Enterprise and Regulatory Reform Bill

Wednesday 17th October 2012 Commons Chamber

[2nd Allocated Day]

Further consideration of Bill, as amended in the Public Bill Committee.

New Clause 8

Tribunal procedure: miscellaneous

‘(1) The Employment Tribunals Act 1996 is amended as follows.

(2) In section 9 (pre-hearing reviews and preliminary matters), in subsection (2) (deposit orders), in paragraph (a)—

(a) omit “, if he wishes to continue to participate in those proceedings,”;

(b) after “an amount not exceeding £1,000” insert “as a condition of—

(i) continuing to participate in those proceedings, or

(ii) pursuing any specified allegations or arguments”.

(3) In section 13A (payments in respect of preparation time)—

(a) in subsection (3), after “shall also” insert “, subject to subsection (4),”;

(b) after subsection (3) insert—

“(4) Subsection (3) does not require the regulations to include provision to prevent an employment tribunal from making—

(a) an order of the kind mentioned in subsection (1), and

(b) an award of the kind mentioned in section 13(1)(a) that is limited to witnesses’ expenses.”

(4) In section 42 (interpretation), in subsection (1), after the definition of “employment tribunal procedure regulations” insert—

““representative” shall be construed in accordance with section 6(1) (in Part 1) or section 29(1) (in Part 2),”.’.—(Jo Swinson.)

Brought up, and read the First time.

12:52

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 1—Removal of requirement for protected disclosures to be made in good faith—

‘The Employment Rights Act 1996 is amended as follows:

‘(1) Omit “in good faith”—

(a) in section 43C (Disclosures qualifying for protection), in subsection (1),

(b) in section 43E (Disclosure to Minister of the Crown), in paragraph (b), and

(c) in section 43F (Disclosure to prescribed person), in subsection (1)(a).

(2) Omit “makes the disclosure in good faith,

(b) he”—

(a) in section 43G (Disclosure in other cases), in subsection (1), and

(b) in section 43H (Disclosure of exceptionally serious failure), in subsection (1).’.

New clause 2—Duty on employers to prevent detriment caused by others to workers who have made protected disclosures—

‘(1) The Secretary of State shall make regulations requiring an employer, where a worker has made a protected disclosure under section 43A of the Employment Rights Act 1996, to take reasonable steps to ensure that the worker is not subjected to any detriment by any act, or any deliberate failure to act, by a person other than his employer done on the ground that worker has made the disclosure.

(2) Regulations under this section—

(a) are to be made by statutory instrument, and

(b) are not to be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.’.

Amendment 80, in clause 7, page 4, line 13, at end insert—

‘(1) Prior to the commencement of this section, the Secretary of State shall carry out an impact assessment into the effect of the introduction of proposed fees for the employment tribunal system and the impact this will have on the effectiveness of ACAS conciliation proceedings.’.

Government amendments 6 and 7.

Amendment 51, page 5, line 43, at end insert—

‘(e) preventing an employer or ex-employer of a prospective Claimant from applying for costs against the prospective Claimant under the Employment Tribunal Rules or other measures to provide an incentive to employers or ex-employers to take part in the conciliation process.’.

Amendment 52, in clause 11, page 7, line 27, after (2) insert

‘With the consent of the parties but not otherwise.’.

Amendment 53, page 7, leave out lines 29 to 38.

Amendment 54, page 8, leave out lines 1 to 10.

Amendment 81, leave out clause 12.

Government amendments 8 to 10.

Amendment 82, leave out clause 13.

Government amendments 11 to 13.

Amendment 70, in clause 13, page 9, leave out line 15.

Government amendment 14.

Amendment 71, page 9, line 32, leave out

‘in whatever way the Secretary of State thinks fit’

and insert

‘by the Secretary of State following consultation with the TUC and CBI’.

Government amendment 15.

Amendment 58, leave out clause 14.

Amendment 59, in clause 14, page 10, line 11, at end insert—

‘(c) and where the employer employs in excess of 10 employees at the time of the claim first being submitted to ACAS as per section 18A of this Act,’.

Amendment 92, page 10, line 14, at end insert—

‘(1A) The Secretary of State shall by regulations provide for an employer to pay a penalty to the Secretary of State for each period of time (as specified in those regulations) that passes during which an award of compensation under Part X of the Employment Rights Act 1996 has not yet been paid by the employer.’.

Amendment 72, page 10, line 17, leave out from ‘£5,000’ until end of line 4 on page 11.

Amendment 83, page 10, leave out lines 20 to 25.

Amendment 73, page 11, line 47, after ‘Fund’, insert

‘to be spent with the objective of promoting awareness of employment rights and promoting training for employment.’.

Amendment 94, in clause 15, page 12, line 4, leave out from ‘(protection),’ to end of line 5, and insert ‘after subsection (2), insert—

‘(2A) The disclosure of information relating to a private contractual matter to which the person making the disclosure is party is not a qualifying disclosure unless the worker making the disclosure reasonably believes it to be made in the public interest.”.’.

Government amendments 16, 17 and 31.

Amendment 57, in schedule 2, page 65, line 22, leave out ‘one month’ and insert ‘six months’.

[Jo Swinson]

New clause 8 will introduce sensible changes to the employment tribunal rules of procedure recommended by Mr Justice Underhill. I shall say more about the effect of those changes shortly. A number of other new clauses and amendments have been tabled both by the Government and by other Members, and I shall attempt to address them—as well as new clause 8—as comprehensively but as succinctly as possible. As Members will know, part 2 was subjected to thorough scrutiny by the hon. Member for Edinburgh South (Ian Murray) and his Committee colleagues, and all the clauses were accepted unamended.

Contrary to some of the views expressed in Committee, these measures do nothing to affect an individual’s employment rights. Instead, they deliver on the Government’s commitment to giving businesses more confidence to take on new staff and grow. We know that employment tribunals are a continuing cause of concern for businesses and, indeed, employees, and I should be surprised if Opposition Front-Benchers tried to argue that all is working swimmingly at present. The measures in part 2 are designed to alleviate the fears and problems by encouraging the earliest possible resolution of disputes, facilitating settlement agreements to help businesses to manage their staff more effectively, and ensuring that the tribunal system itself operates efficiently for all users.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Will the Minister give way?

[Jo Swinson]

I will in due course, but I want to make a bit of progress first.

I welcome this opportunity to set out the changes that we have proposed and respond to those made by others, continuing the work of my predecessor to bring reform to the employment tribunal system. Let me begin by explaining the amendments that we are making through new clause 8, which will amend existing provisions in the Employment Tribunals Act 1996.

Following his fundamental review of the rules of procedure for employment tribunals, Mr Justice Underhill made a number of recommendations about how the rules might be improved. In some instances, he felt that the primary legislation would need to be amended before desirable changes in the procedural rules could be made. These changes will help to achieve more effective and targeted case management which will benefit all tribunal users.

The first change involves deposit orders. Tribunals can currently require a party to pay a deposit of up to £1,000 as a condition of continuing to proceed with a weak claim. However, a judge cannot currently use a deposit order to weed out the weak elements of a particular claim, and must instead attach a deposit order to the entire claim as a condition of proceeding. That lack of flexibility does not aid effective case management. Enabling judges to make better-targeted deposit orders will give both parties a clear sense of where they should focus their efforts, encouraging a more realistic approach to settlement, and I believe that it will also lead to greater use of such orders.

The second change relates to the recoverability of witness expenses for people who choose to represent themselves at tribunals and seek a preparation time order in respect of their work on the case. An oddity in the current costs regime places people who represent themselves at tribunals at a disadvantage, as a tribunal cannot make a costs order for witness expenses and a preparation time order in respect of the same party. We are amending the Employment Tribunals Act 1996 to remove that unnecessary restriction.

The final change deals with the recoverability of lay representatives’ costs. Mr Justice Underhill considered that those who chose to be represented by a non-lawyer, and who had paid for that service and advice, should not be put at a disadvantage when a tribunal concluded that the other party’s conduct meant that a costs order was warranted. I agree that those who choose to engage lay representatives rather than lawyers should not be disadvantaged when it comes to the award of costs, and I intend to use the existing powers in section 13 of the Employment Tribunals Act to change the rules of procedure in order to allow for such costs orders. The new clause helps to clarify the scope of section 13 by introducing a definition of the word “representative”.

Let me now deal with new clauses 1 and 2, tabled by the hon. Member for North Ayrshire and Arran (Katy Clark), which amend clause 15. Along with the organisation Public Concern at Work, she has been a powerful advocate on this subject, and we discussed it recently during a Westminster Hall debate that she had initiated.

I think we can all agree that, in an ideal world, legislation for whistleblowing would not be needed at all. In such a world, all employers would be open and receptive when an issue was raised, and would not seek to silence or drive out a person who brought important matters to their attention. However, as we know, such enlightened approaches to whistleblowing are not universal, so legal protection is required. We are equally keen to ensure that the protection offered by the public interest disclosure legislation is not abused by those who seek to rely on it for purely self-interested reasons. Clause 15, which has already been debated in Committee, will ensure that the whistleblowing provisions cannot be used to advance purely personal interests.

New clause 1 addresses a different aspect of the public interest disclosure legislation. It proposes the removal of the good faith test, which has been in place since the legislation was introduced. That would mean that individual whistleblowers would retain the benefit of employment protection even if their reasons for blowing the whistle were malicious, if they deliberately set out to cause commercial damage, or if they acted out of a desire for personal revenge.

There is clearly a balance to be struck. We are conscious of the recommendations of Dame Janet Smith’s inquiry into the tragic circumstances of the Shipman case. She suggested that the good faith test be removed to encourage more whistleblowers to come forward. We also recognise that the motivations of whistleblowers are not always clear-cut. Personal feelings, particularly when a relationship has broken down, sometimes make it difficult to understand the intentions of the person who is making a disclosure. Having said that, I should add that, as we have already made clear, we believe that the legislation is working well overall, and that the good faith test serves an important purpose.

We are also keen to avoid making a change that could allow individuals access to an uncapped award when their motives for blowing the whistle were malicious, and I therefore do not believe that there is a clear-cut case for removing the good faith test. However, I recognise that the hon. Lady has raised an important issue relating to this specific element of the public interest disclosure regime, and we will continue to look closely at the policy aims of the test to ensure that they are still being achieved.

[Julian Smith (Skipton and Ripon) (Con)]

Does the Minister agree that there is much more scope for whistleblowing in this country, given the number of whistleblowers in America and the incentives that they are given to come forward? Does she agree that there may be more work for the Government to do in future months?

[Jo Swinson]

I thank my hon. Friend for his intervention. It is a positive thing that we have an environment where people, rightly, feel able to come forward and blow the whistle. The legislation that was enacted was important and is generally working well. We are proposing small changes to it in this Bill, but it is absolutely important. For the reasons that I outlined, that legal protection is necessary and we should be proud of the fact that we have such legislation.

13:00

The second proposal by the hon. Member for North Ayrshire and Arran, new clause 2, seeks to put in place a remedy for a whistleblower who has suffered some sort of detriment, even where that has not been directly caused by the employer. As it stands, the wording of the new clause suggests that an employer could be responsible for the actions of any person who has caused detriment to a whistleblower, including people who have no connection to the employer. Yesterday, we discussed the vicarious liability provisions in the Equality Act 2010 that are being repealed through this Bill, and the reasoning that causes us to consider those unnecessary applies to this provision, too. It would therefore be inconsistent to make these changes to the public interest disclosure regime. As the hon. Lady knows, we had a good discussion on this matter in the Westminster Hall debate.

It is important to note that a whistleblower does have protection and remedy in those circumstances. First, where the employer incites or encourages co-workers to engage in harassment it is likely that they will be liable, even if they do not carry out that activity themselves. Secondly, employers have a duty of care to their workers to provide a workplace that is one of trust and confidence, and that is safe. Thirdly, where the abuse is particularly grave or oppressive the employer can be found to be vicariously liable under the Protection from Harassment Act 1997.

Finally, the law already provides a level of protection for those who argue that their employer has acted to destroy the relationship of mutual trust and confidence. In such cases, an employee could bring a claim for constructive dismissal. Taken as a whole, the Government believe that those protections strike the right balance in protecting whistleblowers without imposing unreasonable and unworkable demands on employers.

Let me now deal with the amendments to clause 7. The early conciliation regime that we are introducing will require prospective claimants to transmit details of their claim to ACAS in the prescribed manner. Where information is missing from an early conciliation form submitted by a prospective claimant, we think that there may be merit in allowing ACAS to obtain the relevant details via the telephone. Our amendments 6 and 7 therefore propose the replacement of the words “send” and “sending” with “provide” and “providing” to give the flexibility needed to implement the best process for all parties. They are minor amendments and have no other effect on the early conciliation process debated in Committee, of which Opposition Members were supportive.

[Julian Smith]

I am heartened by these amendments, because one of my concerns in Committee was that this process with ACAS could become far too formal. It is really important that as this early conciliation develops we make it as informal as possible.

[Jo Swinson]

I thank my hon. Friend for that intervention. He rightly says that we want that process to be a success, and enabling the technology of the telephone to be used in it is a helpful, albeit minor, amendment.

Opposition Members have tabled a number of amendments on the early conciliation process. Amendment 80 seeks to require the Secretary of State to consult on, and undertake an assessment of, the impact of the introduction of fee charging in employment tribunals on the effectiveness of early conciliation before commencing these provisions. Hon. Members will know that the power to charge fees in tribunals is one that already existed; we announced our intention to introduce fees in employment tribunals in January 2011, and subsequently consulted on the appropriate charging points and fee levels in December 2011.

We recognise that the introduction of fees to bring an employment tribunal claim may affect the behaviours of both claimants and respondents, and that there may therefore be an impact on how parties elect to engage with early conciliation. We considered the possible impact as part of the assessment that accompanied the announcement in November 2011 of our intention to introduce early conciliation—copies are in the Library of the House. As part of the implementation planning, we will publish further impact assessments. The proposed amendment would simply require us to replicate work that we have already done and will continue to do, so I am unable to support it. The amendment is unnecessary, but I can give the assurance that we are, of course, continuing to take into account the impact that our approach will have.

[Ian Murray (Edinburgh South) (Lab)]

I wonder how the Minister would deal with an issue that has been raised by the chair of ACAS, Ed Sweeney. He said that the introduction of the fee structure could have an impact on the effectiveness of conciliation at ACAS.

[Jo Swinson]

As the hon. Gentleman will find if he checks Hansard, I have just said that we recognise that our approach could have an impact; it may affect the behaviours of both claimants and respondents. We have already published an impact assessment, but we will keep this matter under review. Of course, if at a future point a further change is necessary as a result, we will come back with it. The Bill does not need to provide for that consultation process, given that it is already ongoing.

[John Cryer (Leyton and Wanstead) (Lab)]

We also need to address the question of ACAS’s capacity to deal with the extra cases—no matter how the process is run, their number will increase. Is there not an implication in terms of extra resources, for ACAS to deal with what could be an extra 100,000 cases a year?

[Jo Swinson]

I thank the hon. Gentleman for his intervention, which highlights the crucial role of ACAS in this area. My predecessor gave reassurances in Committee, but I say again that ACAS will be adequately resourced. It is absolutely essential that that is the case in order to deliver early conciliation. Indeed, I remind hon. Members that in his evidence to the Committee, the chair of ACAS, Ed Sweeney, said that he was confident that the Government would make sure that ACAS will be adequately resourced. I am glad to be able to give that reassurance to the House.

Amendment 51 would add a power to make regulations which would prevent an employer from seeking costs against an employee at tribunal, or to take any other measures that would incentivise employers to take part in the conciliation process. Amendment 57 would have the effect of providing those individuals bringing claims under a particular Act, whose limitation period would otherwise expire during the period of early conciliation or within one month of the conciliation process ending, with an additional six months in which to lodge their claim with the tribunal.

I recognise the intent behind the amendments tabled by Opposition Members; they clearly share our belief that resolving disputes is best done between the parties, rather than at an employment tribunal—as, I believe, do those involved in the process. There has been broad support for the introduction of early conciliation, both in the House and from employers and employees, who recognise the benefits that it offers. It is the benefits—savings in time and cost, and in the considerable stress of the tribunal process—that will encourage parties to engage in conciliation, rather than a change in the rules to prevent respondents from seeking a costs order.

The rules on costs orders are clear: costs may be ordered by a tribunal where a party has acted vexatiously, abusively, disruptively or otherwise unreasonably in bringing or conducting proceedings. However, it is rare that parties act in such a manner; the vast majority of cases are where there is a genuine disagreement between the parties, which is why only 1,311 of these awards were made in 2011-12.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Do the Government recognise that the reason behind the amendments is the concern that many hon. Members have that the Government’s plans will reduce access to justice?

[Jo Swinson]

I do recognise that there is genuine concern, particularly in respect of the new fee regime. It is important that a remission regime is in place as well; it is important to point that out. However, the amendments would provide protection for people who are behaving in a vexatious and abusive manner. No matter which side of the dispute that occurs on, we should not be encouraging it. Where a claimant is behaving unreasonably—this is at the discretion of the tribunal—it would be inappropriate for employers to be prevented from seeking a costs order if the tribunal considers that the claimant’s behaviour justifies such an order.

