Draft Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2026
(1 day, 10 hours ago)
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The Committee divided: - Ayes: 11 / Noes: 4 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Housing, Communities and Local Government (Samantha Dixon)
I beg to move,
That the Committee has considered the draft Non-Domestic Rating (Chargeable Amounts) (England) Regulations 2026.
It is a pleasure to serve under your chairship for the first time, Mr Turner.
On 1 April 2026, business rates bills will change as a result of the 2026 revaluation of all rateable values. The draft regulations will deliver a transitional relief scheme to gradually phase in bill increases resulting from the revaluation over three years. They will also deliver a 1p transitional relief supplement, in 2026-27 only, to help fund the cost of the support scheme.
I want to be clear to the Committee that the transitional relief scheme we are discussing is only one part of the support package announced by the Chancellor at the Budget in November. The transitional relief scheme by design only protects ratepayers from changes in their rates bills before other reliefs. As we know, changes in other rate reliefs can occur at the revaluation, which also affects rates bills. An obvious example is the ending of the covid-era 40% relief for retail, hospitality and leisure, which helped many businesses recover from covid over recent years.
That is why we also have in place the supporting small business relief scheme, which provides further support beyond transitional relief for those ratepayers who, at the revaluation, will lose certain other reliefs, including the 40% retail, hospitality and leisure relief. The supporting small business relief scheme is delivered by guidance rather than regulations, and the full details of the scheme were published in early December.
It would be remiss of me not to acknowledge the concerns raised by the pub sector in recent weeks. As hon. Members will be aware, the Chancellor is looking at what more we can do to support pubs, and further work is under way. The details of that will be announced in the coming days. These further interventions are not formally part of today’s debate, but they are important context: as we consider the draft regulations, we must remember that they are only part of the picture. When taken together, our overall support package will ensure that most properties seeing bill increases will see them capped at 15% or less next year, or £800 for the smallest properties.
As hon. Members will be aware, revaluations are an important and necessary part of the business rates scheme. At revaluations, the rateable value—the estimated annual rental cost—of all 2 million non-domestic properties is uprated to reflect market conditions. At the same time, the multipliers—or tax rates—are adjusted in response to the overall movement in the tax base. To put it simply, if the overall total of rateable value increases at the revaluation, it has a downward pressure on the tax rates, and vice versa. That is why the multipliers for next year will be at a lower rate than they are currently. The new rateable values, which were published by the Valuation Office Agency in draft in November, will be applied from 1 April.
The nature of revaluations means that some ratepayers’ bills will go up, some will stay the same, and of course some will go down. The Government know that, and we know that support is required to help some of those ratepayers seeing increases to move gradually to their new liability over time. That is why we have introduced the generous support package to help ratepayers with their new liability over three years, at the centre of which is the transitional relief scheme we are discussing today.
The transitional relief scheme that the draft regulations will deliver will provide support to around half a million ratepayers that will see their bills rise substantially as a result of the 2026 business rates revaluation. That support will be provided over three years, and is worth about £3.2 billion.
The scheme will cap bill increases that arise due to the revaluation by a set percentage each year; for example, in the first year of the revaluation, 2026-27, the caps in the transitional relief scheme are 5% for small properties, 15% for medium properties and 30% for large properties. The caps are before changes in other reliefs and local supplements, such as the Crossrail supplement charged in London, so changes in actual bills may differ from the caps. As I have said, we have provided further support for properties losing certain other reliefs, such as the current 40% retail, hospitality and leisure relief.
For this revaluation, the transitional relief scheme will provide more generous caps for large properties in years 2 and 3, compared with previous revaluations. The caps will also rise with inflation in 2027-28 and 2028-29, as has been the case previously. Of course, ratepayers’ bills may also change for other reasons, unrelated to the revaluation—for example, if the property has been improved.
At the Budget, the Chancellor announced that to help fund the cost of the transitional relief scheme, the Government would introduce a 1p transitional relief supplement. This will only apply for one year, from 1 April 2026. The impact of the supplement will add only 2% to 3% to the bills of affected ratepayers in 2026-27.
As I have said, it is important to note that the precise increase in bills next year, and in the future years of this rating list, will vary depending on the individual circumstances of each ratepayer and, in later years, on inflation. However, the caps will ensure that large increases are moderated, so that ratepayers have time to adjust to their new bills, as opposed to seeing a very large increase overnight on 1 April 2026. Transitional relief is calculated and applied automatically by local government; ratepayers do not have to contact their local authority to apply for it.
Revaluations are an important and necessary part of the business rates system. By ensuring that rateable values are updated in line with recent market values, we ensure that the burden of business rates is fairly distributed across the tax base in line with market conditions. Equally, we recognise that a large overnight change in their rates bill can be challenging for some businesses. That is why, at the Budget, the Chancellor announced a generous support package worth £4.3 billion, which includes protection to help ratepayers to transition to their new bill, with further support for pubs to be detailed in the coming days. The draft regulations will help to deliver that important support package by implementing the transitional relief scheme, and I commend them to the Committee.
David Simmonds (Ruislip, Northwood and Pinner) (Con)
It is a pleasure to serve with you in the Chair, Mr Turner, for what I think is the first time.
As the Minister outlined, the purpose of the draft regulations is to round off the otherwise larger increases in business rates, but it is important to put that in context. A short time ago, we had a general election, in which the Prime Minister said that there would be a new regime of “permanently lower business rates”. I appreciate that the Treasury is currently hiring a new business rates tax adviser, but this issue is not going away.
In Prime Minister’s questions this afternoon, my hon. Friend the Member for Rutland and Stamford (Alicia Kearns) referred to a 2,000% increase in the business rates applying to one of the pubs in her constituency. Previously, the hon. Member for York Central (Rachael Maskell) had reported that a survey showed an average increase of 41% for hospitality businesses, 44.4% for music venues and 27% for independent shops in her constituency. The body that represents the United Kingdom’s gym and health providers, ukactive, reports an average increase of 60% in the business rates for which its members are liable. The National Pharmacy Association has reported that its members are having to remortgage their homes and put their life savings into their businesses to meet the business rate increases proposed by the Government. To date, over the last 12 months, there have been a net 200,000 job losses in the retail sector, which businesses report are primarily due to increases in business rates and national insurance contributions.
