Draft Social Security (Scotland) Act 2018 (Carer’s Assistance) (Consequential Modifications) Order 2026
(1 day, 8 hours ago)
General CommitteesRead Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Scotland (Kirsty McNeill)
I beg to move,
That the Committee has considered the draft Social Security (Scotland) Act 2018 (Carer’s Assistance) (Consequential Modifications) Order 2026.
It is a pleasure to serve under your chairship, Sir Christopher. The draft order was laid before the House on 8 December, and I am grateful for the opportunity to debate it. As with all the Scotland Act orders we have considered since the start of this Parliament, this one is the result of collaborative working between the UK and Scottish Governments.
The order will be made under section 104 of the Scotland Act 1998 which, following an Act of the Scottish Parliament, provides the power for consequential provisions to be made in respect of the law relating to reserved matters or the laws elsewhere in the UK. Scotland Act orders are a demonstration of devolution in action, and I am pleased to say that the Scotland Office has taken through 12 orders since the Government came to power in July 2024.
The Scotland Act 2016 devolved responsibility for certain social security benefits, and employment support, to the Scottish Parliament. This included carer’s allowance, which the Scottish Government replaced with the carer support payment in 2023. This order was introduced to make provisions in consequence of further changes that the Scottish Government have made to their carer support payment. The Scottish Government requested the order, and the UK Government worked collaboratively with them on the draft, showcasing devolution in action.
The order makes amendments to the relevant UK and Northern Ireland legislation as a consequence of the Carer’s Assistance (Miscellaneous and Consequential Amendments, Revocation, Transitional and Saving Provisions) (Scotland) Regulations 2025, which were made on 6 November 2025 and will come into force, in respect of the provisions relevant to this order, on 15 March 2026.
The Scottish Government’s regulations introduce additional support—the carer additional person payment—for those who receive carer support payment and care for more than one person; extend support for carers from eight to 12 weeks after the death of the person they care for; and introduce a new Scottish carer supplement which, for most carers, will replace the carer’s allowance supplement that is currently paid under section 81 of the Social Security (Scotland) Act 2018. The order will ensure that the Scottish Government’s changes to the carer support payment are reflected in reserved benefits.
In summary, the order makes consequential amendments to UK legislation to reflect the introduction of changes to the carer support payment in Scotland. It is an example of devolution in action, it is about the UK Government working with the Scottish Government to deliver for the people of Scotland, and it reflects the continued strong co-operation between the Scottish and UK Governments.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
It is a pleasure to serve under your chairmanship this afternoon, Sir Christopher.
The consequential modifications are uncontroversial in and of themselves, serving only to substitute wording across existing legislation and update previous regulations to reflect the change in the definition of carer support payments. As the Minister set out, the order amends the defined terms in social security legislation to reflect the introduction of carer support payments, as introduced in the Carer’s Assistance (Carer Support Payment) (Scotland) Regulations 2023 and the Carer’s Assistance (Miscellaneous and Consequential Amendments, Revocation, Transitional and Saving Provisions) (Scotland) Regulations 2025, as provided for by the Scottish Government’s Social Security (Scotland) Act 2018.
Although the order itself is technical and necessary, and we will not stand in its way, I would like to speak to the wider context of the instrument. The order follows the introduction of the 2023 regulations, an instrument of the Scottish Parliament that acted to replace the carer’s allowance in Scotland, originally administered under the Department for Work and Pensions, with a new type of benefit that served the same original purpose, administered by Social Security Scotland. The 2023 legislation epitomises the Scottish Government’s bureaucratic tendencies at the expense of Scottish taxpayers.
In the wake of the failed bid for independence in 2014, the Smith commission set out provisions for greater devolution, and the resulting powers for devolution were set out in the Scotland Act 2016. From that flawed experiment, we now know that it matters not how much is given—for the nationalists, it will never be enough. Where devolution serves simply to duplicate work that is already undertaken, more efficiently and at lower cost, by the Department for Work and Pensions, we must ask whether the Scottish equivalent represents value for money for taxpayers or is simply yet another a marketing exercise for those who wish to create more separation between us.
