Lords Secondary Legislation Scrutiny Committee Sub Committee B HL Paper 205 25 October 2018

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Ordered to be printed 23 October 2018 and published 25 October 2018 
Published by the Authority of the House of Lords
HOUSE OF LORDS
Secondary Legislation Scrutiny Committee 
(Sub-Committee B)
HL Paper 205 
2nd Report of Session 2017–19
Proposed Negative Statutory 
Instruments under the European 
Union (Withdrawal) Act 2018
Includes 6 Information Paragraphs on 6 Instruments

Secondary Legislation Scrutiny Committee (Sub-Committee B)
The Committee’s terms of reference, as amended on 11 July 2018, are set out on the website but 
are, broadly:
To report on draft instruments and memoranda laid before Parliament under sections 8, 9 and 
23(1) of the European Withdrawal Act 2018.
And, to scrutinise –
(a) every instrument (whether or not a statutory instrument), or draft of an instrument, 
which is laid before each House of Parliament and upon which proceedings may be, or might 
have been, taken in either House of Parliament under an Act of Parliament;
(b) every proposal which is in the form of a draft of such an instrument and is laid before 
each House of Parliament under an Act of Parliament,
with a view to determining whether or not the special attention of the House should be drawn to 
it on any of the grounds specified in the terms of reference. 
The Committee may also consider such other general matters relating to the effective scrutiny 
of secondary legislation as the Committee considers appropriate, except matters within the 
orders of reference of the Joint Committee on Statutory Instruments.
Members
Rt Hon. Lord Cunningham of Felling 
(Chairman)
Rt Hon. Lord Janvrin Lord Sherbourne of Didsbury
Baroness Donaghy Lord Kirkwood of Kirkhope Rt Hon. Lord Rooker
Lord Goddard of Stockport Baroness O’Loan Baroness Watkins of Tavistock
Lord Hodgson of Astley Abbotts Baroness Redfern 
Registered interests
Information about interests of Committee Members can be found in the last Appendix to this 
report.
Publications
The Sub-Committee’s Reports are published on the internet at http://www.parliament.uk/
seclegbpublications
The National Archives publish statutory instruments with a plain English explanatory 
memorandum on the internet at http://www.legislation.gov.uk/uksi
Committee Staff
The staff of the Committee are Christine Salmon Percival (Clerk), Paul Bristow (Adviser), 
Nadine McNally (Adviser), Philipp Mende (Adviser), Jane White (Adviser), Louise Andrews 
(Committee Assistant) and Ben Dunleavy (Committee Assistant).
Information and Contacts
Any query about the Committee or its work, or opinions on any new item of secondary 
legislation, should be directed to the Clerk to the Secondary Legislation Scrutiny Committee, 
Legislation Office, House of Lords, London SW1A 0PW. The telephone number is 020 7219 
8821 and the email address is hlseclegscrutiny@parliament.uk .

Second Report
PROPOSED NEGATIVE STATUTORY INSTRUMENTS UNDER 
THE EUROPEAN UNION (WITHDRAWAL) ACT 2018
Proposed Negative Statutory Instruments about which no 
recommendation to upgrade is made
• Animal By-Products and Transmissible Spongiform Encephalopathies 
(Amendment) (England) (EU Exit) Regulations 2018
• Merchant Shipping (Accident Reporting and Investigation) and the Railways 
(Accident Investigation and Reporting) (Amendment) (EU Exit) Regulations 
2018
• Rail Passenger Rights and Obligations (Amendment) (EU Exit) Regulations