It is clear that that reflects a very substantial, permanently higher rate of business rates and an unwelcome U-turn by the Government. All of us can see the practical impact in our communities, and I would bet that there is not a Member in this room who has not been lobbied by local pubs, cafés and shops about the impact that this is having on their business.
Mr Andrew Snowden (Fylde) (Con)
Does the shadow Minister agree that this is creating a perfect storm and that the reason so many people are getting in touch with us—many MPs on both sides of the House will have owners of pubs, restaurants and bars getting in touch with them—is that this business rates change will crystallise that? In coastal areas like Fylde, people have less money in their pockets, so there are fewer visitors to hospitality venues to start with. Those businesses already face significant cost increases because of changes to national insurance and other changes in the tax system. As a result, these 40%, 50% or 60% changes in business rates will be the final straw for many of those businesses.
The Chair
Order. We have an hour and a half to debate the regulations, but interventions must be a bit shorter.
David Simmonds
My hon. Friend has outlined in very clear terms what any of us in this room could on behalf of our constituencies. There will be different local dynamics, but everywhere is suffering as a consequence of the increased taxes on businesses. Government Members might not wish to hear such messages from Opposition Members—and that is understandable, because this is politics—but they might listen to the hon. Member for Burton and Uttoxeter (Jacob Collier). In Prime Minister’s questions, he said that “any wins” had been “wiped out” by the increase in business rates, compared with what was proposed through transitional relief, and he reported to the House 60% and 70% rises in business rates affecting his local pubs.
I will conclude with some questions for the Minister. First, what is the net benefit of all these measures—the increases in business rates and the transitional relief—to local councils? We know from the local government finance settlement that two thirds of local authorities in England lost net funding from central Government as a consequence. Given the substantial increase in business rates income that this would imply, what will the overall impact on local government funding be?
Secondly, what assessment has the Department made of the impact that this will have on high streets and local businesses in particular? Many of those business have been lobbying us because the family business tax, the rise in national insurance and the interaction with the changes in the point at which national insurance is charged have put huge pressure on them. The impact of these business rates on top of that is enormous.
Thirdly, what role have the local reliefs, which were briefly touched on by the Minister and are set out in the explanatory memo, played in the determination of the funding settlement? Although the fig leaf is offered that local reliefs may be available, it is clear that the Government’s assumption is that all these increases will be implemented in full before any consideration is given to additional funding. What consideration has the Minister given to a return to the local authority business growth incentive business rates regime, which was designed to incentivise local authorities, through additional support from central Government, to look to create opportunities to support local businesses and high streets, in a way that we know was very effective?
The Prime Minister said on 7 January that the Government were in talks to see
“what further support and action we can take.”—[Official Report, 7 January 2026; Vol. 778, c. 260.]
That was days after he acknowledged that as a result of this settlement, pubs and hospitality, in particular, “will struggle.” The question for Opposition Members is, is this it?
The Chair
Before I invite Members to bob if they want to catch my eye, may I ask them to stick strictly within the confines of the draft regulations, please?
Peter Lamb (Crawley) (Lab)
It is a pleasure to serve under your chairmanship, Mr Turner. I am here replacing another Member. When they told me the subject, I said, “Great! It is the first time I have ever actually known something about the subject.” They said, “For goodness’ sake, don’t let the Whips hear you say that”—such is the time in which we live. At the risk of incurring the wrath of Members who would clearly like to get out of this room as quickly as possible, I hope I might be of service to the Government on this issue.
For almost a decade I ran a local authority that collected one of the highest levels of business rates in the country. We are seeing the second highest increase as a result of changes being instituted now—such is the consequence of having a major airport in our patch. However, I am aware that we are likely to hold a vote on this topic, so I would like to frame in people’s minds exactly what is being debated before we get to a vote.
The current system of discounts for the hospitality industry is running out; no additional money has been put forward to fund it—it was not in the Budget. Currently, these things are not done through legislation or statutory instrument, but operate through guidance, with local authorities essentially given discretionary relief and paid back by the Government. If we do not put another arrangement in place, that collapses.
The proposed system delivers a lower rate than the previous system. If Members do not vote in favour of it, a system will come into effect that has a higher level of rates for the hospitality industry—with its level of interest in this—and for businesses that are struggling at the moment than is currently the case. This is the only proposal on the table at the moment.
Mr Snowden
If that is the case, would it not have been better if the Government had had the foresight to put a new system in place to deal with the discounts that existed before, and made some choices about where the pounds are spent—rather than on higher welfare, maybe on supporting businesses?
Peter Lamb
I would be delighted to have a different system in place. In fact, I spent many years as a local authority leader, lobbying the last Government to try to do anything on that front to resolve a system that, frankly, is still Elizabethan in design and in no way reflects the changing nature of local economies. It requires a fundamental review, and I understand from the Minister that we are looking at various changes at the moment, and further measures are being put in place to support people. However, I say to Members in this room today that if this proposal goes to a vote and they vote it down, they will in practice be voting for higher rates on these struggling businesses.
A second thing will happen. During covid, I was leader of my local authority, and businesses were suddenly unable to pay business rates. The liability around business rates is such that, regardless of what we have coming in as a local authority, we have to pay that money to the Government or they will take legal action; that is technically the requirement. My largest donor was Gatwick airport—[Interruption.] Rather, my largest contributor was Gatwick airport; it has not donated any money to me at all. It suddenly found that because aviation was hit so hard, it could not afford to pay its business rates at all. We faced a situation where local authorities in the area could not make payroll under the existing system. When Members vote today, they must therefore be very clear that they are voting to bankrupt not only the hospitality industry, the retail industry and other struggling sectors, but their own local authorities. That is all I will say on that.