[Mr Chuka Umunna (Streatham) (Lab)]

If the Minister accepts that there are serious concerns about the introduction of fees and its impact on access to justice, why does she not look at the case management powers in the interlocutory stage of case proceedings and perhaps expand deposit powers to act as a disincentive for vexatious claimants? That would not have an impact on access to justice as her Government’s proposals are having.

[Jo Swinson]

A range of measures in the Bill will help to improve access to justice. Of course, the most important thing is to make sure that fewer people end up going to employment tribunals in the first place. [Interruption.] I have just discussed the measures on early conciliation, which is a much better way of resolving disputes. We also have measures on rapid resolution, which I will come on to deal with and which have been discussed in Committee. Those are the ways of ensuring that people are able to get the best resolution to their disputes. Obviously there will still be a role for employment tribunals and there will be cases that, for whatever reason, cannot be managed through those other, better options for resolving them. In imposing a fee, there will still be access to justice through the remission regime for those who are otherwise unable to afford it.

[John McDonnell (Hayes and Harlington) (Lab)]

My amendment 51 seeks to prevent employers from applying for costs and using the provisions as an incentive to take part in conciliation. Is the Minister saying that such a power already exists in law and that she does not feel it should be codified? Or is she simply opposed to codifying it?

[Jo Swinson]

As far as I am aware—I am sure that inspiration will reach me if this is not the case—tribunals already have the power to impose costs, but the amendment would seek to limit the circumstances. Where proceedings have been brought or conducted in a vexatious, abusive, disruptive or otherwise unreasonable manner, it is important that the tribunal route retains the discretion to award costs. That happens in a tiny number of cases, because even when a case reaches tribunal most people engage with it in a spirit of genuine concern and with a genuine problem, but there will be some cases in which a relationship is vexatious or in which someone seeks to settle scores. If that is the case, it is appropriate for costs to be ordered in such a way.

Let me turn now to amendment 57, the proposal to amend the period for lodging a claim from one to six months for those whose limitation period would otherwise expire during the early conciliation period or within one month of the early conciliation process ending. The amendment would affect only a small number of individuals: those whose claim was brought under the Trade Union and Labour Relations (Consolidation) Act 1992 and who had sent their claim to ACAS towards the very end of the limitation period.

We want all claimants to have the confidence to engage meaningfully in early conciliation without the fear of running out of time to bring a claim. That is why we have provided for all claimants to have a minimum of a month following the end of the early conciliation period in which to lodge a claim, regardless of its nature. It is difficult to see why individuals should require longer than a month to prepare and submit the necessary form to the tribunal, bearing in mind that they will already have gone through the early conciliation process and have been considering the matter for some time, and it is even more difficult to see why such a lengthy extension should apply to such a narrow range of claims. We want all people to be able to engage in early conciliation and to have the confidence to do so and, if it does not work, to pursue other options. I am therefore unable to support amendments 80, 51 and 57.

Opposition Members have proposed three amendments to clause 11, amendments 52, 53 and 54, which relate to the composition of the Employment Appeal Tribunal. As my predecessor, my hon. Friend the Member for North Norfolk (Norman Lamb), explained in Committee when a similar amendment was voted down, we believe it is right that when the issue under consideration is related solely to a point of law the matter should ordinarily be heard by a judge sitting alone. That is always the case in the EAT, of course. However, when the judge considers that there is merit in sitting with a panel, they will be able to do that, and the Lord Chancellor can also order it for specific proceedings. I am therefore unable to support the proposed amendments.

Government amendments 8, 9 and 10, to clause 12, provide for confidentiality of negotiations before the termination of employment. Since the introduction of the clause in Committee, my Department has sought and received feedback from a number of key stakeholders. Some, including the Employment Lawyers Association and some business representative groups, told us that the original wording of subsection (1), which stated that employment tribunals should not take account of offers of settlement in their deliberations, could be open to misconception and misunderstanding. Although the Government believe that the original drafting of the clause would have the desired effect—namely putting an offer of settlement outside the deliberations of the employment tribunal in unfair dismissal cases—we wish to allay those fears and are amending the drafting of subsection (1) for the purposes of clarity and the avoidance of doubt. Subsection (5) is rendered unnecessary by that redrafting, so amendment 10 is a consequential amendment to remove it. In the proposed amended clause, just as in the original, employment tribunals will remain able to consider an offer of settlement in claims being brought on other grounds.

Amendment 9 does nothing more than reflect the difference in terminology between tribunals in Scotland, where the term “expenses” is used in employment tribunal proceedings, and those in England and Wales, where the term “costs” is used. Clause 12 was debated at some length in Committee—I have no doubt that Opposition Members have fond memories of that—and none of the amendments changes the purpose or effect of the clause, which were accepted then.

Opposition amendment 81 would remove clause 12 in its entirety. It is worth going back to consider the original aim of the clause. It is aimed at helping employers and employees come to a consensual end to employment relationships that are just not working out by facilitating the use of settlement agreements. A settlement agreement offers potential benefits to employers and employees, including a much quicker resolution than that offered by the tribunal, where the average time taken to resolve a claim is 24 weeks. Employers have the security that they will not face a tribunal case that would distract them and other workers from their business activities, and employees end up with the certainty of a cash payment, avoid the time and stress of tribunal, and leave with their head held high and possibly a reference. We want to encourage more businesses and individuals to consider the use of settlement agreements as a viable and potentially preferable means of parting ways than an emotionally draining performance management or misconduct route or a costly and stressful employment tribunal.

13:15

The removal of clause 12 would maintain the current legislative regime. Some might say that is no problem, as settlement agreements will continue to be used by some businesses, but it would demonstrate that we are not listening to what businesses say about what they want and need to increase their confidence to take on new staff. We have heard many times through formal and informal consultation that finding ways to make it easier to end employment relationships that are not working out would remove the fear factor of hiring. The removal of clause 12 would mean that, although we have been given a practical example of a measure that would support business and support growth, we have chosen not to take it. As a Minister at the Department for Business, Innovation and Skills, it is my role to support growth, not hinder it.

[Julian Smith]

I am heartened that the Minister is not seeking to make any changes to the clause. Is she surprised that the Opposition are so unenthusiastic about helping the 4.5 million small businesses that will benefit from the clause?

[Jo Swinson]

It is intriguing, given the experience of Opposition Front Benchers as employment lawyers. It is worth bearing in mind that compromise agreements already exist and existed for 13 years under the previous Government. They have a lot of merit, but tend to be used by large firms in particular—large firms, which can afford to employ expensive employment lawyers. Small and medium-sized companies often feel very afraid of taking on such conversations and that is what we are seeking to address.

I recognise that there are concerns about how the clause might work in practice and what safeguards there may be for individuals, many of which my colleague, my hon. Friend the Member for North Norfolk, addressed in some detail in Committee. I strongly believe that in clause 12 we have found the right balance between protecting individuals and giving employers the flexibility and confidence they need to manage their businesses effectively. It is about balance. The settlement agreements measure provides a mutually beneficial solution for employers and employees as regards ending the employment relationship. Let us be clear that this is not, as some have suggested—and as Opposition Members have been suggesting from a sedentary position—the first step to no-fault dismissal or Beecroft-lite. We have made it abundantly clear that we will not go down that path.

[John Cryer]

Will the Minister give way?

[Jo Swinson]

I will give way shortly.

We believe our approach to settlement agreements is a more effective way of dealing with workplace problems, as it offers a positive outcome for all parties. Settlement agreements are by definition voluntary and consensual. Individuals will still need to get independent legal advice before signing an agreement and can decline it if they want to do so. That approach has the benefit that an agreed settlement gives an employer surety that they will not face a tribunal case on any grounds covered by the settlement agreement, which a no-fault dismissal regime would not provide. Employees are at liberty to reject an offer when it is not right for them and our approach does not remove an employer’s obligations not to discriminate or prevent an individual from bringing other evidence to support a case of unfair dismissal.

[Ian Murray]

rose—

[Jo Swinson]

I shall give way first to the hon. Member for Leyton and Wanstead (John Cryer).

[John Cryer]

Earlier, the Minister mentioned the possibility of no-fault dismissal. That is exactly what the Opposition are suggesting. It will be illegal to quote protected conversations later, so no-fault dismissal by the back door will be introduced. What mechanism will she use to monitor the workings of this clause so that that does not happen?

[Jo Swinson]

I cannot make it clear enough that this is not no-fault dismissal. The proposals in the Beecroft report would have removed at a stroke the employment rights of 30 million individuals, whereas what we propose is a voluntary and mutually beneficial process that will end the employment relationship only if the employee agrees to it. That is entirely different. The suggestions that are being made are not founded in fact. The hon. Gentleman says that we should consider how things proceed, and compromise agreements have been on the statute book for some time.

[Debbie Abrahams]

Will the Minister give way?

[Jo Swinson]

I will finish answering this intervention and take the intervention from the hon. Member for Edinburgh South, and then I will be happy to take an intervention from the hon. Lady.

Over the past year—at least over several months—the Government have considered how the process could be improved and have come forward with our proposals. The consultation on exactly how the agreements should take place is running and is open until 23 November. The hon. Member for Leyton and Wanstead is free to input his views and I encourage him to do so. Just as we have considered the current scheme, I am sure that if the scheme is found not to work in future years, any Government would be happy to reconsider it.

[Ian Murray]

The Minister is being incredibly generous in taking our interventions. Does she not accept that settlement agreements, while they can be used where there is no dispute, are likely to create dispute?

[Jo Swinson]

I do not think so. Clearly it is important that the conversation is conducted in a mature and respectful way, and the guidance, on which we are consulting and which will include things such as guideline letters and templates, is expressly designed to make that easier for employers. The problem the hon. Gentleman raises is precisely the opposite of what the proposals will address, because now, where protected conversations can happen if there is a dispute, that creates a perverse incentive to employers to try to manufacture a dispute. Hopefully, the proposed measures will make it much easier for people to have that conversation without having to pretend that there is a dispute where none exists.

[Debbie Abrahams]

I am grateful to the Minister for giving way—eventually. I fear that this is another example of poor legislation from this Government. As I understand it, the provisions regarding protected conversations will not apply in certain conditions, including where an employer is deemed to have behaved in an improper way, yet there is no definition of “improper” in legislation. Will the hon. Lady comment on that?

While I have the chance, I will make the intervention I wanted to make earlier. We know from the OECD that the UK is one of the most lightly regulated countries in the world, next to the United States and Canada. Exactly what evidence does the Minister have to draw on that the measures will improve growth?

[Jo Swinson]

The hon. Lady is being slightly uncharitable in saying that I gave way “eventually”. I took her intervention immediately on finishing my response to her hon. Friends. My approach is to take interventions because the function of Report stage is to ensure that amendments receive proper scrutiny, and I am determined to make sure that hon. Members can have those discussions and receive reassurances where there are concerns.

On the question about settlement agreements and the protections that remain, obviously the agreements should not be used in a way that results in an employee feeling under pressure or that they have to take the agreement. If there is any bullying behaviour or suggestion of discrimination, of course there would be no protection for that conversation. The hon. Lady asks about the definition of “improper”. The consultation on that is under way, and I encourage her to make her views known to it. In general terms, our aim is to reflect, without prejudice, unambiguous impropriety, which would include cases of discrimination and bullying, where there would be no protection for the employer.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

The Minister is being very generous. Does she accept that, under the proposed arrangement, the conversation could come out of the blue for employees, with no warning that their performance may not be up to the standard or that they may not be performing in the manner that the employer requires; and that that will itself generate massive insecurity among the UK work force, which will serve to undermine growth, not aid it? No one will feel confident in buying a car or even a fridge if they think that the next day, out of the blue, they might have a conversation about their performance and be offered a settlement agreement which they feel they have no choice but to accept.

[Jo Swinson]

I recognise that the hon. Lady is genuine in raising her concern, but I think it is misplaced. Employees will not be forced to accept a settlement agreement; it is purely voluntary. She says the conversation will come out of the blue, but clearly we want employers to behave responsibly, with good employment relations and good human resource management. As I mentioned, we are taking steps to produce guidance to make it easier for employers to act in a proper way. The risk that an employee will go into work and their manager will say that they have issues with some aspect of the employee’s performance exists now. Employers and employees having confidence that they can have these conversations at an early point is better than their fearing the conversations, which allows problems to fester and grow.

[Catherine McKinnell]

The Minister talks about encouraging good and positive behaviour, but I am concerned that the measure encourages precisely the opposite sort of behaviour—that it will encourage an employer to approach an employee for the very first time about their performance with an offer to terminate their employment, rather than help them to improve it. There can be no doubt that there is inequality of arms in that conversation for a vulnerable individual who may be facing unemployment. Has the Minister properly considered that?

[Jo Swinson]

It has properly been considered. It is important to repeat that the protection is for conversations relating to a settlement agreement. A settlement agreement, by definition, is a negotiation, so it is unlikely to be a case of take it or leave it. The measure is about starting that conversation and enabling people to say, “We think this is an issue. Is this working out?” I think that enabling employers and employees to have those conversations without the fear described by many within the business community will improve management and not lead to the consequences the hon. Lady fears.

[Stewart Hosie (Dundee East) (SNP)]

I understand what the Minister is saying but I think a little honesty here would be helpful. If an employee behaves badly, they can be sacked. If a business is in trouble, an employee can be made redundant. It is no-fault dismissal by the back door when the conversation and what she describes as a negotiation, with such an imbalance of arms, means that contractual terms of redundancy can be diminished by an offered settlement to go with no fault. That is what this is really about.

[Jo Swinson]

I do not appreciate the hon. Gentleman’s implication. The provision is about making sure that those conversations can take place. Legal advice will have to be sought and given to the employee at that point, before any agreement is reached. Guidance will be given—as I said, we are consulting on that. We are building on and improving the existing procedure for compromise agreements, which have worked well in many cases. We are taking a provision that has been in employment law for many years and improving it.

[Julian Smith]

We are hearing a load of bluster and rubbish from Opposition Members. This is a balanced measure that puts a bit more power in the hands of those who will create new jobs in this country. The shadow Minister was an employment lawyer; every member of the Opposition Front-Bench team was a business owner. They are being hypocrites about the clause.

[Mr Speaker]

Order. The hon. Gentleman must withdraw his use of the word “hypocrites” in relation to Members of the House. Perhaps he will be good enough to withdraw the remark and apologise.

[Julian Smith]

I do withdraw it and apologise, Mr Speaker.

[Mr Speaker]

Thank you. I am grateful.

[Jo Swinson]

Thank you, Mr Speaker. I think it is fair of my hon. Friend the Member for Skipton and Ripon (Julian Smith) to point out that many business owners are genuinely concerned about how employment law currently works.

[Mr Umunna]

The Minister has indeed been incredibly generous about giving way. For the record, Mr Speaker, I think it is of assistance to have a range of experience in this House. We have lawyers and many business owners in the shadow BIS team and we speak with the benefit of professional experience.

Does the Minister not acknowledge that employers can have these conversations with employees, as long as they follow fair procedures? That is all we are asking for.

[Jo Swinson]

The procedures are far more likely to be used by large companies, and many business people, particularly those in small and medium-sized enterprises, fear to take them up. That was borne out by much of our consultation, both formal and informal. I do not know whether Opposition Members genuinely believe that there is no concern among business about tribunals and employment law—

[Mr Umunna]

indicated dissent.

[Jo Swinson]

Well, people watching this debate or reading it in Hansard will see that that concern among businesses exists and is not being taken seriously by the Opposition, but I shall be happy to be corrected.

[Mr Umunna]

The Minister knows full well that, for example, we welcomed the setting up of the Underhill review, because we acknowledge that there are issues, but it is really a question of degree. Of course we have to take into account the concerns of business, but our job as politicians is to take into account the concerns of society as a whole and to balance the different interests, and that is what she has got wrong.

[Jo Swinson]

I agree that the job of politicians is to balance those interests, but I disagree with the hon. Gentleman that we do not have the right balance. As hon. Members have pointed out, very different proposals emerged from some quarters, but the Government have said firmly that we will not go ahead with the no-fault dismissal plans that were put forward. That shows that we are taking a balanced approach.

[Catherine McKinnell]

I thank the Minister for giving way again. She has talked a lot about fear. It may well be the case that some businesses fear an employment tribunal, but what about evidence? My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) asked where the evidence was for the view that the measure would aid economic growth and the creation of jobs. I, for one, have yet to see any evidence. I hear only rhetorical references to fear.

13:30

[Jo Swinson]

I encourage the hon. Lady to speak to employers in her constituency about the issue, which is raised frequently. As to evidence of employers’ fears of employment tribunals, let us look at the previous Government’s record in office. The fear of employment tribunals can put people off employing staff. If people are more likely to employ staff, they are more likely to grow their businesses and create wealth for this country. But let us look at the record of the Opposition. In 1998 there were 90,000 claims going to employment tribunals. By 2010, despite the measures that the Labour Government apparently took to try to improve that situation, the figure was 236,000—a huge jump in the number of tribunals, which of course has created a concern for businesses.