The division of payments for carers into a parallel system creates a new level of bureaucracy and adds complication in the system that we think is quite unnecessary. Those who are already in receipt of carer’s allowance would have to reapply for the carer support payment if they relocated to Scotland. This creates barriers within the United Kingdom, just as NHS Scotland, which is unable to share data and records with NHS England, prevents seamless care across the United Kingdom.
We do not wish to stand in the way of this statutory instrument, which seeks to make technical adjustments to existing legislation as a result of the 2023 and 2025 regulations. However, I wish to put on the record the official Opposition’s frustration with the Scottish Government’s endless duplication, waste and inefficiency, which is costing Scottish taxpayers dear.
Susan Murray (Mid Dunbartonshire) (LD)
It is a pleasure to serve under your chairship, Sir Christopher.
The SI updates UK social security law to reflect changes made by the Scottish Government to carer benefits, and accounts for updates to the carer support payment, which replaces the carer’s allowance in Scotland, and two new Scottish carer payments: the carer additional person payment and the Scottish carer supplement. The extension of support for carers from eight to 12 weeks after the death of the person they care for is welcome, and the changes ensure that the Scottish benefits interact correctly with the UK-wide reserved benefits. On that basis, the Liberal Democrats are supportive.
Kirsty McNeill
I thank Members for their contributions. I not only thank the hon. Member for West Aberdeenshire and Kincardine for his support for the technical nature of the change, but note and share his view that the Scottish Government are indeed incredibly careless with taxpayers’ money. I would go further and say, on behalf of the Labour Government, that they are addicted to wasting money. That point is noted and is a point of agreement between us. I thank the hon. Member for Mid Dunbartonshire for her party’s support for the changes.
This instrument demonstrates the UK Government’s continued commitment to work with the Scottish Government to deliver for Scotland. I commend the draft order to the House.
Question put and agreed to.
Draft Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025
(1 day, 8 hours ago)
General CommitteesRead Hansard Text Read Debate Ministerial Extracts
The Economic Secretary to the Treasury (Lucy Rigby)
I beg to move,
That the Committee has considered the draft Financial Services and Markets Act 2000 (Cryptoassets) Regulations 2025.
This statutory instrument delivers a comprehensive regime for the regulation of cryptoassets within the Financial Services and Markets Act 2000 framework, meaning that cryptoassets will be regulated under the same architecture as other financial services. Coupled with the rules being prepared by the Financial Conduct Authority, the regime will protect consumers and give technology and financial services firms the certainty they need to invest and grow in the UK. There is a general trend towards more people investing in cryptoassets in the UK; as they become more intertwined with traditional financial services, it is critical that we offer appropriate protection and get our approach to regulation right.
Previous intervention in this space has focused on addressing the most urgent risks first, namely money laundering and misleading financial promotions. However, as it stands, most cryptoasset activities are not subject to broader financial services regulation covering matters such as conduct and prudential requirements. Consumers and industry have long called for clear and comprehensive oversight of cryptoassets in the UK, and the Treasury first consulted on these proposals in 2023 under the previous Government. In October 2024, this Government committed to implementing a regime largely in line with the consultation proposals. The instrument before us today delivers on that commitment.
The instrument amends the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 to do two principal things: first, to define the categories of cryptoasset that will be in scope of the regime; secondly, to define the new activities that will be regulated. Generally, firms undertaking those activities in the UK or for UK consumers must be authorised by the FCA or risk committing a criminal offence. The new activities are: issuing qualifying stablecoin in the UK; safeguarding qualifying cryptoassets and relevant specified investment cryptoassets; operating a qualifying cryptoasset trading platform; dealing in qualifying cryptoassets as principal or agent, or arranging deals in qualifying cryptoassets; and qualifying cryptoasset staking.
The instrument also uses the new designated activities regime to create frameworks governing public offers of qualifying cryptoassets and their admission to trading on relevant platforms and to tackle market abuse in relation to such cryptoassets. As people will have spotted, it also makes consequential amendments to various pieces of legislation to ensure that the regime can operate effectively and to ensure consistency between the cryptoasset regulatory framework and the rules that apply to traditional financial services. The provisions will take effect from 25 October 2027, which will allow the FCA to consult and finalise rules this year, and give at least 12 months for firms to apply for authorisation and the FCA to process applications ahead of the enforcement date.
