Treasury

In preparation for leaving the European Union, HM Treasury made over 50 EU exit statutory instruments under the European Union (Withdrawal) Act 2018 to ensure the UK’s financial services regulatory regime stood ready for all scenarios at exit day. This included introducing a range of temporary permissions and transitional regimes to minimise any disruption to firms and consumers as we leave the EU.

The UK has now left the EU and entered a transition period, which will last until 31 December 2020. The European Union (Withdrawal Agreement) Act 2020 (“EUWAA 2020”) delayed those parts of the EU exit statutory instruments that would have come into force immediately before, on, or after exit day so they instead come into force at the end of the transition period. As a result of further secondary legislation made under the EUWAA 2020, the temporary permissions and transitional regimes will also now apply at the end of the transition period.

While, in general, the same laws and rules will apply at the end of the transition period, HM Treasury recognises it will be important, irrespective of the agreement that is reached between the EU and UK, for the regulators to have the flexibility to smooth any adjustments to the UK’s regulatory regime for financial services at the end of the transition period.

The Department will therefore retain the regulators’ “temporary transitional power” (TTP), which was introduced via the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019, and shift its application such that it is available for use by the UK regulators for a period of two years from the end of the transition period.

The TTP will allow the Bank of England, the Prudential Regulation Authority and the Financial Conduct Authority to phase-in changes to UK regulatory requirements so that firms can adjust to the UK’s post-transition period regime in an orderly way, in line with the objectives already set by Parliament.

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At Budget 2013, the Government announced they would begin signing decommissioning relief deeds. These deeds represented a new contractual approach to provide oil and gas companies with certainty on the level of tax relief they will receive on future decommissioning costs.

Since October 2013, the Government have entered into 96 decommissioning relief deeds.

Oil and Gas UK estimates that these deeds have so far unlocked approximately £8.1 billion of capital, which can now be invested elsewhere.

The Government committed to report to Parliament every year on progress with the decommissioning relief deeds. The report for financial year 2018-19 is provided below.

Number of decommissioning relief agreements entered into: the Government entered into five decommissioning relief agreements in 2018-19.

Total number of decommissioning relief agreements in force at the end of that year: 92 decommissioning relief agreements were in force at the end of the year.

Number of payments made under any decommissioning relief agreements during that year, and the amount of each payment: one payment was made under a decommissioning relief agreement in 2018-19, for £43.2 million^[1]. This was made in relation to the provision recognised by HM Treasury in 2015, as a result of a company defaulting on its decommissioning obligations.

Total number of payments that have been made under any decommissioning relief agreements as at the end of that year, and the total amount of those payments: four payments have been made under any decommissioning relief agreement as at the end of the 2018-19 financial year, totalling £94.0 million.

The Government are developing proposals to address the unlawful age discrimination identified by the Court of Appeal in the 2015 reforms to the judicial and firefighters’ pension schemes.

On 15 July 2019, the Government announced they would take steps to remove this discrimination retrospectively [HCWS1725]. It confirmed that this would apply to pension scheme members with relevant service across all those public service pension schemes that were introduced in 2014 and 2015, regardless of whether individuals had made a claim. This is a complex undertaking, and it is important to get it right.

Since February 2020 relevant pension schemes have been conducting technical discussions with member and employer representatives to seek initial views on the Government’s high-level proposals for removing the discrimination.

I am grateful for the constructive engagement of trade unions, staff associations, public service employers and other stakeholders in these discussions. The Government are considering the initial views of stakeholders and continuing to work through the details of the technical design elements of the proposals. Detailed proposals will be published later in the year and will be subject to public consultation. The Government will welcome views on these proposals.

For the avoidance of doubt, members of public service pension schemes with relevant service will not need to make a claim in order for the eventual changes to apply to them.

I would like to reassure members that their pension entitlements are safe. The proposals the Government are considering would allow relevant members to make a choice as to whether they accrued service in the legacy or reformed schemes for periods of relevant service, depending on what is better for them. The Government will provide more detail later in the year, but if an individual’s pension circumstances change as a result, the Government may also need to consider whether previous tax years back to 2015-16 should be reopened in relation to their pension.