[Catherine McKinnell]

I would be interested to hear the Minister’s analysis of how many of those employment tribunal cases were equal pay claims that were rightly going through the tribunal system. On the evidence, or the apparent lack of evidence, about the genuine fear of employment tribunals, I wonder whether the hon. Lady is in fact making a case for better business support, rather than legislating to make it easier to sack people, which seems a little counter-productive to growth.

[Jo Swinson]

This is not about making it easier to sack people. This is about making it easier for people to come to a mutual agreement, which is, by definition, not sacking.

[Richard Fuller (Bedford) (Con)]

May I offer my hon. Friend some reassurance that she is charting a middle course? She has heard the concerns of the lawyers on the Opposition Benches who, instead of recognising that our business leaders are going out every day to do the best they can for their employees, assume that they need to be corralled and controlled. There are Members of the House who would like to see the Minister go further in her measures in the Bill to make it easier for business leaders to hire more people so that the current recession becomes a job-filled rather than a jobless recession.

[Jo Swinson]

I think I thank my hon. Friend for his intervention. The fact that there is criticism from both sides shows that a balanced approach is being taken. I shall make progress as I know that other Members want to speak.

[Ian Murray]

I am grateful to the Minister for allowing me to intervene. Let us nail once and for all the myth about employment tribunal claims. The Government used this as the supposed evidence for changing a range of workers’ rights. The massive increase in employment tribunal claims arises from multiple claims, which have risen substantially, but the individual number of multiple claims has stayed exactly the same for the past three or four years. Indeed, employment tribunal claims are dropping.

[Jo Swinson]

The fact remains that there is a massive backlog of employment tribunal claims, there are massive problems with the way the system is working, and there is significant concern in the business community, which has been expressed in the House and in Committee. I shall move on to the other amendments before allowing other Members to have their say.

Government amendments 11 to 15 to clause 13 will ensure that the power in the Bill to amend the unfair dismissal cap cannot be used to introduce a cap based on an individual’s pay without there also being a specified upper limit. My hon. Friend the Member for North West Leicestershire (Andrew Bridgen) raised a concern in Committee that, as it stands, the power in clause 13 could be used to introduce a pay-based cap with no upper limit. Clearly, such a step would increase potential compensation for the very highly paid and could thereby increase risks and uncertainty for employers. As my hon. Friend the Member for North Norfolk who is now the Minister of State, Department of Health, made clear at the time, this is not the Government’s intention. On the contrary, we are seeking to give employers greater confidence in dealing with disputes and to ensure greater realism about the level of awards in order to encourage settlement.

We launched a consultation on proposals to change the cap on compensation for unfair dismissal on 14 September, alongside our consultation on settlement agreements. The consultation includes looking at the overall level of the cap and also the option of introducing a pay-based cap alongside a specified upper limit. We therefore seek to make these amendments to ensure that the power in clause 13 reflects the Government’s policy intentions.

Opposition Members have proposed three amendments to this clause, the first of which, amendment 82, would delete the clause in its entirety. It has been a matter of common agreement for many years that the compensatory award should be subject to an upper limit. What that limit should be is the issue in question. This clause recognises the agreement that exists about the need for an upper limit, but provides a power for the Secretary of State to vary that limit subject to specific considerations. As I have said, we are consulting on what the appropriate limit should be. I am therefore unable to accept the amendment.

Amendment 70, tabled by the hon. Member for Hayes and Harlington (John McDonnell), seeks to remove the upper limit of three times median salary. The effect of this would be to allow the cap to be set at any amount. This would clearly run counter to the objectives that I set out a moment ago of greater confidence for business and greater realism for claimants. The hon. Gentleman tabled a further amendment to the clause, amendment 71, which would require the Secretary of State to consult the TUC and the CBI before deciding on a figure for median annual earnings where the figure published by the Statistics Board is more than two years old. I cannot envisage a situation in which such information would not be produced by the ONS in any two-year period but, should such an eventuality ever arise, the Secretary of State will be under a duty to act reasonably and rely upon relevant information. The Secretary of State and other Ministers meet the TUC and CBI regularly to discuss a range of matters, so there is little to be gained from placing a requirement to consult the TUC and the CBI on the face of the Bill. I am therefore unable to support either of the hon. Gentleman’s amendments.

I turn now to the amendments to clause 14 tabled by my hon. Friend the Member for Bedford (Richard Fuller). Amendment 58 would delete clause 14 in its entirety. Amendment 59 seeks to restrict the imposition of a financial penalty to those businesses employing more than 10 people—that is, to exempt micro-businesses. I want to make it clear, as did my predecessor in Committee, that the introduction of this discretionary power for tribunals is not intended to penalise employers indiscriminately. It will be used only when an employer has breached an individual’s employment rights, and when that breach has been accompanied by aggravating features—for example, where there has been a deliberate decision to act in a way that breaches the employee’s rights, or where the same employer repeatedly acts in an unlawful manner.

When we first proposed the introduction of financial penalties, we had thought to make the imposition of the penalty automatic when there was a finding in favour of the claimant, but we listened to the concerns expressed by business during the resolving workplace disputes consultation last year and revised our proposals to give the tribunal discretion to decide when a penalty was appropriate. Good employers—those who try to do right by their employees—have nothing to fear, regardless of their size. A genuine mistake will not be grounds for the imposition of a penalty. However, those businesses which the tribunal considers have acted deliberately or maliciously will rightly, I believe, face the prospect of a financial penalty. They will no longer be able to gain a competitive advantage over businesses that abide by their obligations.

I cannot stand here and defend bad employers. I recognise the good work that my hon. Friend the Member for Bedford has done to support the interests of small businesses, and I am sure he does not want to defend bad employers either. I hope he will not press his amendments, as the Government are unable to support them.

[Richard Fuller]

Of course I do not wish to defend bad employers but as the Minister knows, almost all employers are good employers who do the right thing. Will she address the general principle, which is not so much about the points that she mentioned? Why are the Government trying to get in on the financial action? This is about money that will go to the Government. It is nothing to do with the relationship between the employer and the employee. The money will not go to the employee. Why is it so important that the Government get their take?

[Jo Swinson]

My hon. Friend is right to point out that the majority of employers are good employers. I am sure hon. Members in all parts of the House find that to be so when they visit local businesses in their constituencies. Even in the case of good employers, a mistake will occasionally be made and they will end up at a tribunal. That is why, in response to the consultation, we removed the automatic imposition of a penalty. Any penalty will be based on the circumstances of the case and will be imposed by the people who have heard all the facts—the tribunal. It will be imposed only on employers who have deliberately flouted the law or done so in a malicious or aggravated way.

On the point about financial penalties, this is not some kind of revenue-raising scheme; it is about ensuring that the right incentive structure is in place by creating a further penalty for businesses that deliberately flout the law. That will incentivise the right kind of behaviour. For the reasons I have just outlined, that will be fairer on the vast majority of businesses that are good employers and that should not lose out to those employers that gain some kind of advantage by treating their employees badly.

[Richard Fuller]

The Minister again mentions an additional penalty for those employers. Is she aware that the Law Society has stated:

“Uplifts on compensation of up to 25% are already available in cases of unreasonable breach of the Acas Code on Disciplinary and Grievance Procedures”?

Is that not a sufficient additional penalty?

[Jo Swinson]

I do not believe that what we have at present is sufficient. Although they make up a small portion, there are clearly too many employers who do not comply properly with their obligations. I think that it is quite right that we send a clear signal and make it clear that those employers can expect to face a bigger consequence at a tribunal than those well-intentioned employers who try to do the right thing but fall foul of the law because of an error—after all, we are all human.

Opposition Members also seek to amend clause 14. Amendment 92 seeks to address the issue of non-payment of employment tribunal awards by proposing that an employer should pay a penalty for each period that an award made in an unfair dismissal case goes unpaid. I recognise, and indeed sympathise with, the amendment’s aims, but I am afraid that it would not have the intended effect. When I took over this brief, I was genuinely shocked by the level of employment tribunal awards that are unpaid. The figures for 2009 show that six months after an employment tribunal makes an award as many as 40% of claimants had not received the money they were rightly due, which is clearly unacceptable.

Whatever people’s views on the rights and wrongs of the employment tribunal process and how it could be improved, when an employment tribunal grants an award and the case has been heard properly, the claimant should be able to get their money. Like my predecessor, I am very concerned at the figures for non-payment. When a tribunal finds in favour of a claimant, it cannot be right that they are unable to get the money they are owed.

We are consulting on two changes that I believe might have some effect on the number of awards paid promptly. They include proposals to put a date on a tribunal’s judgment specifying when payment should be made and to charge interest from the date of judgment where an award is unpaid after 14 days. These charges will apply to all cases, not just to unfair dismissal cases. Importantly, in that scenario the interest will be added to the award and paid to the claimant. That consultation closes on 23 November and I encourage the hon. Members who have tabled amendments to take part and feed in their views.

I want to consider what more we can do on this issue. I have already discussed it with my colleague and fellow Minister for Equalities, the Under-Secretary of State for Justice, my hon. Friend the Member for Maidstone and The Weald (Mrs Grant). We are both clear that action is necessary, but we cannot take action without first understanding the underlying problem properly. The previous Government attempted to resolve the problem by introducing a fast-track enforcement process, but it still persists. The process had some success, but not enough people have been accessing it and, even for those who have, it has not been successful in all cases.

I have therefore commissioned research from the Department on the reasons why so many awards go unpaid. Once we have that information, which I anticipate will be early next year, we will be able to take whatever steps we can to ensure that claimants receive the award they are entitled to. Therefore, I ask my hon. Friend not to press the amendment and I commit to taking the proposal away and considering it further to see what we could do in the light of the research findings.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

I raised with the Minister’s predecessor the case of a constituent who found herself in that situation. She was, in effect, dismissed for being pregnant and was awarded £24,000 by a tribunal but to this day has still not received any of it. In the issues the Minister is considering, in the consultation and in the wider concern she has expressed about how we can best address this, will she also seek to work with colleagues across the Government to look at companies that change their status in order to avoid paying out awards when cases are brought against them?

[Jo Swinson]

I do not know the details of the case the hon. Gentleman describes, but I am more than happy to look into it. Given that he was in contact with my predecessor, I am sure that the information will be available in the Department. I think that we need to look at the whole range of issues. There is clearly a range of reasons why an award would not be paid, and they might all require different solutions. If a company has become insolvent, for example, there is a different set of problems than if companies are simply choosing not to pay. Trying to understand where exactly the problem lies is the first step towards ensuring that we can tackle it properly, because I agree that cases such as the one he outlines are unacceptable.

13:44

Amendments 72 and 83 seek to remove the limitations we have proposed for any penalty. Amendment 72 would remove both the upper limit of £5,000 and the requirement that the penalty should be equal to 50% of the award, effectively allowing the tribunal to impose a penalty of any amount above £100. As we have made clear, the objective of the financial penalty regime is to encourage employers to have greater regard to their employment obligations without introducing an additional burden that would undermine their confidence to take on staff. Employers facing an unlimited fine are more likely to feel compelled to settle claims that they might otherwise have defended and won, which is not necessarily in the interests of justice. The amendment would also allow the tribunal to impose a penalty where it subsequently awards compensation for a failure to comply with an earlier order or recommendation, opening up the possibility of employers being fined twice for the same breach.

Amendment 83 would preserve the upper limit of £5,000 but seeks to remove the cap that restricts the penalty to 50% of the award, thereby allowing the tribunal to impose a penalty of any amount between £100 and £5,000, the minimum and the maximum. Removing the 50% cap would remove some of the certainty that businesses have over potential liability if the matter goes to a hearing and, as a consequence, might affect their decision to defend a claim. This is a new measure that the previous Government did not think to try. We believe that it will have a positive impact, but we of course need to see how it works in practice. If the amount of the fine proves insufficient to encourage greater compliance, or indeed if it has a detrimental effect on businesses defending a claim, we have the power to vary the limit by secondary legislation and we will use it.

[Debbie Abrahams]

Will the Minister tell us what the evidence is for those caps?

[Jo Swinson]

As I have said, this is a new measure and these are the figures we have put in place. I do not know what figures the hon. Lady thinks should be set. It is important that there is some certainty for businesses and so, after progressing with this measure and putting it in place, we can then review it and see how it works. By ensuring that the specific amount is not set in primary legislation, we will have the ability to amend it through secondary legislation, which will give the required flexibility. Amendments 72 and 83 would undermine the objectives of the financial penalty regime and so I am unable to accept them.

The final amendment to clause 14, amendment 73, tabled by the hon. Member for Hayes and Harlington, seeks to specify the purpose for which any moneys accruing to the Exchequer from the imposition of financial penalties should be used. Hon. Members will know that the Government already fund the activities to which the amendment refers through ACAS, with an annual grant in aid allocation of about £45 million a year. As my predecessor made clear in Committee, the purpose of the financial penalty is not to raise revenue for the Exchequer. It would not be appropriate to expect ACAS to function with some element of its annual funding being dependent on what is ultimately a discretionary decision by a tribunal. The existing mechanism for funding ACAS is the right one, so I am unable to accept the amendment.

Amendment 94 seeks to address a point we covered in Committee. I understand that its aim is to prevent a disclosure relating to a breach of a private contract from being a qualifying disclosure for the purposes of a whistleblowing claim, unless it is clearly in the public interest. My predecessor, my hon. Friend the Member for North Norfolk, explained in Committee our reasons for not wanting to take that route. We believe that such an approach would have the potential for unintended consequences and would not in itself address the concerns raised by the Parkins v. Sodexho decision. For example, the issue in that case could have been reframed as a health and safety issue, with similar issues then arising in relation to the disclosures of minor breaches of health and safety legislation, which are of no interest to the wider public. Not only are we closing the loophole identified in the Parkins v. Sodexho case, but by introducing the public interest test we are removing the potential for the opportunistic use of the protection. That will prevent any cases similar to the Parkins v. Sodexho case in the areas that would otherwise be uncovered by the amendment.

[Ian Murray]

I am grateful to the Minister, who is being incredibly generous in giving way. What would she say to the Law Society, which says that the clause will not do what the Government intend it to do?

[Jo Swinson]

I think that it will do what the Government intend it to do—basically what it says on the tin. It is about making sure that the public interest disclosure regime has to have a public interest test. That is what was meant when the legislation was initially framed and formed. The case law that has come up since then has showed that there was a loophole, and I think, to be fair, that the Opposition have accepted that it needs to be closed.

Following my discussions with the hon. Member for North Ayrshire and Arran, the House may wish to be aware of the steps that the Government are taking in the NHS to encourage whistleblowers. As I said during the recent debate on the issue, the Government fully support the rights of NHS staff to raise concerns in the public interest. That right has been enshrined in the NHS constitution and further strengthened through changes made to the constitution and the handbook in March this year. The Department of Health is continuing to build on the rights set out in the Public Interest Disclosure Act 1998 further to highlight the statutory protections available for those who raise concerns. I want to stress that the Government fully support genuine whistleblowers and want to encourage individuals to bring issues to light, but we need to ensure that the balance of protection for employers and individuals is correct. We believe that the current clause achieves this, and I am therefore unable to support the hon. Lady’s amendment. However, I welcome the constructive work that she, among others, has been doing on the issue.

The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) asked about the level of £5,000 and penalties. The provision is intended to mirror the national minimum wage compliance regime, so there is method behind it, but it will be possible to amend it if necessary.

I turn now to our amendments 16, 17 and 31 to clause 17. Members who followed the progress of the Bill through Committee will recall that the original clause, then clause 16, was accepted into the Bill without debate. The purpose of the clause then, as now, was to amend specified primary legislation to replace all references to “compromise agreements”, “compromise contracts” and “compromises”, where they occur in an employment context, with the terms “settlement agreement” or “settlement”. By renaming compromise agreements, we are addressing any conscious or sub-conscious reluctance by a party to use these agreements arising from the perception that they are conceding or “giving in” on some or all of their arguments. The original drafting of the clause—with the agreement of the Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock)—extended the change of name to Northern Ireland in so far as it related to the National Minimum Wage Act 1998. Having since considered matters further, my Northern Ireland colleagues have concluded that such a change should not be made in isolation and should form part of the wider review of employment law that they have recently launched. As a consequence, it is necessary make minor amendments to restrict the effect of the name change to England, Scotland and Wales in only that Act.

I commend the Government amendments to the House and hope that I have fully explained why we are unable to support the other amendments in the group.

[Mr Speaker]

Before I call Mr Murray to speak to the new clause from the Opposition Front Bench, I have a short statement to make. Nominations for the Chair of the Procedure Committee closed yesterday, and an election was held by secret ballot earlier today. The following candidate was elected: Mr Charles Walker. The full breakdown of voting is set out in a paper which will be available from the Vote Office. I congratulate the hon. Gentleman on his election.

[Mr James Gray (North Wiltshire) (Con)]

On a point of order, Mr Speaker. I would be most grateful if you could point me to the procedurally correct way of congratulating my hon. Friend the Member for Broxbourne (Mr Walker) on an outstanding victory, wishing him well in chairing an extremely important Committee of this House, and committing myself to serving under him loyally as an ordinary member of the Committee in future.

[Hon. Members]

Hear, hear.

[Mr Speaker]

I am extremely grateful to the hon. Gentleman for his point of order, and the reaction of the House shows that Members as a whole are as well. I thank him for what he said and for his participation in the election.