If Opposition Members would like to propose something else in the House, we would be more than happy to debate it. However, if this proposal goes to a vote and they vote against it, they will have voted to put a higher rate of taxation on the hospitality industry.
Sir John Whittingdale (Maldon) (Con)
I do not want to repeat the excellent points made by my hon. Friend the Member for Ruislip, Northwood and Pinner, but I have listened carefully to the Minister and I have to say that essentially, this measure is a sticking-plaster over a gaping wound. It is of course the case that specific relief was provided during covid and that was going to come to an end, but it did not have to be removed in its entirety overnight. It is that decision, which is a choice being made by the Government, that has inflicted these enormous rates bill increases on many businesses right across the country, particularly on the high street.
I have been contacted by many of the pubs in my constituency and they have raised concerns about not just the impact of these existing measures, but the Government’s promise that there is some relief coming over the horizon, because it is extremely unclear what that will be. As one example, the pub I visited last weekend had rooms upstairs, so does it qualify as a hotel or a pub, and to what extent is the relief package going to benefit it? Those influences are having a real impact and affecting businesses’ decision about whether they can continue to trade. It is simply not good enough for the Government to say, “Well, in due course we’ll get round to telling them.”
It is not just pubs; I hear the Minister talking about relief coming for pubs, but as my hon. Friend the Member for Ruislip, Northwood and Pinner said, many other kinds of businesses are equally impacted. I am a patron of the Music Venue Trust, which represents grassroots music venues across the country. As I raised with the Exchequer Secretary to the Treasury in the Chamber earlier this week, some of them have not paid rates before and are suddenly facing bills, and others are seeing enormous increases. As the MVT said in its statement on the measures, these are not bills but “closure notices”—these venues will simply not survive.
I take the point made by the hon. Member for Crawley that the measure that we are debating will provide some small relief but it is simply not enough. It is not going to address the real issues that are affecting businesses. I hope the Minister will press her colleagues to introduce those measures and tell us a little more because at the moment there is total uncertainty for businesses and their future.
Zöe Franklin (Guildford) (LD)
It is a pleasure to serve under your chairmanship, Mr Turner. I will keep this brief. I was grateful that the Minister recognised that this issue must be set in its wider context: businesses are struggling. I regularly have conversations with businesses in my constituency and we are getting to the point where the situation could be a closure notice for many, as was mentioned earlier. The Liberal Democrats are particularly concerned that the Government promised to permanently lower business rates for retail, hospitality and leisure, but have failed to use the full powers they gave themselves to deliver support.
We are also concerned about transparency and accountability. Despite repeated parliamentary questions, the Government have not published clear, sector-specific data on the impact of the revaluation, even though the Valuation Office Agency has confirmed that such data was shared with the Treasury. That lack of transparency makes it so much harder for Members to assess what the revaluation really means for their constituencies. That is ever so important where industries, such as hospitality, are a major part of their local economy. We have argued for practical targeted support and we have called for an emergency VAT cut for hospitality, accommodation and attractions. We have also raised concerns about the cumulative impact of alcohol duty and national insurance rises.
Ultimately, we believe the measure set out in this statutory instrument do not go far enough to address the scale of the challenge facing businesses in places like my constituency, but voting against it would be voting against any transitional support at all, so for that reason, while I cannot support it, I will not oppose it. I will abstain and we will continue, as a party, to press the Government to recognise the pressures facing town centres and to take urgent action to protect pubs and jobs. I do push the Government, however, because they need to do more and they need to do what they have promised.
Lewis Cocking (Broxbourne) (Con)
It is a pleasure to serve under your chairmanship, Mr Turner. I welcome the tiny—absolute minuscule—support that the Government are offering in this legislation. We are continually told that most rates will be capped and the changes will not affect most businesses on the high street, but I have not spoken to a single business or pub on my high street that is not seeing a significant increase in its business rates, even with the relief. Let us take the Farmers Boy in Brickendon: its business rates are going to go from £4,000 to £8,000. I do not understand which businesses the Minister or people in the Department are speaking to out there to say that most are not going to see an increase. From the businesses that I speak to, that is simply not true.
We continually hear from the Government, “You guys were in power before the last general election,” but they have had 18 months and they have done nothing. They had 14 years in opposition when they could have come up with a credible plan for government, but they have proved to the people up and down the United Kingdom that they were clearly incapable of doing that. I want to understand from the Minister what the Government will do to support businesses and stop these closure notices—because they are closure notices for many of my constituents in Broxbourne.
Samantha Dixon
Today’s debate illustrates clearly how passionate Members are about their local high streets and the businesses in their constituencies, which I completely recognise. I will try to address Members’ comments.
The introduction of the permanently lower rates for eligible retail, hospitality and leisure properties, paid for by the high-value multiplier, is just the first step in the Government’s programme to transform the business rates system, which the hon. Member for Ruislip, Northwood and Pinner asked me about. In September 2025, the Government published an interim “Transforming Business Rates” report to set out what we will do next to meet our objective of delivering a fairer business rates system that supports investment and is fit for the 21st century. At the Budget, a call for evidence was published on the role of business rates in business investment, which will help us to develop a system that better supports investment and economic growth. The transformation of the business rates system is a multi-year programme happening throughout this Parliament, with much more to come.
I turn to other issues. The hon. Member asked about the impact on local government. We hope that the revaluation will be, as much as possible, neutral. We will adjust the business rates retention scheme to offset the impact on local revenues.
David Simmonds
I am grateful to the Minister for addressing that point. It slightly begs the question, however, if the main purpose of these increases—we have heard about 2,000%, 60% and 27% increases for independent shops, as well as 200,000 job losses—is to raise additional business rates income, but the effect on local government finance is neutral. What on earth is the point of inflicting all that pain on the business sector if it does not put a single extra penny in the pockets of local government?