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SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE B)
INSTRUMENTS OF INTEREST
Draft Credit Transfers and Direct Debits in Euro (Amendment) (EU 
Exit) Regulations 2018
1. The Single Euro Payments Area (SEPA) was launched and is maintained by 
the European banking and payment industry, represented by the European 
Payments Council. In the Explanatory Memorandum (EM) to these draft 
Regulations, HM Treasury (HMT) says that the SEPA enables quick 
and efficient Euro payments; and that EU Regulation 260/201 (the SEPA 
Regulation)1 establishes business rules for businesses conducting cross-
border payments in Euro within the EEA, covering areas such as ensuring 
that Payment Service Providers (PSPs–mostly banks) can be directly 
contacted by other PSPs looking to make a Euro payment to them; and also 
the message format of the payment. HMT says that these draft Regulations 
propose making amendments to ensure that the SEPA Regulation continues 
to operate effectively at the point at which the UK leaves the EU. It states 
that the retention and amendment of this piece of EU law is “designed to 
maximise the likelihood of the UK remaining a member of the SEPA as 
a third country.” The instrument also gives HMT powers, by a negative 
statutory instrument, to amend the technical requirements annexed to the 
SEPA Regulation, and to revoke these Regulations in the event that the UK 
is not able to remain a member of the SEPA. These powers are not subject 
to any sunset provision.
2. We obtained further information from HMT about the background to its 
statement about membership of SEPA. The Department has now told us 
that “currently the UK is a member of SEPA by virtue of being a member 
of the EU. After the UK leaves the EU, the UK will have to apply to join as 
a third country in order to remain as part of SEPA. Applications from third 
countries are determined by the European Payments Council by reference 
to its published criteria for third-country participation. 2 These criteria 
include that relevant provisions of EU law, which include inter alia the SEPA 
Regulation, are ‘effectively represented’ in the domestic law of the applicant 
state. If the SEPA Regulation were not (a) retained by the European Union 
(Withdrawal) Act and (b) amended by this SI, then it would be difficult for 
the UK to show that effective representation, which in turn would jeopardise 
the success of the UK’s application.” At our request, HMT is revising the 
EM to the Regulations to make this background clearer.
Draft Deposit Guarantee Scheme and Miscellaneous Provisions 
(Amendment) (EU Exit) Regulations 2018
3. Deposit Guarantee Schemes (DGSs) protect depositors of banks and other 
credit institutions in the event that they are unable to repay deposits due. 
If this situation arises, DGSs protect depositors up to defined levels and 
provide compensation to depositors, removing the need to seek to recover 
their money through insolvency proceedings. The UK’s DGS is the Financial 
Services Compensation Scheme (FSCS). In 2014, the Deposit Guarantee 
1 Regulation 260/201 establishing technical and business requirements for credit transfers and direct 
debits in euro and amending Regulation (EC) No 924/2009.
2 European Payments Council, Criteria for participation in the SEPA Schemes for communities of 
banks or financial institutions outside the European Economic Area (EEA) , 1 March 2018: https://
www.europeanpaymentscouncil.eu/ sites/default/files/kb/file/2018–03/EPC061-14%20v3.0%20
Criteria%20for%20Participation%20in%20SEPA%20Schemes_0.pdf  [accessed 23 October 2018].