[Ian Murray]

I congratulate the hon. Member for Broxbourne (Mr Walker) on his election to the Procedure Committee.

Let me, too, start with an affair of state by saying happy birthday to the shadow Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Streatham (Mr Umunna). I will not lead the House in a chorus of “Happy Birthday”, but we wish him many happy returns.

While I warmly welcome the new Minister to her place, I have to say, with a tinge of disappointment, that I will miss her predecessor, the hon. Member for North Norfolk (Norman Lamb), for two reasons. First, we incessantly used his book, “How to maximise compensation at an employment tribunal”, in Committee. [Interruption.] For the information of the hon. Member for Skipton and Ripon (Julian Smith), the then Minister was formerly an employment lawyer. Secondly, at the end of Committee proceedings we bought him a small gift, “Fifty Shades of Grey”, relating to his other passion in life, and I was looking forward to questioning him on that. I hope that the hon. Lady has read the book, because then some of the references in my speech might make more sense.

It is an indictment of how uncomfortable the Minister is with this part of the Bill that the Government have restricted the time available on Report to deal with the complicated issues within it. Let me be clear from the outset. It does not matter how much the Secretary of State stamps his feet or the Liberal Democrat Minister denies it, this Bill is delivering Beecroft by the back door. It is not just Labour Members who are saying that. I am delighted that the hon. Member for Skipton and Ripon is in his place, because he said the same in Committee, much to the disdain of the former Minister. As is consistent with most of the clauses in this hotch-potch of an enterprise Bill, these changes to rights at work are not about enterprise and are not a panacea for a Government with no strategy for growth.

I cannot emphasise enough that the hard-fought-for rights of employees up and down this country are not the reason we are in a double-dip recession; the failed economic policies of this Government are the reason.

[Julian Smith]

rose—

[Ian Murray]

Let me make some progress, and then I will give way.

To start with the positives, I welcome new clause 8, which is derived from the report by Mr Justice Underhill and his esteemed team. We have always recognised the need to review the procedures of the employment tribunal system to make it work better for employees and employers, but with these proposals we have particular concerns about the increased use of deposit orders. We support the premise of deposit orders in deterring claims which may be unmeritorious, but we fear that their increased use, combined with the introduction of the fees regime, may restrict access to justice. This has the potential not only to restrict justice but to do so for the most vulnerable employees in the employment tribunal system. Will the Minister assess the impact of the changes on deposit orders? I appreciate her giving the commitment that if there were an impact she would return to the issue, but it is strange that these proposals have been introduced. Several of my hon. Friends have been asking about the evidence for doing so. Despite repeated pleas in Committee to produce a proper impact assessment on the insertion of fees into the process, that has not happened.

I welcome the provisions to allow for costs for lay representatives. We agree with Mr Justice Underhill when he said:

“We can see no reason why the claimant should not be able to recover those charges when he would have been able to if he had instructed a legal representative.”

We will not oppose these changes in new clause 8, as they have been properly evidenced, but I could not say that about the rest of part 2, where the Government have absolutely no evidence for any of their proposed changes. Indeed, their own impact assessments, and business surveys, show that there is little appetite for them in the business community. Businesses tell me and other Members that their main concerns are not employee regulations but lack of finance and the general state of the economy.

The reality is that the previous Labour Government created nearly 2 million jobs and 1 million businesses within the current system of employment rights. Mr Beecroft himself agreed, in effect, when he said in Committee that he had no empirical evidence but was basing these recommendations on experience and from talking to people in the pub. In Committee, we had a perfect 10 from Government Members in terms of anecdotes. I am sure that at one point we even heard a direct quote from the managing director of “Anecdotes R Us”. The evidence, particularly from the OECD, shows that the United Kingdom has the third most liberal employment rights regime in the western world.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

Does my hon. Friend agree that taking advice on employment rights from somebody who profits from legal loan sharks is perhaps not the right way forward when looking for effective guidelines and regulation?

[Ian Murray]

I am grateful for my hon. Friend’s intervention. I think that people can make up their own minds about the ideology and ethos of the report.

Amendment 80 deals with fees and their impact on ACAS early conciliation. In Committee we pressed amendments to assist applicants and to ensure that ACAS was properly resourced. The amendment covers a similar concern that we have about the new deposit orders. We welcome the new role for compulsory early conciliation by ACAS, but we are concerned that the insertion of the fees system after the ACAS conciliation process will dilute the effectiveness of conciliation and put employees in the untenable position of having to settle their dispute or find the necessary £1,200 to take it beyond the ACAS system.

Ed Sweeney, the chair of ACAS—I have mentioned this already—said during his evidence to the Committee that

“we do not know whether charging for tribunals would have an adverse effect on either employers or employees…Will there be less, from an employer’s point of view, of engaging in conciliation”?––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 68, Q146.]

The Minister herself has admitted that there could be an issue and will deal with that after the system is up and running. Despite being pressed time and again on this issue in Committee, no Minister has produced an impact assessment on the impact of ACAS conciliation when low-paid and vulnerable workers will have to find a fee to enter the employment tribunal system.

14:00

Amendment 81 merely asks the Government to delete clause 12, because it is an ill-thought-out clause on settlement agreements, which are the key dividing point between us. The Government are trying to mix protected conversations with the current without prejudice rules, while adding a touch of Beecroft no-fault dismissal. Let me be totally clear: the reason why Opposition Members are against the clause is that it is bad for business.

Current compromise agreements can be used when there is a dispute between employee and employer. Indeed, they are already widely used—Thompsons Solicitors alone used nearly 6,000 of them last year. Under the new rules, employers will be able to offer an employee a sum of money if they agree to leave employment and sign a new settlement agreement. Any conversations or offers made with a view to terminating employment by agreement will be treated as confidential and will not be able to be considered by an employment tribunal in an unfair dismissal case, unless the employer has behaved improperly. The amount of satellite litigation in the potential attempts to define what improper behaviour is will grind the employment tribunal to a halt.

This also applies to cases involving impropriety with regards to discrimination. If someone who wants to have an honest and open conversation about age uses a settlement agreement, they will end up in an employment tribunal as a result of age discrimination legislation. Essentially, the Government will allow employers to make minimal offers to workers to leave, then gag those very same workers from even mentioning that at an employment tribunal.

The new process may even undermine this country’s redundancy regime. At present, employers must follow a proper procedure in order to dismiss under-performing workers. To challenge the hon. Member for Skipton and Ripon, I have run my own business and have dismissed employees, but every single working day I left my house to go to work to look after the biggest assets in my business, namely the employees. The new process will encourage bad practices. It will send a signal to employers that there is no longer a need to follow a formal disciplinary process and that they can try to push people out of the organisation by offering them a sum of money. That sounds like Adrian Beecroft’s report by the back door.

Teresa Pearce (Erith and Thamesmead) (Lab): Can my hon. Friend clarify something for me? The Minister said that, by definition, a settlement agreement would not amount to sacking an employee. Under the new sanctions regime for jobseeker’s allowance, if someone leaves their job voluntarily they cannot claim JSA for 13 weeks. Would a settlement agreement amount to them leaving their job voluntarily?

[Ian Murray]

My hon. Friend asks an exceptionally good question. I think that it would amount to a voluntary leaving of work, because the employee will not have been sacked—they will have come to an agreement with their employer that they will leave. They will not have been made redundant. I hope that the Minister will address that issue, because it could have significant consequences.

[Julian Smith]

It is incredible that the hon. Gentleman is unable to understand the frustration of many businesses on the issue of coming to the end of an employment relationship. Does he not understand how frustrating it is for many entrepreneurs throughout the country to finish a relationship with an employee that is not working out?

[Ian Murray]

The hon. Gentleman makes a tremendous intervention, because he is actually arguing our point: the proposals are bad for business. We would accept the Underhill review’s proposal to make the employment tribunal better and we would accept, with minor amendments, the ACAS proposal for early conciliation, but to put in place a compensated, no-fault-dismissal-cum-protected-conversation system would be bad for business. The hon. Gentleman must also realise that the Business Department’s own small business survey showed that only 6% of businesses listed regulation as a concern. That included all regulation, so employment regulation was only a minor part of it. He can shake his head, but that is what BIS’s own impact assessment says.

[Catherine McKinnell]

The shadow Minister is making a powerful case as to why the measures are bad for business. To follow on from the important point made by my hon. Friend the Member for Sunderland Central (Julie Elliott), people who rely on mortgage protection insurance are also likely to be adversely affected if they enter into a settlement agreement. Have the Government considered whether that protection could be invoked if those affected enter into a voluntary agreement to leave their employment?

[Ian Murray]

My hon. Friend makes a fantastic point. I do not have the answer, because the Government have not told us, but it seems that if an insurance company can do anything to get out of paying a particular insurance policy, it will do so. Perhaps the Minister will address that.

Citizens Advice has said clearly—I think it has sent this briefing to all Members—that

“this looks less like an attempt to encourage more use of compromise agreements, than a further erosion of the legal protection against unfair dismissal.”

The Minister has been challenged to say exactly what the settlement agreement represents and to come clean. If she did so, this would be a far easier debate to deal with.

The current system allows for the use of compromise agreements when there is a dispute. The new settlement agreements can be used at any time, but it is clear that they are likely to create a dispute. The reality is that the mere fact of instigating discussions without prior process is likely to cause the end of the employment relationship, which is exactly what the employer will want. It is the equivalent of one party in a personal relationship saying to the other party, completely out of the blue, “I don’t love you anymore.” Who would hang around after that? [Interruption.] My hon. Friend the Member for Hartlepool (Mr Wright) suggests that I am speaking from personal experience, but I could not possibly comment. We propose to delete the Beecroft clause, because it is bad for business and equally bad for employees.

[Julian Smith]

Will the hon. Gentleman confirm that Labour does not believe that regulation is a big issue for business?

[Ian Murray]

The hon. Gentleman spent a lot of time in Committee posing such questions, but the Federation of Small Businesses, the Engineering Employers Federation, Citizens Advice and many of the top groups that deal with employers and employees tell us that a compensated, no-fault dismissal is bad for business, and BIS’s own impact assessment says exactly the same. Until the Government can produce empirical evidence that underpins some of the Beecroft reforms, I am unwilling to believe what the hon. Gentleman says.

I hope that the Minister has listened to my comments on amendment 81 and I will test the opinion of the House on it at the appropriate time.

Amendment 82 would remove clause 13 and its provision on compensatory awards. The clause gives the Secretary of State the power to alter the amount of compensation paid to an employee who is found by a judge to have been unfairly dismissed. Every Government member of the Committee indicated that they want the amount to be drastically reduced, despite the fact that the Bill gives the Secretary of State the potential to increase it from its current level of £72,000. The Secretary of State has indicated that his cap would be a maximum of either an annual salary or median earnings, whichever is the lower, potentially limiting all claims to about £26,000, the effect of which would be to hit anyone who earns more than average earnings. This Government have hit middle earners time and again and these proposals have the potential to hit them hardest when they will have actually won a claim at an employment tribunal. It should be up to the employment tribunal judge to decide what an adequate compensatory award is, not the Secretary of State.

I will give the House an anonymised example. A claimant was dismissed at the age of 58. He was earning as little as £26,020 net per year, but owing to dismissal will not attain that level of earnings before he retires at 65. After eight months of unemployment, the claimant got a job on £20,020 net per year. His loss was calculated by a judge at an employment tribunal to be £124,200. Under the current regime, he would receive 62% of that claim. Under the Secretary of State’s regime, he would receive less than 20% of it. That is somebody on fairly average earnings of about £26,000 a year. Citizens Advice has stated:

“The idea that this could have a measurable effect on the behaviour of workers and employers is not credible”.

It proposes the deletion of clause 13 on that basis. That is why I would like to test the opinion of the House later this afternoon.

The critical point is that the combined impact of settlement agreements, ACAS early conciliation, fees and the lowering of the cap on compensatory awards will deliver the very compensated no-fault dismissal that was in the Beecroft report. Let me demonstrate why. If an employer decides that he no longer likes an employee, he might offer them a sum of money to leave his employment in a settlement agreement. The employer could say that the amount offered will be reduced each day that the settlement agreement is not accepted. The employee will feel pressured into accepting an offer for fear of victimisation, for fear that the offer will be withdrawn or reduced over time, or because of the spectre of having to take an unfair dismissal claim with the associated fee structure. Even if the employee were to win the tribunal case, the compensation cap proposed by the Secretary of State would be considerably lower than the losses that they had encountered.

This is a rogues charter that will result in poorly compensated employees who feel that the system is too complicated and expensive to make a rightful claim for justice. This is compensated no-fault dismissal in action. Let us not mention the ludicrous announcement by the Chancellor at the Conservative party conference that people could give up their workplace rights for a few company shares.

I will quickly run through amendments 92 and 83. In Committee, we pressed the then Minister, the hon. Member for North Norfolk, to introduce a better system for the enforcement of employment tribunal awards. He committed to look at that, but nothing has come forward. As the Minister has said today, some 40% of people who have been found by a judge at an employment tribunal to have been unfairly dismissed never receive their award. I am glad that the Minister is as shocked as we are by those figures and is looking at the matter. I will support her if there is a genuine attempt to make the system better.

Amendment 92 would essentially add to the powers of the employment tribunal to impose a penalty on an employer who does not settle the award within the time specified by the judge. It seems strange that the Government are proposing to fine an employer for aggravated circumstances in order to boost the coffers of the Treasury, while the employee has to wait or gets nothing at all. I am sure that many Members have constituents who have not been paid their compensatory awards.

Amendment 83 would merely remove the provision that introduces a parking ticket-style discount to employers if they pay their fine to the Treasury within the set period of time. That could have the unintended consequence of the penalty being prioritised over the awards due to the employee.

I will move on to amendment 94 and the new clauses tabled by my hon. Friend the Member for North Ayrshire and Arran (Katy Clark). Amendment 94 relates to clause 15, in which the Government attempt to limit the definition of a protected disclosure, which is the basis of whistleblowing claims. Whistleblowing is a day-one right that has the potential for unlimited compensation. The Opposition agree with the Government that this should not be used for an individual’s own employment contract, but we disagree that inserting a public interest test into the legislation will assist in the matter.

The Law Society agrees with us. It has said that the provision should state that a breach of a legal obligation requires something more than a breach of the individual contract of employment, so as to satisfy the public interest test. At present, the provision means that allegations about matters other than a simple breach of a legal obligation must fall within a test of public interest. A disclosure that a criminal offence has been committed would therefore also have to satisfy the public interest test.

We propose that the legislation be altered to omit an individual’s employment contract from whistleblowing claims, unless it satisfies the public interest test. One reason why the Government have got it wrong on this matter is that there has been no consultation with the relevant parties and stakeholders on how best to achieve the goals that we want to achieve.

14:15

The Government are trying to make it easier to fire, rather than hire, employees. They have no empirical evidence that the changes will improve the system. Indeed, the potential unintended consequences of an explosion in satellite litigation have been raised by many stakeholders and by many Members this afternoon. The impact will be felt by the lowest-paid and the most vulnerable. Although many Government Members are using the Bill as a way to attack the trade union movement, the changes will affect those who are not in a trade union the most, because they do not have the same representation.

Yesterday, we heard that the Government were legislating to try to change perceptions of health and safety. Today, they are doing the same with the perceptions of employees’ rights at work, rather than dealing with those perceptions. An eminent employment lawyer with over 30 years’ experience, Joy Drummond from Simpson Millar, emphasised that in Committee:

“Isn’t it more responsible for a Government to educate…employers and publicise the traps and how they should behave, rather than to legislate on the basis of a myth which, in itself, will, through implementation in such a way, cause more problems for everybody?”—[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 21 June 2012; c. 97, Q212.]

That is why the measures that we are putting forward would be good for business.

Most shockingly, these reforms will impact on consumer confidence by damaging job security. These reforms purport to assist business, but they might have the opposite effect on the economy. Do not take that from me. The Minister’s predecessor, the hon. Member for North Norfolk, said of the Beecroft report before he was appointed to the Business, Innovation and Skills team:

“I think it would be madness to throw away all employment protection in the way that’s proposed, and it could be very damaging to consumer confidence.”

He went on to say, “It’s crazy”. The Bill has the potential to choke off access to justice for people who have been wronged in the workplace and deserve justice. It also has the potential to damage growth. I challenge the Minister and the Government to prove once and for all that this is not Beecroft by the back door by joining us in the Lobby this afternoon.

[Richard Fuller]

I will speak in favour of the two amendments relating to clause 14 that stand in my name. We have heard many legal arguments today. I am not a lawyer by training, so I have listened as intently as I can. My background is in business, and I draw the House’s attention to my continuing interests.

The Minister did an excellent job of portraying the middle path that she is taking with the legislation. I intervened on her to say that many business people feel that Parliament and politicians are out of touch with the realities of their day-to-day business. In some cases, their voice is not heard loudly enough. My amendments deal with one area where there is further that the Minister could go.

[Julian Smith]

My hon. Friend says that the public feel that this place is sometimes out of touch. From what he has heard from Opposition Members, would he say that Labour is anti-business and completely out of touch with entrepreneurs?