In conclusion, as I have set out, this regime will raise standards, strengthen consumer protection, help to tackle market abuse and support the responsible growth of the UK’s cryptoasset sector by providing clear and consistent rules. It brings cryptoassets within the robust Financial Services and Markets Act framework while ensuring that the sector has the space and flexibility to innovate. I hope the Committee will join me in supporting this instrument.
Mark Garnier (Wyre Forest) (Con)
I start by welcoming the general thrust of this incredibly important legislation. The Minister and I have sparred a number of times in the past, and so far we have managed to keep it to under five minutes; I must now apologise to the Committee, as I might take a little longer. As the Minister said, work on this piece of legislation was started under the previous Government, and it is absolutely vital for the City of London to maintain its presence as a global financial leader.
The City of London has been innovative and thought-leading for a few hundred years now. Jonathan’s Coffee House was the first to advertise share prices, from which the London Stock Exchange grew, setting the model for equity ownership the world over; similarly, Lloyd’s Coffee House created the insurance market that we see today. As new technology comes forward, it is vital that the City of London, or the UK’s financial services sector, not just adopts this new technology but leads on it, and leads on it with the intelligence and experience that we have gained over the previous centuries of legislating in this area.
As we move forward in the age of new technology, we need to legislate. This SI is possibly the best example of how we can embrace that change. Indeed, the short time that we have been given to debate this piece of legislation belies its importance and the months of consulting that lie behind it. While the Opposition are absolutely behind the thrust of the SI, we believe that it is slightly flawed in its drafting. It appears to draw together two separate things: in very simple terms, it appears to confuse cryptoassets with stablecoins.
Cryptoassets—bitcoin and the like—are commodities in the same way as a bond, a share or other commodities. They are items that are bought and sold with a view to their value changing. However, a stablecoin is an asset fully backed by a fiat currency, and thus a proxy of that underlying fiat currency. A stablecoin is part of the payment system and should be regulated as such.
I am someone who understands the principles of this legislation, but sometimes it is important to have the help of people who really get the law. I am grateful to a couple of people who have helped me to put this argument forward today, in particular Mike Ringer, who is the founder of ReStabilise, but more importantly Professor Sarah Green, who was a law commissioner for commercial and common law at the Law Commission of England and Wales from 2020 to 2024. She was responsible for the Electronic Trade Documents Act 2023 and the Property (Digital Assets etc) Act 2025.
As I have discussed, this draft legislation establishes the regulatory parameter for cryptoassets in the UK, including stablecoins. As such, what we are discussing is crucial for the delivery of HM Treasury’s often repeated policy intention for the UK to become a global hub for digital assets and blockchain technologies—something that we are 100% behind. That means that a properly drafted Bill is mission critical.
The ability of the UK to become a global leader in the digital economy, and to retain its position as a leading international financial centre, depends on the ability of this piece of legislation to set out clearly, decisively and unambiguously how it will distinguish between different types of cryptoassets. Without strong, decisive and nuanced categories, the potential for effective regulation, and therefore optimum growth, will be lost. This is not an opportunity to be squandered, yet the current drafting threatens to do just that.
The Government’s policy note that accompanied the original draft SI, published in April last year, states:
“This is a draft SI and should not be treated as final. It is being published for technical checks, such as any significant errors or oversights in the legal drafting that would mean that the provisions in this SI would not achieve the desired outcomes explained in this note, or that could lead to other significant unintended consequences.”
My goal today is to explain why an oversight in the current drafting means that the SI’s provisions do not achieve their stated aim.
Let me explain. A critical component of the successful development of digital asset markets is an effective form of digital settlement asset—that is, digital cash. There are three forms of digital cash: first, there are central bank digital currencies, or CBDCs; secondly, there are tokenised commercial bank deposits; and thirdly, there are regulated stablecoins. If the UK is to establish itself as a global hub for digital assets, it is essential that all of those can be used interchangeably with traditional fiat money, or state-backed money. For that to happen, each form needs to be regulated in a way that recognises its particular nature and function.