Samantha Dixon
We do recognise that business rates make up about a quarter of local authorities’ core spending power and they support critical local services, but the revaluations maintain fairness in the system by redistributing business rate liabilities among ratepayers to reflect recent market conditions. Standard features of the business rates tax system mean that between financial years, tax take may increase or decrease due to inflation or changes in relief. Hon. Members will be aware that rates rise in line with inflation and change annually to reflect inflation. On the wider impact on local government, I will respond to the hon. Member for Ruislip, Northwood and Pinner in writing.
Members have raised the issue of the high street. It is important to note that the temporary and unfunded—I repeat unfunded—40% RHL relief for 2025-26 will end on 31 March, and will be replaced by the permanent lower retail, hospitality and leisure tax rates from 1 April. The change, coinciding with the revaluation, means that some retail, hospitality and leisure properties will need greater support to help them transition to their new bill.
We have provided exactly that through expanding the supporting small business relief scheme, which will, as I outlined, cap bill increases for ratepayers who are losing some or all of their small business rate relief, rural rate relief, 2025-26 retail, hospitality and leisure relief, or 2023 supporting small business relief, at the higher of either £800 or the equivalent transitional relief cap. My hon. Friend the Member for Crawley put it most ably: to vote against this particular measure would be to see businesses facing higher bills, which is not what the Government want.
I thank all Members for their contributions to the debate. As my right hon. Friend the Chanceller announced at the Budget, the business rates support package, of which this relief is a part, will help ratepayers facing bill increases as a result of the revaluation to move gradually over time to their new liability. I am grateful for the opportunity to speak on this matter today, and I commend the draft regulations to the Committee.
The Chair
It seems that the Committee may divide on the draft regulations, so let us be clear on what we are discussing. The motion being debated is that the Committee has considered the instrument; it is not a motion to approve the instrument. The House will decide whether to pass a motion to approve the instrument, if such a motion is put before it.
Question put.
Draft Medical Devices (Fees Amendment) Regulations 2026
(1 day, 10 hours ago)
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The Committee divided: - Ayes: 11 / Noes: 4 - Question accordingly agreed to.
The Parliamentary Under-Secretary of State for Health and Social Care (Dr Zubir Ahmed)
I beg to move,
That the Committee has considered the draft Medical Devices (Fees Amendment) Regulations 2026.
It is a pleasure to serve under your chairship, Ms Jardine. I am grateful for the opportunity to open the debate on these regulations, which were laid before Parliament on 16 December 2025 and are due to come into force on 1 April 2026. The purpose of the regulations is to amend the Medical Devices Regulations 2002 and the Medical Devices (Northern Ireland Protocol) Regulations 2021 to update their fee structure. They do that by introducing a new medical devices registration fee, which provides additional funding for the Medicines and Healthcare products Regulatory Agency’s strengthened post-market surveillance of medical devices.
From 1 April 2026, the new annual fee will apportion the MHRA’s PMS costs more fairly across the sector and will replace the current per-application fee, which is insufficient to cover the costs of the post-market surveillance we wish to see in future. In 2026-27, the fee will be part-subsidised by the Department of Health and Social Care, with the intention that, subject to further ministerial and parliamentary approval, we will move to a fully cost-recovering annual fee model from 2027-28.
As to why the regulations are necessary in a modern MHRA regulatory framework, PMS refers to the work that the MHRA does to collect, review and act on safety and performance issues relating to medical devices on the market. The independent medicines and medical devices safety review highlighted the need for a higher-quality medical devices PMS framework. The Medical Devices (Post-market Surveillance Requirements) (Amendment) (Great Britain) Regulations 2024, which came into force on 16 June 2025, were a key part of the wider reforms developed in response to the recommendations in that review. The 2024 regulations strengthen the medical devices safety and surveillance framework, improve patient safety and support the MHRA’s more risk-proportionate and innovation-friendly approach to regulation. However, they are also estimated to increase PMS workload by 60% to 70%, at an annual cost of around £17 million, so finding a sustainable funding model is vital.
Historically, the PMS of MHRA devices has been funded mainly by subsidy from the Department of Health and Social Care, and partly by the current per-application fee model. Subsidising ongoing regulatory activity through general taxation is not the MHRA’s usual approach to fees and services. The usual approach is based on His Majesty’s Treasury’s “Managing Public Money” guidance, which states that fees should be set on a full cost-recovery basis. Therefore, the regulations reduce subsidy by introducing a direct annual registration fee, so that those who benefit from access to the market fund the regulatory activity that underpins it.
On the intended operation of the regulations in practice, the new annual fee apportions the overall cost of the MHRA’s PMS activities by using the global medical device nomenclature system, which is a globally recognised system for naming and classifying medical devices. It is hierarchical, with broader groupings at higher levels and more granular entries at lower levels—for example, level 2 is a “category” and level 5 is an individual GMDN “term”.
Medical devices are registered with the MHRA using a GMDN code. Prior to placing devices on the market for use, the MHRA hosts a register of them called the device online registration system, or DORS—I am sorry, Ms Jardine, it is another acronym. The register is a valuable resource to monitor devices in circulation and to know when there are concerns about their uses. The proposed fee will be calculated using information from DORS; in practice, the MHRA will charge based on the number of chargeable GMDN level 2 categories that the manufacturer’s registrations fall into. It is important to note that if a manufacturer has multiple devices in the level 2 category, they will be charged only once a year for that category.
As the GMDN system is already in use for device registration, this approach also limits the administrative burden because fees can be calculated from existing data, rather than requiring additional information from the manufacturer, and is therefore less onerous. The MHRA consulted widely on the fee as part of its last statutory fees uplift and updated its approach based on stakeholder feedback. The consultation ran for two months, from August to October 2024, and was widely promoted and was supported by a small and medium-sized enterprise webinar.
The annual fee proposed in the consultation was £210 per GMDN level 5 term, using the most granular, fifth level of the GMDN structure. Most respondents did not support the proposal: 72% were opposed, 18% had no opinion and 10% supported it. Their concerns focused on the introduction of a new annual cost at short notice and the risk of a disproportionate impact on SMEs and areas that attract more GMDN registrations, such as in vitro diagnostics and—something that is close to my heart—surgical instruments.