[Richard Fuller]

My hon. Friend makes an excellent point. All of us are aware that the Labour party has trouble understanding aspiration and even more trouble in rewarding aspiration. I am sure that Opposition Members will reflect deeply on the point that he has made.

[Mr Iain Wright (Hartlepool) (Lab)]

indicated dissent.

[Richard Fuller]

The shadow Minister does not agree with me, but let me point out to him the way in which the hon. Members for Walthamstow (Stella Creasy) and for Edinburgh South (Ian Murray) have spoken about Mr Beecroft. Somehow, a person becomes a word, which becomes something to be thrown around and handled in the most insulting of ways. There is no understanding of what Adrian Beecroft has done.

[John Cryer]

Did the hon. Gentleman read the evidence that Mr Beecroft gave to the Public Bill Committee? When he was asked, repeatedly, what the basis of his assertions was on a whole range of subjects, and what evidence he was bringing to bear, he more or less said, “Well, it’s something I’ve just dreamed up.” He did not present any particular evidence that I can pinpoint in the Hansard report.

[Richard Fuller]

The hon. Gentleman makes a good point, but—[Interruption.] I am serious, and this is a serious point. I do not know much about football, but I understand that the idea is to play the ball, not the man. That is also important in debates, which was why I did not feel it was correct when the Secretary of State dismissed Adrian Beecroft’s proposals out of hand and called them “bonkers” on Second Reading. It is important that we should debate those proposals. If, as the hon. Gentleman says, there is not sufficient evidence for them, let us look forward and move on to other issues.

My point is that Opposition Members too often harangue business people or try to portray them in a particular light. I refer particularly to the comments of the hon. Member for Walthamstow, who I believe discussed how Mr Beecroft made his money. I gently urge her to recognise that Mr Beecroft’s boss at the time—they were in the same company, making the same money—was an adviser to the former Prime Minister, and that the Labour party received millions of pounds in donations from that gentleman. If she wishes to make such points about one individual, I look forward to being copied in on her letter to the Leader of the Opposition suggesting that the Labour party should return that money.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

The hon. Gentleman has mentioned some adjectives used about Beecroft that he thinks were less than precise. Surely a simpler way to put it is that the plural of “anecdote” is not “evidence”. Beecroft presented a series of anecdotes about business that he could not back up with any facts. I know the hon. Gentleman well enough to know that he is in the facts business, so surely he will reflect on that when considering Mr Beecroft’s report.

[Richard Fuller]

The hon. Gentleman, too, makes a good point. I have read the evidence given to the Public Bill Committee, and it was not sufficiently evidentiary to move Mr Beecroft’s point forward. However, the hon. Gentleman will know that developed economies are currently having trouble with how to increase employment as they come out of recession. In the United States and the United Kingdom, it is taking us longer to create jobs as the economy recovers. It is therefore imperative that we look at the evidence, to see whether we wish to promote the Beecroft proposals. That is why we need a deeper and more serious debate than just talking about poor evidence in a Public Bill Committee or anecdotal evidence somewhere else, and one without name-calling.

[Mr David Anderson (Blaydon) (Lab)]

The hon. Gentleman makes the exact point that we constantly made in the Public Bill Committee. Given what he is saying, surely we should stop this debate and then take a view one way or another when we have got the evidence. At the moment, everything that the Government are doing is based on views that are not evidence-based.

[Richard Fuller]

I appreciate the hon. Gentleman’s perspective, but the Minister made quite clear her belief that there is sufficient evidence and support for the Government’s measures. Many of us think that they will go quite some way towards providing what businesses and employees would see as a reasonable and fair way to make efficient changes in the procedures for dismissal, dealing with unfair dismissal and tribunals.

I wish to focus on clause 14 and my amendments to it. Amendment 58 would delete the clause entirely, and amendment 59 would apply its principles only to businesses outside the micro-business sector—those that have more than 10 employees. The shadow Minister, the hon. Member for Edinburgh South, has given a number of the justifications for doing that both in Committee and today. First, there is the principle that involving the Government in a dispute between an employer and an employee may complicate the achievement of a settlement between those two parties. It is difficult to understand the a priori reason why a Government should try to achieve a take, because as he made clear, we should be trying to ensure that employers pay the amount for which they are responsible to an employee who has been aggrieved by a dismissal. I listened to the Minister’s comments, but my concern is that the clause will provide additional complexity in the process.

As the Minister indicated, the clause will also create an imbalance between the employee and the employer, and we are not sure how that will play out under the new regime. I hope that if the Minister will not accept my amendments today, she will at least agree to examine how the changes play out, and perhaps consider whether the issue of financial penalties should be reviewed in future.

[Julian Smith]

It is worth recording that every business representative group in Britain is concerned about the clause, for many of the reasons that my hon. Friend has given.

[Richard Fuller]

I thank my hon. Friend very much for that intervention.

[Julie Hilling (Bolton West) (Lab)]

I can understand why businesses do not want to face the reality of their actions, but we know that many businesses flout employment law, whether deliberately or innocently. If anybody breaks the law in any other walk of life, whether through a driving offence, robbing a shop or whatever, there is a penalty to be paid. Clause 14 is not about innocent omissions; it is about employers doing something deliberately. From many years of representing people, I know that employers often deliberately go against what is written in legislation. Surely they should have to pay some penalty for doing that, just as anybody would in any other walk of life. If someone breaks the law, they pay a cost.

[Richard Fuller]

The hon. Lady makes some good points from her experience, but my view is that we should focus our attention on ensuring that the aggrieved employee is in the best possible position to receive the maximum amount of the settlement that has been made in their favour. As was shown in evidence to the Public Bill Committee, in a large proportion of cases the employee does not get that amount. I do not see how it will help to add an additional burden on top of that, with the Government trying to take money as well. There seems to be a discord between that and our trying to do the best by employees. That is why I would rather the clause be completely removed.

I believe the shadow Minister said in the Public Bill Committee that in 59% of cases, employees do not receive the full settlement, and I would like the Government’s focus to be on reducing that figure. I believe that the clause is unhelpful, and as my hon. Friend the Member for Skipton and Ripon (Julian Smith) said, business representatives also believe that.

[Julie Hilling]

What, then, do we do with employers who continue to flout the law? I absolutely agree that the claimant should get the compensation to which they are entitled, but some employers continuously flout the law and just pay a small amount. Often, employees get a small award at tribunal anyway, depending on their age, length of service and income. What do we do with those employers?

[Richard Fuller]

That is an interesting question. My amateur response is that there are better ways to solve the problem than the method in clause 14. Imposing an additional burden in the form of money going to a different party, the Government, is not the optimum path to reach the resolution and outcome that both the hon. Lady and I would like to see when an employer has acted inappropriately and is not paying the bill that he or she should to the aggrieved employee. In general, as I have said a number of times, I would rather have the law presume that the employer is doing the right thing and will make the right payments. If he or she does not, there should be other measures, which perhaps the Minister can mention in her response.

As we have heard from my hon. Friend the Member for Skipton and Ripon, both the Federation of Small Businesses and the Institute of Directors have made representations to the Government that it would be better to remove the penalty on businesses imposed by clause 14. I have mentioned some of the representations made to the Government by the Law Society—that the benefits of imposing financial penalties on employers are not convincing—and, perhaps for slightly different reasons, from Opposition Members we have heard why the clause may not be good. I would rather leave those comments for the Minister to reflect on than push the amendments to a vote. I appreciate the hearing from the House.

14:30

[Katy Clark (North Ayrshire and Arran) (Lab)]

I will speak to new clauses 1 and 2, which relate to different aspects of whistleblowing. The current provisions on whistleblowing are in the Public Interest Disclosure Act 1998, a landmark piece of legislation introduced by the previous Labour Government. That legislation was fought for by many people over many years, and came about as a result of decades of campaigning by many across the political divide. I am therefore pleased to see that the hon. Member for Aldridge-Brownhills (Mr Shepherd) is listening to the debate, as he was one of those who campaigned on this matter during the previous Conservative Government.

Clause 15 introduces a public interest test into the whistleblowing legislation, and future claims will be successful only if the worker believed that the disclosure was made in the public interest and—in the case of wider disclosures—can demonstrate that that belief was reasonable under the circumstances. The clause will make it more difficult for people to rely on the 1998 Act, as it creates yet another legal test in what is already a complex legal area, and means that those who may be considering whistleblowing will face yet another hurdle to obtain the protection of the legislation. New clause 1 would remove one of the other legal tests—the good faith test—from the legislation.

There is no doubt that lives have been saved as a result of public interest disclosure legislation. However, as the Minister indicated, Dame Janet Smith stated in the Shipman inquiry that the good faith test was a barrier to whistleblowers, and that is borne out in reports from the ongoing Mid Staffordshire and Leveson inquiries. Given that another test is being added for a protected disclosure to be met, we must consider whether the proposed legislation will make it more difficult for someone to get the protection of the law.

I believe that Parliament and politicians should want individuals to whistleblow when that is in the public interest. Indeed, at almost any point in history, there have been situations in which it was—and should have been—appropriate for an individual to bring information to the attention of the relevant authorities or, where appropriate, the public, irrespective of whether they could prove that they were acting in good faith.

[Julian Smith]

I pay tribute to the work done by the hon. Lady on this important issue. Does she think that the time has come to consider the American model in which society starts to give incentives to whistleblowers, and will she comment on that?

[Katy Clark]

I would not necessarily say there should be incentives, but people should not be punished for whistleblowing. It is currently very difficult to get the protection of the law, and we need to look at that. That is why I, together with others, have called on the Government to look at the entire area. It is now more than a decade since the 1998 Act was introduced, and we need a thorough review and full public consultation on all issues associated with whistleblowing.

Current topical examples of where I believe it should not be necessary for someone to show that they are acting in good faith include the allegations that are coming to light about Jimmy Savile, and the cover-up that we have seen over many years following the Hillsborough disaster. There will be many other examples central to the political debate where politicians would welcome whistleblowers taking action.

[Julie Hilling]

Briefly, I would like to give another example. At Network Rail, women were consistently getting compromise agreements and therefore being gagged from speaking about things that were taking place. They were all women, so one can imagine the sorts of situations involved. The proposed legislation would make life much harder for people in such situations.

[Katy Clark]

My hon. Friend is absolutely correct. There must be mechanisms by which people can bring problems of that nature to the attention of the appropriate authorities.

By going ahead with this legislation and creating new hurdles, the Government will make it more difficult to rely on whistleblowing legislation. There is a strong argument that the motives of the claimant are irrelevant if bringing forward such information is in the public interest. As they stand, the Government’s proposals will significantly water down whistleblowing legislation in this country, but that balance would be significantly restored if new clause 1 were accepted.

New clause 2 deals with vicarious liability and addresses a loophole that has arisen as a result of the case of NHS Manchester v. Fecitt and others, of which the Minister will be aware. Three nurses from Manchester raised a concern about a colleague lying about his qualifications, but they were unable to rely on the protection of the law. Will the Minister seriously consider accepting new clause 2, as that would allow that loophole to be closed?

[Mr Richard Shepherd (Aldridge-Brownhills) (Con)]

I apologise for not having heard the opening remarks by the hon. Member for North Ayrshire and Arran (Katy Clark). I can see, however, that she was doing a bonny job, and these are important issues that, in a sense, have been imported into the Bill because of what she describes.

I am a passionate believer in whistleblowing, and I stand in the shadow of some giants from the time just after the election of the previous Labour Government. Tony Wright came up with the idea that people who make disclosures in the public interest should be protected by law, and that surprising proposition met with approval across the House. Other people were involved. Sir Ian McCartney, then a distinguished Member of this House, fought within his Department to see this process advanced, and the Liberal Democrats supported it with interest and vigour. From my party, the Secretary of State for Work and Pensions, then Leader of the Opposition, supported the legislation and served on its Committee. Nor should I forget Lord Borrie, who did sterling work in the House of Lords.

Tony Wright’s original idea that something could—and should—be done, set in train a motion that found supporters from across the House and among their lordships, and from the then new Labour Government. I was fortunate enough—or merely the vessel, depending on how one looks at it—to deliver the idea through a private Member’s Bill. I am, therefore, delighted to hear a newish Labour Member standing up for something that reaches across the parties and has an important principle behind it.

The confusion identified by Public Concern at Work seems to many to cut across what the Government are trying to do. Hon. Members are sympathetic to the Government’s attempt to bring clarity, and many of us are mindful of bullying in public places or the workplace. Nothing should harm the feeling that an individual should be able to come forward and argue that they are making a disclosure, because that is in the interest of society as a whole and of corporate government.

I am cheered by comments from some of my colleagues, who clearly want to make this legislation a working part of ensuring that fraud and criminal activities, as well as all the other matters that have been raised by Public Concern at Work and that are in the public interest, do not take place. After all, the legislation is entitled the Public Interest Disclosure Act 1998. I urge the Government please to enter into negotiations with wider society, and particularly organisations such as Public Concern at Work. The Bill must go to the House of Lords, and I have no doubt that the legal differentiation between terms will be closely scrutinised. I advocate that the bonny Minister raises the flag and fights for a change to the formulation of words, as proposed in new clauses 1 and 2.

[John McDonnell]

We have extremely limited time to debate this group of proposals if we are to debate the green investment bank. I absolutely abhor the programme motion, and the Minister took up nearly a third of the time for debate. Report is the only stage at which someone not on the Committee can table and debate amendments, and I have only around five minutes to speak to mine.

We naively debate the detail of legislation and Bills without understanding their political context. The political context of the Bill is the statements made at the Conservative party conference. This is the first stage in a legislative process under this Government of giving employers the licence to sack at will. That is what this legislation is about.

When the Minister spoke, it was like having a delegate from the Institute of Directors in the Chamber. The measure is like the first stage of the IOD programme for reforming employment law.

[Julian Smith]

Will the hon. Gentleman give way?

[John McDonnell]

No, I will not, because we do not have time and, to be honest, the hon. Gentleman is becoming monotonously boring.

When the Prime Minister spoke at the Conservative party conference, he said that he was on the side of the strivers. He makes it clear in the Bill that he is on the side of employers who want to sack people—without adequate compensation or adequate protection in law.

I have tabled a number of simple, basic amendments to ameliorate the proposed legislation, all of which have been rejected. I suggested that there should be a sanction against employers who do not participate in conciliation. We are told that such a sanction already exists, so my proposal would simply codify what the Minister has said happens in practice. It is important that we include that in the Bill.

I have made a simple attempt to amend the time scales in which claimants can prepare their case. A month is not enough for them—they must collect information and seek legal advice, and individuals often draft legal papers themselves. A six-month time scale would reflect that reality.

Another proposal would ensure that the processes being introduced by the Government have the confidence of all sides. It is unacceptable for the judge to determine who is on the Employment Appeal Tribunal, because it removes the experience of both sides of industry, who could advise the judge. My proposal is simply that consensus should be achieved and that the decision should be made with the approval of both the employee and employer representatives—all parties concerned. Even that proposal has been rejected.

People are not currently adequately compensated, which is why the cap is unacceptable. In no other area of law does a judge make an assessment that someone has lost and determine compensation, only for a cap to prevent full compensation. That is why there should be no cap, and yet the Government are keen on caps—they have introduced a £5,000 cap on fines against employers. What is £5,000 to companies such as Virgin or Starbucks, which we heard about yesterday? They are billion-pound companies. What is a £5,000 fine to them? It is meaningless.

[Nick de Bois (Enfield North) (Con)]

Will the hon. Gentleman give way?

[John McDonnell]

No, because the hon. Gentleman came late to the debate.

[Nick de Bois]

I am not boring!

[John McDonnell]

I might allow the hon. Gentleman to intervene if he came to the Chamber occasionally.

The point of my proposals is to ensure a balance of fairness in the regime that is being introduced. There is currently no balance whatever. The Bill is Beecroft. It is based on no evidence and on prejudice, and is the first stage of the Government’s plans to undermine employment law. This is the first stage of undermining the protections that workers have. People outside the Chamber will realise what is happening in the coming months under this Government. Jobs will be shredded and people will have no protection whatever as a result of the Bill and what will follow. On that basis, I wholeheartedly support Opposition Front Benchers in attempting to remove those clauses.

14:45

[Jo Swinson]

I thank hon. Members who have taken part in this debate. I note the point made by the hon. Member for Hayes and Harlington (John McDonnell) that I spoke at length at the beginning of the debate. I wanted to ensure that I covered all the issues raised and to be fair to Members in taking all interventions offered, which is the spirit in which I have approached the debate. That obviously meant that my remarks were rather lengthy.

I want to respond to the points raised in the debate, because hon. Members are keen to get to the next business. The hon. Member for Edinburgh South (Ian Murray)—the shadow Minister—queried clause 13 and said that it would hit middle earners, but I fear that his analysis of the situation reinforces unrealistic expectations. The average award at an employment tribunal is less than £5,000. In reality, only 0.3% of unfair dismissal claimants are awarded more than the annual salary. The purpose of the measure is to provide additional certainty and to help challenge those unrealistic expectations, but he has not characterised it entirely fairly.

[Gregg McClymont]

Will the Minister give way?

[Jo Swinson]

I will give way to the hon. Gentleman, but I remind him that Labour Members are also keen to get to the next business.