In the case of stablecoins, that will be achieved by regulating issuers under the new regulatory regime brought in by this legislation, which will be introduced and supervised by the Financial Conduct Authority. Also, in the case of sterling-denominated systemic stablecoins, issuers will be subject to dual regulation by the Financial Conduct Authority and the Bank of England.
In its consultation paper on its proposed regulatory regime for sterling-denominated systemic stablecoins, published in November last year, the Bank of England confirmed that the use of regulated stablecoins could lead to faster, cheaper retail and wholesale payments, with greater functionality, both at home and across borders. It therefore wants to support such a role for stablecoins as part of a “multi-money” system alongside commercial bank money, including tokenised bank deposits, so in effect they would be part of the payments system itself.
Similarly, we know that as the world progresses, capital markets, foreign exchange and asset management will increasingly be settled through digitalised blockchain technologies. For the UK to maintain its leading global position in those markets and others, it is vital that we take a leading role in adopting blockchain technologies in the payments system. Used in this way, stablecoins will bring immense benefits in terms of speed, lower costs and programmability. In other words, they are the key to growth both in our economy and in our financial services industry.
However, importantly, without a proper treatment of stablecoins that recognises the way in which the assets actually function in practice, the UK risks not only missing out on positive growth benefits but, crucially, losing ground to other jurisdictions. That ground will be difficult to recover because market provision will already have been established elsewhere, where providers can be certain of their legislative position. We will be trying to catch up where other jurisdictions will have made progress and secured their lead. With the current wording of the SI, that important lead, which provides much economic benefit to the winner, will not be here in the UK.
The SI does not achieve what I hope we all agree we want, which is the UK to lead the way in cryptoassets, including stablecoins and the wider payments opportunity that distributive ledger technology—DLT—provides. However, the solution is simple, straightforward and easily achieved. Essentially, market participants should be able to use regulated stablecoins and tokenised commercial bank deposits in place of traditional fiat currency for the purposes I have mentioned—to make payments, settle capital markets and foreign exchange transactions, and for collateral and corporate treasury management. But crucially, they must do that without suddenly needing to apply for additional licences from the Financial Conduct Authority. If that is the effect of the SI, these new forms of money will not be used because of the unnecessary regulatory hurdle put in the way of market participants. As a result, the development of digital assets and blockchain technologies in the UK could simply grind to a halt. That will take all its growth potential with it, as well as the chance of the UK remaining the pre-eminent force in the financial world.
Unfortunately, the likely need for those additional licences is precisely the effect of the wording in the draft regulations, despite the fact that it appears to run counter to the Government’s often stated, and highly laudable, policy intention. There appears to be a simple drafting error that could be easily rectified. There is currently no defined distinction for the majority of the new regulated activities between “qualifying stablecoins” specifically and “qualifying cryptoassets” generally, which has a number of cascading and adverse effects. The most adverse is that, under the current wording, stablecoins, including those regulated by the FCA and the Bank of England, are treated in the same way as unbacked cryptoassets such as bitcoin. Given that the risk profile of those assets is starkly different from that of a fiat-pegged stablecoin, which is, crucially, simply another form of regulated money, that makes no sense. Lumping unbacked assets together with stablecoins for regulatory purposes is rather like buying a car instead of a horse, but still tying the car to a post in case it runs off. Of course, both need securing, but in ways that recognise the fundamental difference between the two.
From a practical perspective, applying the new “dealing” and “arranging” activities to regulated stablecoins has the effect of potentially requiring market participants who are seeking to use or facilitate the use of regulated stablecoins for the purposes I have mentioned to apply for new licences from the FCA, purely because they are using regulated stablecoins instead of traditional fiat money. In that world, market participants simply will not use them, and the principal benefit and advantage of stablecoins may never be realised.
The Government appear to have attempted to address the issue in the case of payments, by copying across the legacy purpose-based sale of goods and services exemption from the traditional regulatory regime, which disapplies the new “dealing” and “arranging” activities for the use of stablecoins to buy or sell goods. That does not, however, achieve the aim of exempting all those who are crucial to the stablecoin payments process. Significantly, it is not clear that it covers those who exchange fiat money for stablecoins and stablecoins for fiat money. The payments process stands and falls by the ability of users to convert the fiat currency into stablecoins and back again, yet the exemption as currently drafted is likely to deter market participants from providing those essential services because it is not clear that it applies to them.