In response to feedback, several changes were made. The MHRA set up a confidential, trusted advisory group of industry representatives to discuss the approach and seek further advice on implementation. That was welcomed by the members and provided useful feedback and assurance. The fee is being rolled out in a phased way to give the sector time to adapt and respond to its needs. The costs have been fully subsidised in 2025-26, and this instrument introduces a part-subsidised annual fee from 2026-27, with the intention to move to a fully cost-recovering annual fee model from 2027-28, subject, as I have said, to further ministerial review and parliamentary approval. The fee was remodelled to be charged at GMDN category level 2, rather than level 5, which is a higher, more general level, which will result in the costs being more equitably spread.
Overall, the MHRA estimates that, crucially, 56% of manufacturers will pay only £300 a year, and that 82% of manufacturers will pay no more than £900 a year. Crucially, SMEs are more likely to pay only £300 a year, as they are likely to have a more limited range of products compared with larger companies. To add further context, the medical technology sector generated £48 billion of turnover in 2023-24 and the total post-market surveillance cost was £17 million, representing 0.035% of total revenue. That is a good example of how consultation feedback and stakeholder engagement can be used to improve a proposal, in this case by modifying the fee structure to be more equitable and proportionate.
I recognise that manufacturers will always prefer to avoid additional costs, but I am satisfied that moving to a fair and, crucially, more predictable cost recovery approach to fund ongoing PMS is the right thing to do and that the changes made help to address the key concerns raised.
Finally, the MHRA has been working to help the wider medical technology sector to prepare for this change. The phased roll-out has given the sector time to adjust and get ready. The MHRA has published guidance explaining the new fee—how it will be calculated, what account holders need to do to ensure that their registration data is accurate, and how and when the payment needs to be made. The MHRA is improving the functionality of its DORS system so that account holders can see their chargeable GMDN categories, helping them to understand and check what they will be charged for in advance, to give them additional certainty. This new functionality will be ready for 1 April 2026. In the meantime, the MHRA has emailed all manufacturers directly with an estimated fee based on their registrations of November 2025.
In summary, these regulations introduce a necessary and fair annual registration fee from 1 April 2026 to help to fund the MHRA’s strengthened PMS ambitions, as well as its regulatory ambitions to make this country the world leader in life sciences and the medical technology sector. The approach has been improved in response to consultation feedback and is being introduced in a phased way to give maximum time to the sector to adapt, while ensuring that the MHRA has the resources it needs to protect patients and maintain confidence in our growing market. For those reasons, I commend the regulations to the Committee.
Dr Caroline Johnson (Sleaford and North Hykeham) (Con)
It is a pleasure to serve under your chairmanship, Ms Jardine. I agree that post-market surveillance is important for patient safety, but predictability for businesses and reducing the burden on them is also important.
On 12 May 2025, the Minister for Secondary Care, the hon. Member for Bristol South (Karin Smyth), said that the SI that we were discussing on that occasion—the Draft Medical Devices and Blood Safety and Quality (Fees Amendment) Regulations 2025—would increase the fees across the MHRA for devices from June. That included fees for various things, most of which were increased by between 9% and 16%, but some fees, such as for clinical investigation charges, were increased much more. She said at the time that this would
“ensure cost recovery until 2027”.—[Official Report, First Delegated Legislation Committee, 12 May 2025; c. 3.]
It is now January 2026 and the Government are back for more money. Why is that? They increased the fees for regulation 53 of the Medical Devices Regulations 2002—a regulation that the regulations that we are debating today also affect—from £240 to £261 back in June, and they plan to increase them again.
Let us consider why. In May, I raised some questions about the impact assessment produced for that legislation, for two reasons. First, it did not appear that the national insurance increase or the reduction in the national insurance threshold had been accounted for in the calculations. Secondly, the impact assessment assumed a 2.2% pay rise for civil servants for the years 2024-25 to 2026-27. Even then, that level was below inflation.
Regarding staff costs, the Minister in that debate said she thought they were NHS staff, but she later wrote to me to confirm that the national insurance contribution hikes were payable by the MHRA because the staff were civil servants. In response to my written questions, the Minister declined to say whether national insurance was included, but assured the House that the MHRA had “modelled…future costs”, that the uplift would be enough until April 2027 and that the MHRA would find “efficiency savings” if required to manage any future shortfall.
I asked the MHRA, by way of a freedom of information request, what increases it faced in national insurance costs as a result of reductions in the thresholds and increasing the rate. It said that it faced a yearly cost of £1.9 million. I also asked:
“What estimate has the MHRA made of the additional cost arising from the difference between”
the pay rise estimated in the impact assessment and the actual pay rise that was given. The answer was £1.2 million. That is a shortfall of £3.1 million, or 20% of the increase in fees from the last SI.
The MHRA said at that time that
“we believe that, while this extra cost”
—national insurance—
“was not included, our fees cost-recovery methodology and approved fees are still sufficient to cover projected costs over the next two years, without any negative impact on service delivery or financial sustainability.”
That letter was dated 1 August 2025, which is after that PMS legislation came into effect. There was a significant difference between the calculations that the MHRA produced and the £3.1 million figure, which raises questions about their accuracy and the grip that the Government have on the detail and our public finances.
The Government are now here again, wanting to increase the registration fee by an additional 15% to £300, but this time with no impact assessment. The regulations that we are discussing today not only increase the registration fee by 15% from April 2026, but add a maintenance fee of £300 for each device in a category listed, starting with
“the fee period immediately following that in which the person paid the fee for the device registration…due on the first day of each…period”.
That would seem to mean that if a device is registered between now and April, they pay £261 now and £300 on 1 April, which will presumably incentivise delaying any current registrations. I can see that the Minister has adjusted for this in future years, but he does not seem to have done so for those registering this year.
I am interested in how sure the Minister is that his estimate for the increase in the post-market surveillance of £17 million is robust, given that we are back six months after the Government were sure they had enough. This year, the de minimis assessment says that £6 million will come from grant in aid from DHSC, £4.9 million from DHSC financial support and £6.1 million from the fee income. The current registration fees are predicted to produce £1.6 million, leaving a difference of £4.5 million to be covered by fee increases.