[Gregg McClymont]

If the average award is around £5,000, why is there a rush to get rid of the system?

[Jo Swinson]

As I was saying, the measure provides additional certainty and encourages both employers and employees to recognise that high awards are unlikely. Because of the current cap, some people can be misled into believing that high awards are likely, and end up pursuing that route when they could be better served by early conciliation and the other approaches outlined in the Bill.

I welcome the shadow Minister’s offer to work constructively on solving the problem of unpaid tribunal awards.

[Tom Greatrex]

Will the Minister give way?

[Jo Swinson]

I will give way, but I encourage hon. Members not to intervene to raise points that have already been debated—we have gone over a lot of the ground already. This will hopefully be something new.

[Tom Greatrex]

I was unable to make a speech because of the length of the Minister’s contribution, but I would like to raise a specific point on unpaid awards. I have raised a case from my constituency previously but did not get to give the full details. Will the Minister meet me and my constituent to go through some of the circumstances? The problem cuts across the Government, and involves not just the Department for Business, Innovation and Skills. Sometimes companies avoid paying the awards they should be paying, which challenges some of the points made by Government Members about who has confidence in the system.

[Jo Swinson]

I would be happy to meet the hon. Gentleman and his constituent, who, I am sure, is very grateful for the work he has done on this case. It is important to constituents to have the support of their MPs on such issues.

In response to my hon. Friend the Member for Bedford (Richard Fuller), I point out that representations from business suggested we should not proceed with financial penalties, but the ability of a tribunal to impose a penalty when it believes an employer has acted wholly inappropriately is right. I reinforce the point that good employers have nothing to fear, and I welcome the fact that he will not press the amendments to a Division.

I took a lot of interventions on clause 12, but I want to respond to some of the specific points made in the debate. The issue of jobseeker’s allowance was raised. The rules and decisions that currently apply to the regime of compromise agreements will apply to settlement agreements. When assessing claims, jobcentre staff could take into account the facts of the case, how the agreement was instigated and what the reasons for it were. We are also in discussions with the Department for Work and Pensions to ensure that those rules are applied appropriately. Obviously, because it is a voluntary agreement, it will not be a sacking if the employee does not wish it to be, but equally it could be negotiated in such an agreement that the reason for leaving could be deemed to be dismissal. That could help individuals by providing them with additional clarity around jobseeker’s allowance and insurance protection, although I add the caveat, of course, that people would need to look at their specific insurance policies and that those policies would vary from case to case. As I said, however, the wording in the final agreement could assist in such cases.

The shadow Minister suggested that there would be a problem with tribunals grinding to a halt when trying to define the word “improper”. That is not expected to be the case. Tribunals already play a valuable role in interpreting legislation. At the moment, they interpret what “reasonable” means in unfair dismissal cases, and we expect them to consider the meaning of “unambiguous impropriety”, as already happens in the civil courts and case law, in their deliberations on this test. He gave the example of a scenario in which an employer offers a settlement agreement but says that the amount will reduce each day until it is accepted. As my predecessor said in Committee, we would consider that the type of improper behaviour to which the protection would not apply. As I said, however, that consultation is ongoing.

On clause 12, the shadow Minister gave the analogy of somebody in a relationship suddenly saying, “I don’t love you anymore.” That is not a fair analogy. The appropriate analogy would be: “We need to talk.” When something is not working out, encouraging early dialogue is a good thing. That is the spirit behind all these changes, whether on early conciliation, rapid resolution or streamlining and improving the employment tribunal system. Ultimately, our aim is to have fewer tribunals taking place. That would be good for employees and employers, and I commend the Government amendments and new clause to the House.

Question put and agreed to.

New clause 8 accordingly read a Second time, and added to the Bill.



Clause 7

Conciliation before institution of proceedings

Amendments made: 6, page 4, line 18, leave out ‘send’ and insert ‘provide’.

Amendment 7, page 5, line 33, leave out ‘sending’ and insert ‘providing’.—(Jo Swinson.)

Clause 12

Confidentiality of negotiations before termination of employment

Amendment proposed: 81, page 8, line 19, leave out Clause 12.—(Ian Murray.)

Question put, That the amendment be made.

14:53

Division 76

Ayes: 224

---

Labour: 206
Democratic Unionist Party: 6
Scottish National Party: 5
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Independent: 2
Alliance: 1
Green Party: 1

Noes: 279

---

Conservative: 237
Liberal Democrat: 42

Amendments made: 8, page 8, leave out lines 22 to 27 and insert—

‘(1) Evidence of pre-termination negotiations is inadmissible in any proceedings on a complaint under section 111.

This is subject to subsections (2) to (4).

(1A) In subsection (1) “pre-termination negotiations” means any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee.’.

Amendment 9, page 8, line 36, leave out from beginning to second ‘to’ in line 37 and insert

‘Subsection (1) does not affect the admissibility, on any question as to costs or expenses, of evidence relating’.

Amendment 10, page 8, leave out lines 40 to 43.—(Jo Swinson.)

Clause 13

Power by order to increase or decrease limit of compensatory award

Amendment proposed: 82, page 9, line 1, leave out clause 13.

Question put, That the amendment be made.

15:09

Division 77

Ayes: 223

---

Labour: 210
Scottish National Party: 5
Social Democratic & Labour Party: 3
Plaid Cymru: 3
Independent: 2
Alliance: 1
Green Party: 1
Democratic Unionist Party: 1

Noes: 290

---

Conservative: 242
Liberal Democrat: 42
Democratic Unionist Party: 6

Amendments made: 11, page 9, leave out lines 8 to 10 and insert—

‘(b) the lower of—

(i) a specified amount, and

(ii) a specified number multiplied by a week’s pay of the individual concerned.’.

Amendment 12, page 9, line 11, after ‘(2)(a)’ insert ‘or (b)(i)’.

Amendment 13, page 9, line 13, after ‘(2)(a)’ insert ‘or (b)(i)’.

Amendment 14, page 9, line 16, after ‘(2)(b)’ insert ‘(ii)’.

Amendment 15, page 9, line 38, after ‘13(2)(b)’ insert ‘(ii)’.—(Jo Swinson.)

Clause 17

Renaming of “compromise agreements”, “compromise contracts” and “compromises”

Amendments made: 16, page 12, line 23, leave out paragraph (c).

Amendment 17, page 12, line 35, at end insert—

‘(2A) In section 49 of the National Minimum Wage Act 1998 (restrictions on contracting out)—

(a) in subsections (3) and (4), for “compromise” (in each place where it occurs) substitute “settlement”;

(b) after subsection (8) insert—

(8A) In the application of this section in relation to Northern Ireland, subsections (3) and (4) above shall have effect as if for “settlement agreements” (in each place) there were substituted “compromise agreements.”’.—(Jo Swinson.)

New Clause 22

Interpretation of the green purposes: duty to assess impact on the Climate Change Act 2008

‘(1) In interpreting the purposes in section 1(1)(a) to (e), it is the duty of the UK Green Investment Bank to assess whether the implementation of its investment strategy, or similar document outlining or amending the proposed investment portfolio of the UK Green Investment Bank will, as a whole, increase the likelihood of achieving carbon budgets and greenhouse reduction targets as set out under the Climate Change Act 2008.

(2) In subsection (1), whether or not an investment strategy will increase the likelihood of achieving carbon budgets and greenhouse gas reduction targets shall be assessed compared to a scenario where identified investments or investment categories did not proceed.

(3) In undertaking the assessment required under subsection (1), it is the duty of the UK Green Investment Bank to have regard to the advice and reports of the Committee on Climate Change required under sections 34, 36 and 38 of the Climate Change Act 2008.

(4) The Board must make a decision to adopt or amend its investment strategy or similar document described in subsection (1), unless it is satisfied, as a result of the assessment in subsection (1), that the proposed investment portfolio will, as a whole, increase the likelihood of achieving carbon budgets and greenhouse gas reduction targets under the Climate Change Act 2008.’.—(Mr Iain Wright.)

Brought up, and read the First time.

[Mr Iain Wright]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

New clause 25—The UK Green Investment Bank: prohibition on investment in nuclear power or the nuclear industry—

‘The UK Green Investment Bank may not engage in activities that involve facilitating or encouraging investment in nuclear power or the nuclear industry.’.

Amendment 77, page 1, line 11, clause 1, at end add—

‘(3) In undertaking investments in accordance with the green purposes outlined in subsection (1), the UK Green Investment Bank will identify opportunities in which small and medium-sized enterprises can be awarded contracts.’.

Government amendments 1 to 3.

Amendment 76, page 3, line 24, clause 4, at end add—

‘(7) Subject to the approval by the European Commission of the State aid notification concerning the establishment of the UK Green Investment Bank, the Secretary of State shall provide the European Commission with State aid notification concerning the intention to allow the Bank to borrow, including borrowing from the capital markets.

(8) The duty in subsection (7) must be fulfilled no later than 31 December 2013.

(9) It is the duty of HM Treasury and the Secretary of State to either—

(a) permit the UK Green Investment Bank to begin borrowing from the capital markets by April 2015, or

(b) to present to Parliament a report within one month of the passage of this Act giving a clear, certain, alternative date for the UK Green Investment Bank to begin borrowing, based on Office for Budget Responsibility forecasts for the public finances and advice from the Green Investment Bank on its need for borrowing powers,

both subject to the European Commission approving the State aid notification concerning borrowing.’.

Amendment 89, page 3, line 24, clause 4, at end add—

‘( ) Subject to approval by the European Commission of the State aid notification concerning the establishment of the UK Green Investment Bank, it is the duty of the Secretary of State to provide the European Commission with State aid notification concerning the intention to allow the Bank to borrow, including borrowing from the capital markets.

( ) The duty in the above subsection must be fulfilled no later than 31 December 2013.

( ) In the event the European Commission approves the State aid notification concerning borrowing, it is the duty of the Treasury and of the Secretary of State to permit the Green Investment Bank to begin borrowing from the capital markets no later than 30 June 2015, or, if State aid approval has not been received by that date, no later than one month from the date of approval.’.

Government amendments 4 and 5.

Amendment 78, page 4, line 9, clause 6, at end add—

‘(5) The Secretary of State will be required to receive independent expert review of the performance of the UK Green Investment Bank.

(6) The Secretary of State will be required to receive such a review no less than every five years.

(7) An interim review no less frequently than every two and half years.

(8) The independent expert review in subsection (5) must, in particular, include or contain information relating to—

(a) an assessment of the UK Green Investment Bank’s environmental performance in fulfilling the green purposes as set out in section 1.

(b) an analysis of the main trends and factors likely to affect the future development, performance and investments of the UK Green Investment bank,

(c) macroeconomic analysis, including assessments of demand in the UK economy and international factors likely to affect green investment and skills within the relevant industries,

(d) assessment of the competitiveness of the UK Green Investment Bank in securing competitive advantage for the UK in green and low carbon economies relative to other countries, and

(e) recommendations to improve the UK Green Investment Bank’s impact in fulfilling its green purposes in section 1.

(9) Prior to the commencement of a review in relation to subsection (5), the Secretary of State must request the views of—

(a) The Secretary of State for Energy and Climate Change,

(b) The Secretary of State for Environment, Food and Rural Affairs,

(c) The Committee on Climate Change,

(d) Ministers from the devolved administrations,

(e) investors and interested parties, and

(f) members of the public,

and provide a copy of the results of the consultations to the person or persons undertaking the independent review.

(10) The Secretary of State, in the capacity of shareholder, must provide such information as he considers reasonable to enable the person or body undertaking the review to fulfil the requirements of this subsection.

(11) A review made in relation to subsection (5) must be published and laid before both Houses of Parliament.’.

[Mr Wright]

Those hon. Members who served on the Committee will recall that we spent a great deal of time considering whether the green purposes of the green investment bank, as set out in clause 1, were appropriate—namely, whether they were too restrictive or limiting to prevent long-term investment in innovative low-carbon technologies or too wide or broad as to mean that high-carbon investments could not be considered by the bank. As I said, we deliberated over this issue in Committee at length.

Of the five criteria, only one needs to be met to justify the appropriateness of investment by the bank. Was clause 1(1)(b), which refers to

“the advancement of efficiency in the use of natural resources”,

sufficiently tight and robust to deal with the need to ensure that the green economy and the transition to a low-carbon economy are put into effect? In Committee, I used the example of a gas-fired power station that might be marginally more efficient in its use of the earth’s natural resources given 2012 levels, but might well be seen as hopelessly dirty and inefficient by 2030.

That is the purpose of new clause 22—to deal with concerns that investments by the bank might not be in keeping with its green purposes, or at least the spirit behind those purposes. That is why we thought that making an explicit link with the Climate Change Act 2008 would be the best way for an appropriate balance to be struck between giving the bank the flexibility to consider its investment portfolio and ensuring that it cannot and does not decide to fund high-carbon investments. New clause 22 therefore proposes that the green investment bank assesses whether its investment portfolio helps the achievement of carbon budget and greenhouse reduction targets as set out under the 2008 legislation.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Do the criteria that the hon. Gentleman has noted extend to nuclear energy?

[Mr Wright]

We can consider that when hon. Members debate new clause 25. We had considerable debate about it in Committee. The question now is: what is the purpose of the green investment bank? Is it to ensure that we can kick-start innovative technologies that cannot have market buy-in, or is it a question of ensuring that the targets set out in the 2008 Act are met? There is a conflict there, which we considered in Committee at some length. I think that there is potential to consider nuclear, certainly in respect of the nuclear supply chain and ensuring that we can achieve these objectives. I am keen to hear the debate on this matter in the next few moments. It is important to probe the Government on whether this is an appropriate avenue for the bank to invest in.

[Neil Carmichael (Stroud) (Con)]

rose—

[David Mowat (Warrington South) (Con)]

rose—

[Mr Wright]

I shall give way to two eminent members of the Public Bill Committee, but I must bear in mind the fact that we do not have time to debate these issues at length.

[Neil Carmichael]

I thank the hon. Gentleman for that generous introduction. I am glad I stood up when I did. The danger of the shadow Minister’s speech so far is that he is focusing on energy, where, of course, a green investment bank should be considering many other technologies and many issues other than energy. That is one of the problems with new clause 22.

[Mr Wright]

I understand that. The hon. Gentleman will recall that I posed a number of questions in Committee: could the green investment bank invest in forests or in the supply chain for the automotive industry to ensure that we have low-carbon engines? There was a whole range of different debates in Committee, which I thought were useful. As I said, there is a balance to be struck, and that is what new clause 22 is about. Is the aim to achieve what we all want to achieve—igniting, for want of a better term, the green economy—or is the provision too prescriptive? There is a balance between being too broad and too narrow.

[David Mowat]

I thank the shadow Minister, but I am a bit disappointed by the tone of his remarks. I want to get clarity about the point that was raised a few moments ago about nuclear, so that I can understand the position of those on the Opposition Front Bench. Would Sheffield Forgemasters, for example, which is a nuclear supply chain company, be eligible for assistance from the bank?

[Mr Wright]

The hon. Gentleman will recall that I mentioned this issue at length in Committee, when he quite rightly probed me on it. I reiterate my answer to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) a few moments ago. There is a conflict here. What is the purpose of the green investment bank: is it to ensure that we have innovative technologies where there is current market failure making it difficult to get investment, or is it to ensure that we do as much as possible to tackle carbon emissions, meet low-carbon targets and so forth? Within that, nuclear could be a source of investment.

[Caroline Lucas (Brighton, Pavilion) (Green)]

rose—

[Mr Wright]

Before I give way, I should declare an interest in that I have a nuclear power station in my constituency. I would quite like another one, and I think that part of that supply chain could be considered by the green investment bank. I would certainly like more clarity on this from the Government.

[The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)]

rose—

[Mr Wright]

I shall give way to the hon. Member for Brighton, Pavilion (Caroline Lucas) first, and then to the Minister.

[Caroline Lucas]

To be honest, I do not see this contradiction. Given that nuclear takes so long to get up and running, it is not going to help us to meet our carbon targets fast enough. It also requires Government subsidy, which is why the whole of the EMR—electricity market reform—is being rigged to deal with that. Also, the jobs that we hope the green investment bank will create will surely be jobs that we would like to see here in the UK. If we use the bank to subsidise nuclear, what we are doing is basically subsidising jobs in places like Russia, China and France.

[Mr Wright]

I shall come on to this in a few moments. Because of a huge lack of clarity in the Government’s energy policy—anywhere, but particularly in respect of the renewable energy component—many foreign investors will not view the UK as the destination of choice for investment in any case. We have huge potential to be the market leader for renewable and low-carbon technologies, but I think we are missing a trick when it comes to the scale of ambition and the time scale of the green investment bank. The purpose of the new clause is to probe and challenge the Government to ensure that we make this part of a growth strategy rather than to allow it to happen somewhere in the future in a way that makes it virtually meaningless.

[Matthew Hancock]

Given the shortage of time, it may be helpful if I deal with two points now. I can confirm first that the European Commission has granted state aid approval to the green investment bank, and secondly that the Commission strongly discouraged the inclusion of nuclear in our application for state aid. Its inclusion would have delayed approval, and nuclear projects are therefore not in scope in respect of the current application.