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SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE B)
Schemes Directive (DGSD) 3 created a harmonised system of DGSs across 
the EU to ensure that depositors are adequately protected. Certain provisions 
of the DGSD were transposed into UK law through the Deposit Guarantee 
Scheme Regulations 2015.4
4. In the Explanatory Memorandum to these Regulations, HM Treasury 
(HMT) says that the instrument corrects deficiencies in retained EU 
law arising out of the UK’s withdrawal from the EU. 5 In particular, the 
Regulations propose to transfer from EU institutions to the Prudential 
Regulation Authority (PRA) the power to set the maximum compensation 
payable by the FSCS. The PRA will have the power to review, adjust and set 
the deposit coverage level with approval from HMT. We obtained additional 
information from HMT about the way in which this power might be used, 
which we are publishing at Appendix 1.
Statement of Changes to Immigration Rules (HC 1534)
5. These Statements tend to make a range of changes to the immigration 
requirements. The main purpose of this latest edition is to:
• Implement the next phase of the roll-out of the EU Settlement Scheme 
for resident EU citizens and their family members to obtain UK 
immigration status.
• Introduce a form of leave to remain for those children transferred to 
the UK as part of the Calais camp clearance to reunite with family who 
do not qualify for international protection (that is, refugee status or 
humanitarian protection). 6
• Support the operation of the new application process in UK Visas and 
Immigration by amending the Rules on the requirements for a valid 
application.
• Specify evidence for medical exemption from Knowledge of Language 
and/or Life in the UK requirements. The Committee is aware that this 
is a tightening of the provisions to limit the potential for abuse and 
welcomes the change.
Animal Health and Welfare (Miscellaneous Amendments) (England) 
(EU Exit) Regulations 2018 (SI 2018/1033)
6. These Regulations aim to ensure that English law, which implements 
current EU requirements for the welfare of animals on-farm, during 
transport and at the time of killing, remains effective after the UK leaves 
the EU. The Department for Environment, Food and Rural Affairs (Defra) 
explains that in addition to correcting technical deficiencies arising from 
the UK’s withdrawal from the EU, the instrument will end the mutual 
recognition of certificates of competence for slaughtermen that have been 
issued in another Member State. This is in line with an announcement by 
3 Directive 2014/49/EU of the European Parliament and of the Council of 16 April 2014 on deposit 
guarantee schemes Text with EEA relevance, ( OJ L 173/149, 12 July 2014)
4 Deposit Guarantee Scheme Regulations 2015 (SI 2015/486) .
5 Except for Part 2, which makes amendments to bring certain shares in credit unions within the 
meaning of “deposit” in the Deposit Guarantee Scheme Regulations 2015.
6 See also Allocation of Housing and Homelessness (Eligibility) (England) (Amendment) (No. 2) Regulations 
2018 (SI 2018/1056 ) which make “Calais children” eligible for social housing and homelessness 
assistance if they are habitually resident in the Common Travel Area.

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SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE B)
the European Commission from November 2017 that UK-issued certificates 
of competence will no longer be recognised in the EU following the UK’s 
withdrawal, irrespective of the outcome of current negotiations. 7 Defra 
explains that the policy change will affect fewer than 200 people who are 
currently working in slaughterhouses, and that this group accounts for 
around 3% of all slaughtermen registered in England and Wales. According 
to Defra, they will need to apply for a UK certificate of competence at a cost 
of around £225 if they wish to continue to work in England. Defra also says 
that the Regulations do not change any of the monitoring and enforcement 
requirements in relation to the welfare of animals at the time of killing. We 
note the Department’s assurance that the number of slaughtermen affected 
by the Regulations is small. We remain concerned, however, that this 
group will have to apply and pay for new certificates of competence 
at considerable cost simply to continue working in their current jobs. 
The Committee will monitor carefully whether the Government uses 
the same approach in other sectors.
Misuse of Drugs (Amendments) (Cannabis and Licence Fees) 
(England, Wales and Scotland) Regulations 2018 (SI 2018/1055)
7. These Regulations allow a restricted use of a “cannabis-based product 
for medicinal use in humans”. The Regulations set a precise three-part 
definition and, to be permitted for therapeutic use, products must meet all 
three elements of it. Any cannabis-based substance falling outside of this 
definition (for example, a cannabis-based product classified as a medicine but 
produced for recreational use) will remain a “controlled” Class B drug under 
Schedule 1 of the Misuse of Drugs Regulations 2001 (the 2001 Regulations). 
These products can only be prescribed by a medical practitioner and, on 
medical advice, such products may not be administered by smoking. Nor 
does the change in the legislation alter the rules around the cultivation of 
cannabis plants, which still require a licence under Regulation 12 of the 2001 
Regulations to be undertaken lawfully. The limited use of cannabis products 
in this way has been allowed following cooperation between the Home Office 
and the Department of Health and Social Security. Reviews were conducted 
by both the Chief Medical Adviser8 and the Advisory Council on the Misuse 
of Drugs9 to inform the policy. Evidence about the effects of cannabis-based 
medicines in clinical use will be collected and a further review conducted by 
summer 2019.
Police, Fire and Crime Commissioner for Northamptonshire (Fire 
and Rescue Authority) Order 2018 (SI 2018/1072)
8. This instrument transfers responsibility for the governance of fire and 
rescue services from Northamptonshire County Council (NCC) to the 
Police, Fire and Crime Commissioner for Northamptonshire and establishes 
a new Northamptonshire Commissioner Fire and Rescue Authority to 
carry out those functions. It is not the first of these transfers of fire service 
responsibilities to the local Police and Crime Commissioner (PCC). This 
transfer is, however, made against the well-publicised background of the 
7 See: https://ec.europa .eu/food/sites/food/files/animals/docs/aw_brexit_notice _slaughter.pdf  
8 Department of Health and Social Care, Independent report: Cannabis scheduling review: part 1, 3 July 
2018:  https://www.gov.uk/ government/publications/cannabis-scheduling-review-part-1  [accessed 22 
October 2018].
9 Advisory Council on the Misuse of Drugs, Correspondence: Advice on scheduling of cannabis-derived 
medicinal products, 19 July 2018: https://www.gov.uk/ government/publications/advice-on-scheduling-
of-cannabis-based-medicinal-products  [accessed 22 October 2018].