It would be far clearer and simpler to have an exemption drafted in a way that is bespoke to stablecoins, rather than attempting to shoehorn them into a legacy definition that was not drafted with the stablecoin payment process in mind. Alternatively, an existing statutory definition could be used that accommodates the full range of payment activities, such as referring to the use of stablecoins and providing “payment services” in the way that the Payment Services Regulations 2017 do.
Equally as important is the fact that there is, in the current draft, no similar purpose-based exemption for the use of stablecoins in capital markets or foreign exchange transactions, nor in asset or corporate treasury management. Again, those would be straightforward to introduce and should be entirely uncontroversial from a policy perspective. To allow that in the legislation would provide immense benefits to the City.
A failure to make those simple and textually minor clarificatory changes would not only make it very difficult for the UK to become a global hub for digital assets and blockchain technologies, but would risk the UK losing its position as a leading international financial centre. This piece of legislation is intended to be ground-moving in terms of seizing an opportunity for our financial services industry, and it would be tragic if it were reduced to a minor tremor for the sake of simple loose drafting. Those concerns go into great detail, but we need to address them to ensure that we do not mess up a golden opportunity to get this right.
One or two other concerns have been raised with me, but I think we can talk about them at a different time. The principle behind this is something that fundamentally we are 100% behind. It is a very good policy, and it is really important that we get this right, but issues have been raised by legal experts who are cleverer than me—but probably not cleverer than the Minister, who I think started at Slaughter and May. Obviously, we are very keen to work with the Government to get this right; I was hopeful that the Minister would agree to meet me and some experts in this area to look at the drafting of this legislation to see if that is possible. We will support it if she is happy to do that, and then we can move forward, get something together and hopefully get this right. It is important that we get this right, but I would be grateful to hear the Minister’s thoughts.
Lucy Rigby
I am grateful to the whole Committee for their consideration of this matter—in particular the shadow Economic Secretary to the Treasury, the hon. Member for Wyre Forest (Mark Garnier). I share his vital commitment to continuous innovation in financial services. I would argue that what has made London and our financial services hub as world-leading as we are is our continuous embracing of innovation—he went quite some way back with coffee shops. I also share his view that the next stage of innovation, which is critical to embrace, concerns stablecoin, digital assets and tokenisation much more broadly. It is fair to say that we are coming at this from the same place.
With regard to stablecoin specifically, we wholeheartedly agree on the potential of stablecoin to play a really significant role in both retail and wholesale payments. The shadow Economic Secretary rightly refers to qualifying stablecoins as a definition being a subset of qualifying cryptoassets. He also recognises that this SI aims to bring the issuance of stablecoin within the FCA’s perimeter, which I distinguish from using stablecoin as a method of payment. Again, I think we are on the same page in relation to that.
There is a deliberate carve-out for stablecoin payment activities in this SI, because we have carved out any transaction for the purposes of the supply of goods or services. The intention is to deal with the use of stablecoins as a method of payment in the context of the upcoming payments strategy. An awful lot of work will be done on that over the course of this year, because, as the shadow EST rightly refers to, the UK is a leader in payments innovation, and stablecoin is a key piece of that.
There are other pieces of the stablecoin picture; as I am sure the hon. Gentleman knows, the Bank is currently consulting on a systemic stablecoin. Quite what will constitute “systemic” is yet to be defined, so that remains an area in which the industry is, understandably, looking for answers. As I said, the Bank’s consultation is open, and the FCA is also consulting on the detailed rules that will underpin this regime.
I note, and very much welcome, the shadow EST’s support in principle for these measures. It is critical that we make sure that every single i is dotted and every t is crossed. We all want this to go right, and I certainly do not want there to be anything that subsequently becomes an issue. I am not sure that there is at this point but, as I say, while I note his support in principle, I would nevertheless be more than happy to talk to him at a mutually convenient time, and for him to bring in the experts that he referred to. We can then hopefully persuade him that this is completely kosher as it is, or he can tell us why he does not think that that is the case. That is a meeting that I am more than happy to have.
I am grateful to members of the Committee for their consideration of this SI, and I hope they will join me in supporting these measures.
Question put and agreed to.