[Mr Wright]

I thank the Minister for his clarification. It is somewhat at odds with what was said in Committee by the then Minister, the hon. Member for North Norfolk (Norman Lamb), but we are where we are—and I am very grateful to the Minister for his announcement about the state aid application, because it gets rid of at least a paragraph of my speech.

Let me now deal with amendment 76, which makes an important point about what the green investment bank should be doing in the light of its potential, the huge opportunities that it provides, and the equally huge scale of the challenge presented by the need for us to decarbonise our economy. If we are to achieve what we want to achieve, we need active government. Working with business, the Government must assess our present comparative advantage in this sector, and work out how we can maintain or enhance that advantage in the future.

15:30

There is a huge, pressing need for policy certainty for investors in the green economy, but so far the Government have not been able to provide it, to the detriment of the country’s chances—this is relevant to what was said by the hon. Member for Brighton, Pavilion—and the chances for jobs and growth.

Only last week, seven of the world’s largest energy and engineering firms wrote to the Chancellor asking for greater certainty in energy policy to kick-start green manufacturing investment. The Times reported that such companies as Siemens, Alstom UK, Mitsubishi Power Systems, Areva, Doosan, Gamesa and Vestas had warned that while they saw

“potential for significant further investment to support the UK’s move to low carbon generation”,

that investment would fail to materialise if the Chancellor and the Government did not take steps to address the high levels of uncertainty and political risk that were afflicting the sector.

[David Mowat]

Will the hon. Gentleman give way?

[Mr Wright]

I know that the hon. Gentleman is a keen advocate of manufacturing in this country, but we require policy certainty. I hope that he will address the point made in an excellent article by Camilla Cavendish that appeared in The Times last month. She wrote that

“instead of building the equipment in England”,

companies were building offshore wind turbines elsewhere:

“These companies remain uncertain about investing in the UK… the impression that the coalition is split has spooked companies whose boards need to commit capital for 20, 30, 50 years, whether in wind or nuclear power, biomass or solar.”

Is not the lack of the long-term certainty that is so necessary undermining the chances of jobs and growth in this crucial area?

[David Mowat]

I thank the shadow Minister for telling me what I should say in my intervention. What I was going to say was that, although I did not catch the name of every company in the list that he read out, I am pretty sure that the headquarters of all of them are outside the UK—as, by the way, are those of the major manufacturers of offshore wind. And, yes, it is a problem.

[Mr Wright]

That is why I am pleased that the hon. Gentleman will be supporting our amendment 77—which is intended to promote the growth of small and medium-sized enterprises in the supply chain and to ensure that we can realise the great potential of the green economy—and will object to the Government’s amendments 1 and 3, which state that investment can take place not in the UK but elsewhere. As someone who wants to support manufacturing in the UK and the ability of home-grown businesses to provide jobs, growth and export potential for our companies, he will doubtless be supporting us in the Lobbies.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Time will be limited for later speeches, so let me say this now. My hon. Friend read out a list of companies that had expressed concern about the mixed messages coming from the Government. I know from private discussions that I have had with people in some of those companies that they are very worried about where the Government are going, and want more clarity. The amendment provides a good way of clearing up the confusion created by the Government, and making their commitment stronger again.

[Mr Wright]

I agree. The same point was made by the CBI, which concluded in a report produced this summer entitled “The Colour of Growth: Maximising the potential of green business”:

“while business wants to keep up the pace, they are equally clear that the government’s current approach is missing the mark, with policy uncertainty, complexity and the lack of a holistic strategy damaging investment prospects.”

The Government and the Minister—when he is listening—must respond to that. They must provide policy certainty so that investment can be made in the UK.

In Committee, when we discussed the green investment bank and its borrowing powers, I said that we had thought long and hard about the issue. At the time the then Minister, the hon. Member for North Norfolk, said:

“The Government have also committed that the Bank will borrow from April 2015”,

although he then qualified that by using the stock phrase

“subject to public sector net debt falling as a percentage of GDP.”—[Official Report, 12 July 2012; Vol. 548, c. 793W.]

However, given the Government’s failures in relation to its own borrowing targets, that commitment is so far from being achieved as to be virtually meaningless. I would contend that a deficit reduction plan without an accompanying growth and employment programme is no deficit reduction plan at all.

Ours is one of only two G20 countries in recession. In March, the Office for Budget Responsibility reported that the Government might meet their debt target by the skin of their teeth, but since then borrowing figures have been significantly higher than forecast. The deficit is now going up—borrowing is now going up; it has increased by 22% so far this year, as a direct result of this Government’s policies. Citigroup forecasts that the Treasury may have to borrow £48 billion more than it originally forecast by 2015-16, meaning that the Chancellor’s key fiscal target of having public sector net debt falling as a proportion of GDP by 2015 will not be reached. It is widely anticipated that the Chancellor, in his autumn statement to be held in winter, will have to carry out a humiliating climbdown from that important target of his, based largely on his misguided economic policies.

Where does that leave the green investment bank? At a time when our potential as a leading market for green business is under threat, both from intense overseas competition and from uncertainty from this Government, what impact does this failure of fiscal policy by the Chancellor have on this growth area? That is the context behind our amendment 76. We want the green investment bank to be able to provide a stimulus for growth in our economy as soon as possible, but we are equally mindful of the double-dip recession that the Chancellor’s policies have inflicted on the country. Our amendment would ensure that state aid approval on the green investment bank’s borrowing power would be sought and achieved no later than 31 December 2013. What the Minister has said about that is certainly welcome, but what impact will it have? Does it mean that borrowing will take place earlier than 2015? When does he imagine borrowing from the capital markets will be permitted?

Our amendment proposes that the bank must be able to begin borrowing by April 2015 or, if that is not achievable, Parliament must be provided with a clear and alternative date as to when such borrowing may be permitted, based both on OBR forecasts regarding the state of the public finances and on advice from the green investment bank on the need for borrowing powers to achieve its objectives.

[Caroline Lucas]

I wonder why the hon. Gentleman is insisting on that caveat, as the position shared by his Front-Bench colleagues not that long ago was unequivocal in saying that as of June 2015 the bank should be permitted to borrow. The Opposition are now moving away from that position and I simply do not understand why. They are watering down what was there before and is contained in my amendment 89.

[Mr Wright]

My firm policy commitment is to ensure that we have the green investment bank borrowing as soon as possible, as a stimulus to growth. We were mindful of amendments that we tabled in Committee about that, but we also have to consider the appalling financial mess that the Government are dealing with in respect of increased borrowing. Borrowing was going down prior to the general election, but now it is going up. We do not know what the circumstances will be in 2015, so we need to ensure that there can be certainty, based on the imperative to have the green investment bank borrowing from the capital markets as soon as possible while being mindful of the need for rigour and discipline in the public finances.

[Neil Carmichael]

Is it not possible that the green investment bank can encourage other private organisations and banks to step in and start contributing to the green economy, as that is really what this is all about? It is about providing the right confidence, on the basis of a framework of some certainty, which the Minister has asked for and the Government are giving.

[Mr Wright]

Absolutely, and that is why the hon. Gentleman will be supporting our amendment 77 and rejecting Government amendments 1 and 3.

If our economy has sectoral strengths, it is right, in an active industrial strategy, for the Government to be looking to maximise those strengths. They also need to seek to develop further capabilities, as the hon. Gentleman rightly said, that could lead to greater investment, growth and employment opportunities here in the UK and, we hope, to the exporting, for commercial gain, of some of the work, expertise and capability here. We want economic benefits to flow to companies within the United Kingdom. That is not to defend protectionism, or to deny the need for competition and foreign direct investment, but to ensure that the Government, as part of a fundamental, active, industrial strategy, work with business to see how this country can gain and maintain market advantage.

[Neil Carmichael]

rose—

[Mr Wright]

I cannot resist giving way to the hon. Gentleman again, even though I am conscious of the time, because the manner in which he puts his hand up as if he needs to go to the toilet is so endearing.

[Neil Carmichael]

I thank the hon. Gentleman for that. It is important to understand the length and complexity of supply chains and that we do not tie ourselves down to thinking that the supply chain is just within Britain, as it goes further than that. We need appropriate co-operation from the supply chain in big operations. The Government are rightly focusing on supply chains more generally, but we need to bear that in mind.

[Mr Wright]

Absolutely. I think the hon. Gentleman can go to the toilet now. Recent research has concluded that capital expenditure costs for something as important and significant as offshore wind projects, in which my constituency could play a leading part, could fall by a third in the next decade if a greater proportion of the parts were made in the UK. We need to be mindful of that and the Government must work with business to enhance the supply chain possibilities, opportunities and capabilities in the UK. I suggest to the hon. Gentleman, with the greatest of respect, that that is not happening, largely because of policy uncertainty. That is what amendment 77 is designed to address.

[Caroline Lucas]

The hon. Gentleman is talking passionately about policy certainty, yet his amendment 76 reintroduces uncertainty. I cannot emphasise enough that it is amendment 89 that would ensure that the bank would be able to borrow from 2015. It is actually what the Liberal Democrats agreed at their party conference only a few weeks ago. If the hon. Gentleman wants policy certainty, why will he not support amendment 89?

[Mr Wright]

I know that the Liberal Democrats have such power and significance in the coalition that they will be able to advance that proposal. If it is one of their manifesto or conference commitments, it will certainly happen. That might not look as sarcastic as it should do in Hansard, Mr Deputy Speaker.

The serious and important point at the heart of amendment 76 and amendment 89, tabled by the hon. Member for Brighton, Pavilion, is the question of the extent to which we can have the green investment bank operating at scale as quickly as possible, ensuring that it can borrow from the capital markets as quickly as possible and be a major ingredient in the stimulus for growth while at the same time being mindful of the deterioration in the public finances that has largely been caused by the Government’s economic policies. The emphasis on austerity means that tax receipts are going down and benefit payments are going up, so borrowing figures have had to rise by more than a fifth in the past year alone.

Let me go back to the point made by the hon. Member for Stroud (Neil Carmichael). I mentioned Government amendments 1 and 3 and I find it baffling that the amendments state that investments can be considered

“whether in the United Kingdom or elsewhere”.

I fully appreciate and support the need to tackle climate change and the transition to a low-carbon economy on an international and multilateral level. The hon. Gentleman was quite right to say that supply chains are somewhat more complex than they would be if they were solely domesticated. How on earth, however, do these Government amendments to an enterprise Bill that was supposedly designed to improve the competitiveness of the UK economy help to stimulate enterprise and economic activity in this sector in Britain? Is there not a huge risk that Britain’s potential as a world leader in this field will be lost as a direct result of the Government’s amendments? I ask the Minister to think again and to reflect on the amendments we have tabled and on the new clause.

As we have only 17 minutes left to debate this subject, which is incredibly important for the future of this country, I shall now take my seat.

[Matthew Hancock]

I shall try to answer all the questions that have been asked and then leave some time for further comments from other Members who have tabled amendments and new clauses or who wish to speak.

The green investment bank will play a powerful role in promoting the green economy. What we heard from the Opposition suggested that they had introduced such a measure themselves, but this is a coalition measure that is testament to the coalition. It is widely and strongly supported by Liberal Democrats and Conservatives alike and will, I think, help the UK to make a successful transition to a low-carbon economy. I am pleased to have been able to confirm that the European Commission has allowed the bank to make commercial investments in a wide range of sectors. We are therefore fully on track for the bank to be operational within a matter of weeks.

14:09

[David Mowat]

I believe the Minister said that the European permission excludes nuclear power, which forms by far the largest part of low-carbon electricity in this country and is likely to continue to do so. Given that, will he amend the purpose stated in clause 1(1)(a), as it is no longer accurate?

[Matthew Hancock]

The application, which has just succeeded, did not include nuclear. We do not plan to amend that purpose, not least because the Bill provides that the bank can, in time and if appropriate, be moved from the public sector into the private sector using secondary legislation, without changes having to be made to primary legislation.

[Chris Huhne (Eastleigh) (LD)]

Will the Minister assure the House that when he talks about a powerful institution to support the transition to a green economy, he is talking about a bank that will be able to borrow? I regret that the Bill contains no commitment to that borrowing. If the bank were able to use the public spending allocated as a capital base, it would be able to borrow, and if it were in line with, for example, the Bank Nederlandse Gemeenten in the Netherlands, it would be able to make approximately £150 billion of extensive loans. That would give far greater and more powerful support to the green economy than the funding currently allocated to it.

[Matthew Hancock]

The Government have already made a clear commitment that the bank will be able to borrow from April 2015, subject to public sector net debt falling as a percentage of GDP, and the borrowing could take several forms, including from the capital markets. I reiterate that commitment today. Nothing in the Bill prevents that from taking place.

As the Bill stands, the bank is allowed to invest only in activities it considers likely to contribute to the achievement of one or more of the green purposes in the UK. Government amendments 1 and 3 would allow the bank to invest in activities it considers likely to contribute to one or more of the green purposes, whether in the UK or elsewhere. The point about global supply chains has already been made powerfully. The amendments will provide important flexibility in the bank’s future activities. We believe that, for the foreseeable future, the bank’s activities should continue to be in the UK, and the Government and the Secretary of State, as shareholders in the bank, will be able to ensure that that is the case.

[Mr Mike Weir (Angus) (SNP)]

As I understand it, under the Bill in its current form, the bank would not be able to invest in a project that crossed borders—for example, a cable from the Republic of Ireland to the UK or a North sea supergrid. Am I correct, or will the amendment allow investment in such projects?

[Matthew Hancock]

The amendment will allow the bank in future to invest in the UK or elsewhere, but we have amended the bank’s statement of objects in its articles of association so that the bank’s activities are limited to those the board considers will, or are reasonably likely to, contribute in the UK to one of the green purposes. I hope that that answers both questions and addresses the reasonable point made by the Opposition that UK public spending should have a UK focus. We think this is the way to deliver the best of both worlds. The bank’s directors will be required to act in accordance with the company’s constitution to ensure that the bank contributes to the United Kingdom, and there will be flexibility for the future without the need for future primary legislation.

[Mr Iain Wright]

Will the Minister talk us through a scenario in which an investment decision might be made, say, for offshore wind capability, where prices may be cheaper in, say, Germany than in the United Kingdom? Will cost or the achievement of the bank’s purposes be the key consideration? What conflict and tension exist between cost, value for money and the supply chain capability here in the UK?

[Matthew Hancock]

Clearly, one reason for establishing a green investment bank is to ensure that it delivers against the green purposes. Of course cost is vital. That is why we are setting up the bank so that it will act on a commercial basis. The crucial point is that it must act in accordance with one or more of the green purposes; otherwise there would be no point in it being a green investment bank.

[David Mowat]

For clarity on the point that was made from the Opposition Benches, there is a proposal for a very large wind farm in the Republic of Ireland, whose output would come over to the UK through an interconnector and would therefore hit our green purposes. Could we invest in that scheme in the Republic of Ireland under the Bill?

[Matthew Hancock]

I would want to look at the details of the scheme. However, the amendments that we have made to the articles of association refer to the bank contributing in the UK. I would expect, though I cannot formally confirm, that an interconnector would have an impact in the UK as well as on the other side of the Irish sea. I will write to my hon. Friend with more details.

Amendment 2 was tabled in response to a suggestion from the hon. Member for Hartlepool (Mr Wright) that the designation of the bank should be subject to an affirmative resolution of Parliament. We made it clear in Committee that we are looking towards that. We want to ensure that Parliament has the full ability to scrutinise these issues and I hope the Opposition will support that change in arrangements.

Amendments 4 and 5 deal with directors’ pay. The Government have repeatedly demonstrated their commitment to ensuring that UK companies apply the highest standards of corporate governance. We have already introduced measures under the Bill to require quoted companies to seek shareholder approval for the directors’ remuneration policy. This change ensures that the bank will abide by these new commitments so that it is treated as a quoted company for the purposes of chapters 4 and 4A of part 10 of the Companies Act 2006, and so that the company is required to seek shareholder approval for the directors’ remuneration policy. This requirement would continue if the bank were one day moved into the private sector. I am sure hon. Members on both sides of the House will support the Government’s commitment to the very highest standards of corporate governance.

Opposition amendments 76 and 89 deal with the bank’s ability to borrow. As I said, the Government committed in Budget 2011 to fund the green investment bank with £3 billion to 2015. This is a serious demonstration of the Government’s green credentials and it is an appropriate level of funding for a new financial institution so that it can build market confidence and show a positive commercial return, while mobilising additional capital for green infrastructure projects in accordance with its green purposes. It is a major injection of capital which underlines our strong commitment to the bank.

We have also already given a clear commitment that the bank will be able to borrow, including from the capital markets. It may help if I explain the legal position in respect of borrowing by the bank. As a company formed under the Companies Act, the bank already has the power to borrow. The bank’s constitution provides, understandably, that the company will not incur borrowing without Government consent. This restriction is imposed by the Secretary of State as shareholder and does not affect the underlying position under company law that the company, as a legal person, has the ability to borrow.

I want to be clear that we are considering carefully the case for the bank borrowing from the capital markets from 2015-16, subject to the caveats I have mentioned. It is too early to make commitments about the level or type of funding. The views of the bank’s board will be an important factor, so we will have to discuss with it the appropriate level and source of future borrowing. We made a firm commitment in Committee to seek state aid approval from the Commission in respect of borrowing before the end of this Parliament. However, we cannot move to seek that approval before we know the mechanism for and quantum of borrowing. The bank’s borrowing will clearly be scored against national debt totals, so it is entirely reasonable for the Government to take that into account as part of our future spending and fiscal plans.