The de minimis assessment’s best estimate says that the MHRA needs to make £4.3 million of that, which is £300 a year on each of the devices, in the way that the Minister described. However, it also says that
“we plan to seek approval for full cost recovery fee for subsequent years”,
which the Minister has confirmed is his plan today. Why is that not in today’s regulations? Is that because it would have required an impact assessment? How much will this cost businesses? This will be a further £10.9 million and, if £300 a year will get the Minister £6.1 million, then for £17 million he will need about £836. That is a massive increase on businesses coming down the track next year, which I do not think he has fully considered.
Burdens on businesses are important because they stifle activity and innovation. This Government have already added significant burdens to businesses: higher taxes and national insurance rates, the reduction of the national insurance threshold, the Employment Rights Act 2025 and, for family-owned businesses, the business property relief. They are now adding further costs, and I am concerned about the effects on innovation and early access to devices for patients.
What is the Minister’s assessment of international comparators? In recent times we have seen a loss of pharma investment in the UK. Will the extra fees this year, and the prospect of hikes next year, deter investment? There is no impact assessment, so how can we be sure? I am particularly concerned about small businesses and microbusinesses. The de minimis assessment says that it is not possible to exempt microbusinesses. Why is it not possible? It is a political choice not to exempt them, but it is certainly possible to produce regulations that do.
As the Minister described, the consultation revealed widespread concern, with only 10% support. Changes have been made following discussion with a trusted advisory group. Who is in the trusted advisory group? Whose voices from micro and small businesses were heard in that group? There has been no further consultation and no impact assessment on the regulations the Minister has presented today.
I also have some specific questions about obsolescence. Do businesses need to pay a registration maintenance fee for putting a product on the market to sell or lease? That was previously a single charge that lasted for the product’s lifespan, however long that would be. There is now an annual fee. What provision is made for the clinical use and post-market surveillance of items that cease to be registered because a company goes bust or stops selling the item? Can the item still be used? How would a clinician know that the lapse of a previous licence had stopped, particularly if it was a personal piece of medical equipment such as a stethoscope? How does that affect post-market surveillance?
Could registration be discontinued for some items, where someone has several categories possible, in order to register another category and force obsolescence? For example, I have seen one case where the failure to produce spare parts lead to an entire trust having to replace every single defibrillator, at great expense. If a company went bankrupt and was no longer able to pay its post-market surveillance fee, the item would no longer be registered. How would that work?
I also want to ask about categories. Originally, as described in the consultation, the GMDN category was level 5, which is extremely specific. It is now level 2, which is better, but microbusinesses still pay the same charges as larger businesses, so a business selling one product would pay the same as a business selling dozens of products in the same category. Also, there is no accounting for the size of the product or the surveillance required. For example, the charge for an MRI scanner, worth £2 million, would be the same for as a single-use scalpel worth less than £1. Is that fair? I appreciate that people may sell more scalpels than scanners, but what about an umbilical artery dilator, of which not too many are used, at £24 each? Producers of inexpensive but highly specific and useful devices may be disadvantaged. What will the effects be on costs for patients? Again, there is no impact assessment, so we do not know. How much of the cost produced by these regulations does the Minister expect to be transferred back to the Government in paying for more expensive devices?
Overall, there are many more questions raised than answered by these regulations. Patient safety is paramount. There is, of course, a cost to ensure that devices are properly and proportionately regulated, but the Government also need to be responsible and careful with money. As they are, the regulations are a blunt tool adding costs to businesses and a promise of much more cost to come. There is no proper impact assessment, and there is a risk to small businesses and microbusinesses and to inexpensive, low-volume items. As such, I cannot support the regulations.
Dr Danny Chambers (Winchester) (LD)
I am very glad to be here to speak about medical devices and life sciences, because not only are they about solving many of the problems we are facing as a country, such as antimicrobial resistance in treating diseases, but they are a fantastic way of growing our economy. We welcome the fact that the Government acknowledged that the initial plans would have disproportionately affected small and medium-sized businesses. Like all SMEs around the country, they are struggling with everything from soaring energy prices to national insurance and Brexit red tape.
It is vital that we reach a balance, and the Minister spoke well on this. It is imperative that funding is sufficient for the MHRA to regulate the market effectively, and we do not want to deter medical technology companies from investing in the UK. That is why we have called continually for a bespoke customs union with the EU to slash red tape and for a major boost to research and development funding, all of which would hugely benefit the life sciences sector.
Will the Minister confirm that the Government are fully confident—with some sort of impact assessment or study to show this—that the adapted fee structure will not be overly punitive to business, and SMEs in particular, and will not end up inadvertently reducing the investment in and growth of medtech in the UK?
Tom Collins (Worcester) (Lab)
I am very pleased that the Government have taken this approach of listening carefully, responding and trying to build a solution that is manageable and predictable, with a phased transition. As an engineer, I know that safety of products is absolutely paramount. Features such as post-market surveillance are incredibly important, along with the rest of the good regulation system. I am therefore pleased that the Government have taken this seriously, with careful thought and while ensuring that, primarily, patients remain safe.
I will raise one specific case with particularly significant implications for patients. People who rely on continuous insulin therapy, such as those with type 1 diabetes, depend on devices—insulin pumps, primarily—to live their daily lives. Their interaction with the pump is frequent—the relationship is deep—and the device plays a significant role in their life. People will often keep an insulin pump for a number of years, becoming very familiar with its operation. It is important to note that such devices are increasing in sophistication.
In recent years, we have seen some incredible advances in technology, such as continuous glucose monitoring, and there are now more and more pumps on the market with closed-loop control, where the delivery of insulin responds in real time to the patient’s blood glucose level. That has been a transformative technological step forward, but it puts a lot more sophistication into the devices and requires a lot more integration with other devices, such as the CGM devices. That means that patient’s relationship with the pump gets even more sophisticated and deep, and their ability to manage a healthy lifestyle depends critically on the device and their relationship with it. Increasingly, too, patients are dependent on an online platform and a continuous service agreement to maintain the use of the systems and their integrations.