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SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE B)
NCC’s financial difficulties. A review by the Chair of the National Fire 
Chiefs’ Council in March 2018 into the existing Northamptonshire Fire and 
Rescue Service (NFRS) concluded that:
“there is no immediate concern for public safety, but it is not clear how 
much longer this will remain to be the case–especially with further 
year-on-year reductions on the horizon by NCC. The circumstances of 
NFRS must change in the immediate future for my assurance to remain. 
Becoming a PCC fire and rescue authority will remove NFRS from 
the concerns regarding the County Council resources and financial 
position, allowing NFRS a better chance to stabilise itself as a precepting 
authority.”

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SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE B)
INSTRUMENTS NOT DRAWN TO THE SPECIAL ATTENTION OF 
THE HOUSE
Draft instruments subject to affirmative approval
Credit Transfers and Direct Debits in Euro (Amendment) (EU 
Exit) Regulations 2018
Deposit Guarantee Scheme and Miscellaneous Provisions 
(Amendment) (EU Exit) Regulations 2018
Electronic Money, Payment Services and Payment Systems 
(Amendment and Transitional Provisions) (EU Exit) 
Regulations 2018
Draft instruments subject to annulment
Modifications to the Standard Conditions of Electricity and 
Gas Supply Licences and the Smart Energy Code (Smart 
Meters No.4 of 2018)
Instruments subject to annulment
HC 1534 Statement of Changes in Immigration Rules
SI 2018/1033 Animal Health and Welfare (Miscellaneous Amendments) 
(England) (EU Exit) Regulations 2018
SI 2018/1047 Safety of Sports Grounds (Designation) (Amendment) (No. 2) 
Order 2018
SI 2018/1051 Plant Health (England) (Amendment) (No. 4) Order 2018
SI 2018/1052 Design Right (Semiconductor Topographies) (Amendment) 
(EU Exit) Regulations 2018
SI 2018/1055 Misuse of Drugs (Amendments) (Cannabis and Licence Fees) 
(England, Wales and Scotland) Regulations 2018
SI 2018/1056 Allocation of Housing and Homelessness (Eligibility) 
(England) (Amendment) (No. 2) Regulations 2018
SI 2018/1062 European Communities (Designation) (No. 2) Order 2018
SI 2018/1072 Police, Fire and Crime Commissioner for Northamptonshire 
(Fire and Rescue Authority) Order 2018

