaster. We need to develop new ways of protecting crops without harming the environment. We will work closely with the farming sector, the crop protection sector, and the wider food production sector to find alternatives that provide sustainable, secure supplies of food but also work for nature. That is a prize worth seeking.
Mark Spencer
I am grateful to the shadow Minister for his contribution and to hon. Members for their attendance today. I hope that colleagues will recognise that the regulations are crucial to ensure that farmers continue to have the tools that they need to protect their crops. I shall address some of the shadow Minister’s questions.
The national action plan on pesticides is coming soon; we have been liaising with colleagues from the devolved Administrations about it for some time. Those discussions have reached a fruitful conclusion and I hope that we will be able to launch the plan very soon.
Why have there been no new applcations? Obviously, these chemicals and new technologies take a lot of developing. It takes a long time for chemical companies to come forward with products to the marketplace. There is actually a biopesticide that is very close to being rolled out, but the authorisations have not been gone through so far. We need to make sure that we have all the data available to make a credible assessment of whether it is safe for the environment and the operator. We will not shirk away from going through that rigorously. The Health and Safety Executive does an excellent job in giving us that data and knowledge.
I think we pitched the period of two and a half years about right. We think that is a window of opportunity to engage with the sector and make sure that those coming forward with products that they want to register will have ample opportunity to do it within that window. Eighteen months would have been quite tight; it might have been achievable but we want to give a credible time for those applications to come forward and be properly considered.
Daniel Zeichner
I understand the point that the Minister is making, but what does he expect to happen at the end of those three and a half years?
Mark Spencer
I hope that by that time the sector will have had the opportunity to come forward with its own applications to the Health and Safety Executive and for us to have looked at that data and granted UK authorisations. We are committed to working with the sector and we have a good working relationship with it.
The shadow Minister commented about how our friends in the EU had withdrawn some products. We are keen to help our food sector to have the tools available to continue to produce great food. We need to balance that, of course, with the impact on the environment and the safety of operators who use the chemicals. By their very nature, these chemicals are designed to be harmful to some organisms—that is the purpose of their existence. We will make sure that all those health and safety criteria are put in place and that those operating with the chemicals are legally obliged to use the correct equipment.
I hope that colleagues will support the regulations and extend and reinstate the current arrangements. We can do that safely for the benefit of our food producers and the environment. I commend the regulations to the Committee.
Question put and agreed to.