My concern is that if we now introduce a way for a registration to expire early, or for its maintenance not to be renewed, that could create a sense of insecurity or some practical insecurities for patients with insulin pumps. Despite the fact that for an individual medical device, the fees are indeed modest—especially when put in context—we can also imagine situations in which unscrupulous manufacturers might decide that withdrawing a product early suits their product road map and their profit margins. It is important that patients understand that they are safe, that we have mitigated such risks, that patients have control over when and how they change their pump technology, and that it will not be taken away from them for any reason, but in particular for commercial reasons outside their control.
I am confident that the risks can be managed and mitigated, alongside the draft regulations as they into effect, working with the NHS. I am very grateful for the open and collaborative response that I have had from the Minister and the Government up to now on this topic. I put it on the record that it is important that we investigate the potential impacts on this particularly vulnerable group of users, to ensure that they are not compromised or put at a disadvantage as we introduce these important and valuable regulations.
Dr Ahmed
I turn first to the Opposition spokesperson, the hon. Member for Sleaford and North Hykeham. Like me, she is a scholar of medicine, and she practiced in the NHS throughout all 14 years of the last Government. She will know, possibly at first hand, that the MHRA as a regulatory body has not been fit for purpose for a long time. It has lagged behind the inventions and innovations now available to patients, particularly in medical technology. She will also know it is this Government who are placing the MHRA at the service of patients by being bold in our reforming agenda and our leadership in regulating medical technology.
The proof point of that reform is our consultation with trusted groups, including trade associations such as the Association of British HealthTech Industries, the British In Vitro Diagnostics Association and the British Dental Association, all of which were consulted extensively over the course of these regulatory proposals, and with which I engage on a regular basis to garner their support, so that at every step of the way our life sciences sector plan is facilitated by our regulatory institutions and authorities. Indeed, the MHRA was present last week in front of a number of innovative biotechnology companies, whose message was loud and clear: they view the UK’s regulatory framework as first in class, innovative and forward-thinking, and they therefore see investing in our country as an attractive proposition.
On the impact assessment, I assure the Opposition spokesperson and the hon. Member for Winchester that we are not avoiding an impact assessment. In fact, we are supporting industry with a phased approach to fees, and we are open to an ongoing consultation and dialogue as this fee structure comes into place next year and the year after.
My hon. Friend the Member for Worcester is a learned Member of this House, and I entirely take on board his comments regarding insulin pumps. Wherever possible, in the discussions that I have had with my officials and the MHRA, we have said that this fee structure should include the totality of a device, rather than its component parts. I am very happy to take his comments back to my officials, so that we can make sure that he and his constituents are satisfied that there are no unintended consequences in that regard. I thank all Members for their contributions, and thank you, Ms Jardine.
Dr Johnson
The Minister is making a great speech, but he is not answering lots of the questions—I appreciate that he may not have all the answers. Can he commit to answering them by letter? Will he also talk about the possibility of obsolescence? If an item ceases to be registered—he is encouraging people to deregister things that they are no longer selling—can it still be used in the NHS? How would a doctor know whether something had ever been registered in the past and was safe?
Dr Ahmed
I am happy to write to the hon. Lady to give her a fuller answer. She knows that procurement in different parts of the NHS rightly reflects local clinical practices, although there are overarching national frameworks for buying such products. Innovation lends itself to the fact that, over time, patients will want to choose and move on to newer forms of devices that treat their conditions in line with the latest clinical evidence. I am very happy to write to her more extensively on obsolescence and her other questions.
I would like to address some points made on the following topics: the impact on SMEs; the impact on market attractiveness more extensively; GMDN suitability and transparency; clarity on costs; and the evaluation of value for money. I also want to make some points regarding Northern Ireland. On SMEs, as the Opposition spokesperson highlighted, I recognise that new regulatory costs can be felt more sharply by smaller firms, and the MHRA has listened carefully. That is why the fee has been designed to spread costs more equitably across the sector, and the majority will pay only £300 per year.
Following consultation feedback, charging is based on the number of GMDN level 2 categories that a manufacturer’s registered device falls into, rather than the much more granular level 5. That matters for SMEs because they are more likely to have closely related product variants that may attract multiple level 5 terms, but sit more generally within a single level 2 category. Under this approach, multiple products in one level 2 category are therefore charged once per year, reducing the need for repeat charges on minor product variations.
The MHRA estimates that around 56% of manufacturers will pay a single unit fee of £300 a year, and SMEs are most likely to fall into that group, because they typically have a narrower product range than the larger companies. The MHRA is not offering waivers or special SME rates. The charge is designed to be proportionate, and any waiver would simply shift costs elsewhere. The intention is to keep the charge predictable and proportionate, and to phase it in.
Finally, SMEs stand to benefit from a stronger PMS framework, leading to earlier identification of issues, fewer surprises and a more risk-proportionate and predictable regulatory approach that supports responsible innovation. I must make it clear that we are not asking for more money: we are simply changing the MHRA’s regulatory framework to put it on a more sustainable footing so that in the future it is less reliant on the taxpayer and, therefore, more pro-innovation, more pro-market and better able to have a healthier commercial relationship with new and established companies.
On innovation and UK attractiveness, a robust PMS framework is not a brake on innovation—far from it. It helps to make the market more predictable and investable, as per my conversations over the last couple of weeks with major and smaller biotech industry firms. In developing this instrument, we have ensured that the Secretary of State must have regard to three considerations set out in the Medicines and Medical Devices Act 2021: safety, availability, and the attractiveness of the whole of the United Kingdom as a place to research, develop, manufacture and, crucially, supply medical devices. This fee supports safety by ensuring the MHRA has sustainable funding for strengthened PMS, so that risks can be identified and acted on sooner. It supports availability by underpinning a stable and predictable system of oversight that helps to maintain continued safe access to effective devices.