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SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE B)
APPENDIx 1: DRAFT DEPOSIT GUARANTEE SCHEME AND 
MISCELLANEOUS PROVISIONS (AMENDMENT) (EU E x IT) 
REGULATIONS 2018
Additional Information from HM Treasury
Q: In the Explanatory Memorandum, you say: “ … this SI makes amendments to 
transfer from EU institutions to the Prudential Regulation Authority (PRA) the power to 
set the maximum compensation payable by the Financial Services Compensation Scheme 
(FSCS). The PRA will have the power to review, adjust and set the deposit coverage 
level with approval from HM Treasury. The government views the PRA as the most 
appropriate body to review and adjust the deposit coverage limit in light of the PRA’s 
technical expertise and understanding of wider market conditions.” Under the Deposit 
Guarantee Schemes Directive, what factors have influenced the EU institutions when 
they review and adjust the deposit coverage limit? Will the PRA’s review be influenced 
by the same factors, or will it have a different approach? Is the process of review - both by 
EU institutions now, and the PRA in future - a continuous process, or is it undertaken at 
discrete intervals (annually)?
A: EU institutions have not reviewed or adjusted the deposit coverage limit since 
the Deposit Guarantee Scheme Directive (DGSD) came into force. This because, 
as stated in article 6(6) of the DGSD, “the first review shall not take place before 
3 July 2020 unless unforeseen events necessitate an earlier review”. No unforeseen 
events have necessitated an earlier review by EU institutions. In January 2017, the 
PRA adjusted the UK’s deposit protection limit (having notified the Commission) 
due to unforeseen events such as currency fluctuations, as required under Art 6 
DGSD to maintain the limit equivalent to EUR100k. 10 In the consultation, the 
PRA considered developments in financial markets following the UK’s referendum 
to leave the European Union, including with respect to the GBP/EUR exchange 
rate but also noted the benefits of a stable deposit protection limit for depositors, 
firms and for the overall stability of the financial system.
We expect future PRA reviews to take account of all the factors it considers relevant 
at the time in accordance with its objectives. This includes, but is not limited 
to, the matters specified in the SI: “developments in the banking sector and the 
economic and monetary situation in the United Kingdom”. These factors are the 
same as those specified in the DGSD in order to maintain consistency with the 
existing process as far as possible whilst providing the PRA with the appropriate 
flexibility to adjust the coverage level in light of all relevant factors and future 
developments. We expect that in practice the PRA will monitor the suitability of 
the coverage level on a continuous basis and that it will carry out a formal review 
no less often than every five years.
12 October 2018
10 Bank of England, Deposit protection limit, 16 January 2017: https://www.bankofengland.co. uk/
prudential-regulation/publication/2016/deposit-protection-limit  [accessed 22 October 2018].

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SECONDARY LEGISLATION SCRUTINY COMMITTEE (SUB-COMMITTEE B)
APPENDIx 2: INTERESTS AND ATTENDANCE
Committee Members’ registered interests may be examined in the online Register 
of Lords’ Interests at http://www.parliament.uk/mps-lords-and-offices/standards-
and-interests/register-of-lords-interests . The Register may also be inspected in the 
Parliamentary Archives.
For the business taken at the meeting on 23 October 2018, Members declared the 
following interests:
Draft Credit Transfers and Direct Debits in Euro (Amendment) (EU Exit) 
Regulations 2018
Draft Deposit Guarantee Scheme and Miscellaneous Provisions 
(Amendment) (EU Exit) Regulations 2018
Draft Electronic Money, Payment Services and Payment Systems 
(Amendment and Transitional Provisions) (EU Exit) Regulations 2018
Lord Janvrin
Senior Adviser, HSBC Private Bank (UK) Ltd
Attendance:
The meeting was attended by Lord Cunningham of Felling, Baroness Donaghy, 
Lord Janvrin, Lord Goddard of Stockport, Lord Hodgson of Astley Abbotts, Lord 
Kirkwood of Kirkhope, Baroness O’Loan, Lord Sherbourne of Didsbury, Lord 
Rooker and Baroness Watkins of Tavistock.