Dr Johnson
Will this post-market surveillance continue if a device ceases to be registered?
Dr Ahmed
The anticipation would be that post-market surveillance will continue if devices are still used in a clinical setting.
PMS supports UK attractiveness by strengthening confidence in the market for patients, clinicians and investors, and by resourcing a more risk-proportionate, innovation-friendly approach to regulation, including making better use of real-world evidence and enabling more flexible and efficient regulatory burdens over time. A stronger PMS framework will also reduce uncertainty for innovators by enabling earlier proportionate action and helping to avoid sudden escalations that can disrupt plans or supply. By improving real-world evidence and post-market detail, it will also strengthen confidence in the UK as a place to generate evidence, invest and bring new devices to patients.
Hon. Members, including the hon. Member for Sleaford and North Hykeham, asked questions about global medical device nomenclature as the basis for apportioning costs. GMDN is internationally recognised for naming and grouping medical devices and is already used for UK device registration through the DORS, since 2018. Using GMDN categories means that the fee can be calculated from information that manufacturers already provide, making it less onerous, rather than creating a new system for reporting requirements purely for charging purposes. That helps to minimise the administrative burden across the sector, including for SMEs.
Category-based charging is also a practical and broadly proportionate proxy for the breadth of devices and types a manufacturer places on the market and, therefore, the likely level of PMS activity. It avoids a per-device approach and the complexity and burden of trying to calculate an actual PMS cost for each manufacturer.
On transparency, the MHRA is improving DORS, so as of 1 April account holders can see the chargeable GMDN level 2 categories linked to their registrations. Ahead of the go-live, MHRA has written directly to all manufacturers with their estimated fees so that they can check in advance their registration data and plan their budgets accordingly.
On clarity of costs, the consultation proposed an annual fee of £210 per GMDN term at level 5. The feedback was clear that that would be disproportionate, because level 5 is more granular in some areas than in others, exposing SMEs and manufacturers of devices such as in vitro diagnostics and surgical instruments to higher costs. In response, the MHRA redesigned the fee, so its charging is based now on the GMDN level 2 category, which is much broader, and consistent across product ranges. The unit price is higher because there are fewer level 2 categories than level 5, so the amount to recover is spread across fewer units, and the cost base has been updated to reflect inflation since the consultation.
The fee is also being introduced with a phased approach to give manufacturers time to adapt. The PMS has been fully subsidised by the DHSC in the year 2025-26, and this instrument introduces a part-subsidised annual fee model by 2026-27. The intention is to move to a fully cost recovery annual fee from 2027-28, once the new arrangements are embedded and a full impact assessment can be prepared.
On value for money and evaluation, the main objective of strengthening post-market surveillance is to improve health outcomes by increasing the quality and quantity of safety and performance data, and reducing the time from identifying a risk to making a corrective action. That supports patient safety and continued access to safe, effective devices and enables a more risk-proportionate, pro-innovation approach to regulation by strengthening the evidence base and supporting earlier proportionate action where needed.
Dr Johnson
If a device ceases to be registered, can a doctor still use it in the NHS—legally?
Dr Ahmed
As the hon. Lady knows, doctors are able, in certain circumstances, to prescribe unlicensed treatments to their patients if they feel it is a proportionate act to take. It is not something that is in guidelines or routinely recommended, but is at times at the discretion of individual clinicians. Clearly, that would be a peripheral activity, and something that could be looked at by local governance processes; but I am confident that these regulations strengthen the current post-market surveillance, so we are moving to a place of greater safety for the totality of the system.
The fee funds around 102 staff working across key areas, including medical device safety and surveillance yellow cards, software and diagnostics, and compliance and safety data. Roughly three quarters of these posts are existing roles, previously funded through the DHSC subsidy, with around one quarter being new posts that the MHRA expects to fill by the end of March 2026. Performance will be monitored through indicators such as the volume and quality of vigilance reporting, field safety corrective action and trend reporting, signal detection, and timeliness from the initial signal through to alerts and the corrective action being applied. The MHRA is committed to strengthening its internal metrics and producing new KPIs to track performance. These will be reviewed through the biennial fees uplift process to ensure that costs remain efficient and proportionate, and to avoid over or under-recovery.
I turn briefly to Northern Ireland. As hon. Members know, the regulatory position is different from that of Great Britain: under the Windsor framework, the EU devices regulations apply in Northern Ireland. This means that devices placed on the NI market must meet relevant EU requirements. The European Commission has recently announced that EUDAMED registration will become mandatory by May 2026. EUDAMED is the European Commission’s database that collects and stores data about devices on the EU and NI market. It is free for users, as it is funded centrally by the European Commission. In practice, that means that manufacturers, or their representatives, of devices—other than those that are custom-made—that are placing them on the EU or NI markets must register their devices on EUDAMED from 28 May 2026.
Out of a desire to avoid duplicative obligations, we are taking forward a separate piece of regulation that will mean that on 28 May 2026, devices other than custom-made ones, placed on the NI market will need to be registered with EUDAMED and will no longer need to be registered with MHRA, so the fee will not apply. Under EU regulations, custom-made devices are excluded from EUDAMED. They will still need to be registered with the MHRA, and will incur the fee.
Taken together, these regulations put the funding of the strengthened PMS on a clearer, more sustainable footing, so that those who benefit from access to the UK market contribute fairly to the ongoing regulatory work that supports their access. The fee has been redesigned in response to consultation feedback, is being phased in to give the sector time to adapt, and uses existing registration data to keep the administrative burden on business low.
Ultimately, this is about maintaining confidence in the safety and performance of medical devices, supporting continued access, and ensuring that the MHRA has the capacity to act quickly and proportionately if issues arise. I am happy to write to hon. Members if there any detailed points that I have not addressed; I have taken on board the comments of the hon. Member for Sleaford and North Hykeham and I am happy to write to her and the Committee. For those reasons, I invite the Committee to support these regulations for the sake of patient safety and our commercial environment, and I commend them to the Committee.
Question put.