In summary, the Government agree with hon. Members about the importance of the issues relating to the bank’s funding, and their role in highlighting those here is welcome, as the Government want no one to be in any doubt about our serious ambitions for the bank and the green economy. These considerations will clearly be critical to the bank’s future and we will consider carefully how to provide clarity, either through the company’s constitution or by other means, about the legal position with regard to the bank’s borrowing.

[Chris Huhne]

On the other means, will the Minister commit to looking carefully at introducing an amendment in the other place to put that on the face of the Bill?

[Matthew Hancock]

We have been very clear about our commitment to allow borrowing and will look at how best to bring that clarity, which I am sure will include discussions with my right hon. Friend and others.

On the amendment relating to small and medium-sized enterprises, we are strongly committed to supporting SMEs and, indeed, are already providing major help to them through, for example, the business growth fund and the regional growth fund. I must declare an interest: a family business with which I am not directly connected is involved in energy efficiency matters. I expect the green investment bank already to benefit SMEs in a number of ways. For instance, some of the smaller funds that have already been set up are likely to generate investments for SMEs, provided that their targeted project size is under £30 million. However, I do not think that introducing a statutory basis would help, not least because it would increase the complexity of decision making in the bank, increase uncertainly and could increase the likelihood of judicial review. Therefore, we cannot support the amendment.

With regard to amendment 78, on the question of independent review, we think that parliamentary scrutiny and the normal corporate law requirements will be important. First, Parliament has a vital role in ensuring that the bank remains green. Secondly, Parliament will oversee the Secretary of State. Thirdly, I have no doubt that the Select Committee and the Environmental Audit Committee will look at the bank, and its accounts and reports will be placed before Parliament. However, it is important to be clear that the bank is a Companies Act company and, as such, directors owe duties to the company rather than directly to Parliament. We dealt with new clause 25 earlier in the debate on nuclear power.

Finally, the green purposes are clearly important as they relate to the essence of the green investment bank and to the company’s green objectives. Our goal is to have a broad definition of what is green. We agree that the reduction of greenhouse gas emissions is a vital objective, which is why four of the five priority sectors relate directly to it. The bank will be required to report on greenhouse gas emissions associated with its own activities and the board has agreed that the bank will also report on the greenhouse gas impacts of its own investments.

[Caroline Lucas]

I am grateful to the Minister for giving way, because although we have nearly run out of time—we knew we would when the Government voted for the programme motion—I want to put clearly on the record the fact that unless the bank’s ability to borrow is included in the Bill it risks being nothing more than a fund, which would be a tragedy. I say again that if the Liberal Democrats want to vote in line with their own manifesto and their party policy, agreed scarcely a few weeks ago in Brighton, they should support amendment 89, which I would have loved to push to a vote.

[Matthew Hancock]

The Liberal Democrats and, indeed, the Conservatives are supporting this with £3 billion of Government and taxpayers’ money, and that demonstrates their commitment. However, we need a balance. The new clause would increase again the chance of judicial review. Nevertheless, while we are clear that the overall goal must be carbon emissions, we do not want to rule out other investments, some of which were mentioned by the shadow Minister, and support for wider green measures. We will therefore consider tabling a further Government amendment in the other place to clarify the point that is raised in the new clause.

16:00

Debate interrupted (Programme Order, 16 October).

The Deputy Speaker put forthwith the Question already proposed from the Chair (Standing Order No. 83E), That the clause be read a Second time.

The House divided: Ayes 220, Noes 292.

16:00

Division 78

Ayes: 0

---

Labour: 206
Scottish National Party: 5
Plaid Cymru: 2
Conservative: 2
Independent: 2
Social Democratic & Labour Party: 1
Alliance: 1
Green Party: 1
Democratic Unionist Party: 1

Noes: 0

---

Conservative: 243
Liberal Democrat: 45
Democratic Unionist Party: 4

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I now have to announce the result of the deferred Division on the question relating to the order on the abolition of the Commission for Rural Communities. The Ayes were 301 and the Noes were 211, so the Ayes have it. I also have to announce the result of the deferred Division on the question relating to sulphur contents and marine fuels. The Ayes were 479 and the Noes were 33, so the Ayes have it.

[The Division list is published at the end of today’s debates.]



The Deputy Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

Clause 2

Designation of the UK Green Investment Bank

Amendments made: 1, page 2, line 8, leave out ‘in the United Kingdom’ and insert

‘(whether in the United Kingdom or elsewhere)’.

Amendment 2, page 2, line 18, leave out from ‘section’ to end of line 19 and insert ‘—

(a) is to be made by statutory instrument, and

(b) is not to be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.’.—(Matthew Hancock.)

Clause 3

Alteration of the objects of the UK Green Investment Bank

Amendment made: 3, page 2, line 37, leave out ‘in the United Kingdom’ and insert

‘(whether in the United Kingdom or elsewhere)’.—(Matthew Hancock.)

Clause 4

The UK Green Investment Bank: financial assistance

Amendment proposed: 76, page 3, line 24, at end add—

‘(7) Subject to the approval by the European Commission of the State aid notification concerning the establishment of the UK Green Investment Bank, the Secretary of State shall provide the European Commission with State aid notification concerning the intention to allow the Bank to borrow, including borrowing from the capital markets.

(8) The duty in subsection (7) must be fulfilled no later than 31 December 2013.

(9) It is the duty of HM Treasury and the Secretary of State to either—

(a) permit the UK Green Investment Bank to begin borrowing from the capital markets by April 2015, or

(b) to present to Parliament a report within one month of the passage of this Act giving a clear, certain, alternative date for the UK Green Investment Bank to begin borrowing, based on Office for Budget Responsibility forecasts for the public finances and advice from the Green Investment Bank on its need for borrowing powers,

both subject to the European Commission approving the State aid notification concerning borrowing.’.—(Mr Iain Wright.)

Question put, That the amendment be made.

16:14

Division 79

Ayes: 222

---

Labour: 208
Scottish National Party: 6
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 2
Conservative: 1
Alliance: 1
Green Party: 1
Democratic Unionist Party: 1

Noes: 285

---

Conservative: 236
Liberal Democrat: 45
Democratic Unionist Party: 4

Clause 5

The UK Green Investment Bank: accounts and reports

Amendments made: 4, page 3, line 27, leave out from ‘treated’ to ‘as’ in line 28.

Amendment 5, page 3, line 29, leave out ‘that Act’ and insert

‘the Companies Act 2006 for the purposes of the application to it of—

(a) Chapters 4 and 4A of Part 10 of that Act, and

(b) Parts 15 and 16 of that Act (in respect of a financial year).’.—(Jo Swinson.)

Clause 61

Members’ approval of directors’ remuneration policy

[Mr Iain Wright]

I beg to move amendment 93, page 51, line 23, at end insert—

‘(1A) A representative of the company’s employees must be consulted in the preparation of any such revision.’.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

Amendment 95, page 52, line 5, leave out ‘ordinary’ and insert ‘special’.

Government amendment 25.

Amendment 86, page 52, line 11, leave out subsection (b) and insert ‘(b) and annually thereafter.’.

Amendment 96, page 52, line 17, leave out ‘ordinary’ and insert ‘special’.

Government amendments 26 to 30.

New clause 27—Information about payments to recruitment and remuneration consultants in respect of directors’ remuneration—

‘After section 413 of the Companies Act 2006 (Information about directors’ benefits: advances, credit and guarantees) insert—

“413A Information about payments to recruitment and remuneration consultants

The Secretary of State may make provision by regulations requiring information to be given in notes to a company’s annual accounts about payments made in the relevant accounting period in respect of recruitment and remuneration advice relating to directors, including information specifying any fees that have been paid in proportion to the remuneration agreed for a director.”.’.

[Mr Wright]

Amendment 93 is in my name and those of my hon. Friends. This important part of the Bill deals with directors’ pay. We rightly spent time in Committee dealing with this, and I do not want unduly to inconvenience the House by repeating the same points, but at the heart of the debate is a disconnect between executive pay and average earnings, and between executive remuneration and the performance of the companies they lead.

As I mentioned in Committee, in 1980 the median pay of the highest-paid directors in FTSE 100 companies was £63,000, and median wages were £5,400. By 2010, the median pay of FTSE 100 directors was £2.99 million, while median wages had risen to £25,900. The ratio of directors’ and employees’ median pay had risen from 11:1 to 116:1. That trend is not confined to the UK, but has been seen throughout the developed world, most notably in the US, where, by 2008, executive pay was 200 times the median household income. Despite the difficult economic times and financial misery faced by millions, average compensation for an FTSE 100 chief executive rose by 12% in 2011, while average wages rose by only 1.4%.

In that environment of growing pay, there is no meaningful correlation between high pay and high corporate performance. Empirical evidence from research carried out in 2009 concluded that companies that pay their chief executive officer in the top 10% of remuneration earn negative results of -13% in terms of both profits and share price in the next five years.

Opposition Members support some of the Government’s reforms—in the interests of cross-party agreement, I should say that they build on work done by the previous Labour Government. However, as we said in Committee, the Government could go further and be slightly bolder. That is the basis of amendment 93, which would ensure that

“a representative of the company’s employees must be consulted in the preparation of any such revision”

to a director’s remuneration package. We anticipate this ensuring that an employee representative could sit on a firm’s remuneration committee in an advisory capacity.

16:30

Amendment 93 is a development of the argument that we pursued in Committee in which we pressed for a representative from the work force to be an active and full member of the company’s remuneration committee. In response to our amendments in Committee, the then Minister, the hon. Member for North Norfolk (Norman Lamb), stated that the Government did not believe in mandating that all companies must have employees on boards. Crucially for his argument—we reflected on this over the summer—he then said that the UK system of corporate governance involved a unitary board, whereas the likes of Germany and Sweden routinely had worker representation on boards. As he pointed out, however, that can happen there in a way that it cannot happen here, because they have a two-tier system of corporate governance, with an additional advisory board on which employees can play a part. As he also said, in the UK corporate governance system,

“we do not distinguish in law between types of director. They all have the same duties.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 17 July 2012; c. 691.]

That is an accurate reflection of the current situation, and as I said, we have reflected on the then Minister’s comments, which is why we have tabled amendment 93.

We have also been seduced—if that is not too strong a word—by the writing skills, positively Churchillian or Disraelian, of the new Minister, the Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock). In an article written for The Sunday Times in November 2011, he wrote:

“Finally, corporate remuneration committees should be made more independent. For all the controversy the suggestion has attracted, why shouldn’t that include leaving a place on the committee for an employee representative, in an advisory capacity, if only to offer a different perspective?”

We fully agree with his sentiment. I have been seduced by those rhetorical flourishes from his Pitt-esque fountain pen, so we look forward to his supporting us through the Division Lobby.

Amendments 95 and 96 would effectively require a 75% shareholder vote. We mentioned this issue in Committee, and I reiterate the powerful arguments put forward by Dominic Rossi, the chief investment officer of equities for Fidelity Worldwide Investment, who has argued that directors’ pay is over-generous and over-complex.

[Richard Fuller]

The hon. Gentleman is arguing for things he would like to see, but as he is well aware, it is already within the purview of corporations to put an employee on their boards, and shareholder votes can already be held on compensation and can influence that compensation even if they fall short of the 50% hurdle. What compels him to want to make it a legal requirement, rather than to use the market to make these decisions itself?

[Mr Wright]

It is because, as I tried to explain in my opening remarks, over the past 30 years we have seen market failure and a huge disconnect in the level of remuneration paid to top executives, but that has not ensured commensurate performance among the companies they lead, which is what we need. I think that the Government are onside on this. The shareholder spring and activism that we have seen, including at Trinity Mirror, has largely been the result of initiatives put in place by the previous Labour Government on annual advisory votes on directors’ pay and so on. I know that the hon. Gentleman is very familiar with these issues and will support us in ensuring that shareholders—the people who own these companies—have a proper say.

[Richard Fuller]

I appreciate the shadow Minister’s point, but unfortunately, as is often the case, the Opposition are like the ambulance that turns up two days too late and to the wrong address. The market is already responding to these issues, and measures are being taken to change how compensation is made, as he said. The Opposition always rush to legislate restrictive control and put a hand down on aspiration, when the market itself will solve, and is solving, these problems. I fully accept that there is an issue about employee representation in companies and about the historical lack of alignment between compensation on boards, but he is going the wrong way about resolving it.

[Mr Wright]

The purpose of the amendments, which have buy-in from Mr Rossi, Fidelity and elsewhere, is not to seek the death of aspiration, but to encourage, incentivise and try to ensure that companies achieve as much consensus as possible on directors’ pay policy—that was also the position of the Secretary of State earlier in the year—ensuring that companies start early in the process and avoid the use of what is a somewhat blunt and brittle tool, whereby the issue is discussed only at the annual general meeting or what-have-you, which can cause tension. Getting in early and talking to shareholders means that the owners and managers of a business can reach some sort of consensus. That is the purpose that amendments 95 and 96 seek to achieve. I quoted Mr Rossi in Committee, and I will do so again:

“Companies have nothing to fear if what they propose is fair and reasonable and clearly aligned to what is good for long-term shareholders.”

The hon. Member for Bedford (Richard Fuller) is a strong and experienced Member of this House and a good champion of businesses. I disagree with what he says about regulation and employment legislation, but he will recognise that getting good consensus on directors’ pay and ensuring that shareholders have the tools at their disposal to hold managers to account is in all our interests.

Amendment 86 would have the effect of creating an annual binding vote on pay policy, an issue that, again, was much deliberated in Committee. I still firmly believe that an annual vote is hardly disproportionately onerous or somehow unduly bureaucratic. Shareholders are used to, and expect, annual corporate reporting on matters such as the annual accounts—whether they are a true and fair view—and the reappointment of auditors. I reiterate the point that I mentioned in Committee and throughout the passage of the Bill: I fail to see how such a proposal can be seen as onerous. In Committee I had a well-thumbed Financial Times editorial from June 2012, which said that

“the business secretary has missed a trick in not going for annual pay votes…His worthy hope is that this might encourage more medium-term thinking about pay. But an obvious worry is that such votes may degenerate into another exercise in box-ticking, with shareholders voting on boilerplate policies rather than specific deals.”

It went on:

“Executives will restrain their demands only when they perceive a real risk in flouting social norms on pay. Fund managers, who naturally shy from conflict with companies, still need to be encouraged to challenge bosses more—especially on this sensitive topic. Annual votes would at least put them firmly on the spot. Mr Cable’s triennial polls, however well-meaning and thoughtful, may not.”

That point was echoed by the head of the High Pay Commission, Deborah Hargreaves, who stated in evidence to the Committee:

“If you vote every three years on pay policy, it is important that that policy is detailed enough for you to have an effect. The danger is that it could turn into a box-ticking exercise, where you vote on general boilerplate policy recommendations, rather than nitty-gritty details and figures. I felt that an annual vote would include more figures and more detail, and give shareholders more power to make informed decisions about what is going on in relation to pay at the company. If it happened every three years, the fear is that they may be voting on something vaguer and more bland.”––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 21 June 2012; c. 137, Q294.]

Again, I cannot see how our proposal would be onerous, and I think Ministers should think again.

The final amendment in this group is new clause 27, the purpose of which is to improve transparency in the disclosure of information relating to remuneration consultants and the manner in which they are paid by companies. Evidence suggests that remuneration consultants have played a key part in hiking up directors’ pay. Work undertaken by Professor Martin Conyon found a direct correlation between higher-than-average directors’ remuneration and the use of remuneration consultants. Further studies have shown that, on average, pay for chief executive officers is 26% higher in companies that use remuneration consultants. As I mentioned in Committee, across the Atlantic the Congress inquiry led by chairman Henry Waxman concluded that remuneration consultants to Fortune 250 companies were paid almost 11 times as much for providing other services to those companies.

[Richard Fuller]

The shadow Minister is making some good points. Does he believe that the Government should provide guidelines to remuneration committees on how they should set directors’ pay, and on how they should ensure that the correlation with average earnings and with shareholder value growth is maintained?

[Mr Wright]

That is a fair point. There are already guidelines in place, including discretionary guidance from the industry. We also have the combined code on corporate governance, which provides a degree of guidance. We need to determine whether the issue is sufficiently serious that it requires legislation to provide firm guidance. I shall be interested to hear the Minister’s view on that, given that there is agreement across the House on the disconnect between pay and performance, and the link—which acts almost as a catalyst—between remuneration consultants.

Speaking as a chartered accountant who used to work for a “big four” accounting firm, I see a close correlation between these problems and the crisis in the auditing profession a decade ago. That led to the disclosure of fees and to greater transparency on the audit services and non-audit services provided by the accounting firms. The perception was that in corporate scandals involving firms such as Enron, the thoroughness and accuracy of the auditors’ opinion was called into question when audit firms secured additional, often more lucrative, work away from the statutory audit.

New clause 27 would therefore increase disclosure of information relating to payments to remuneration consultants, ensuring that the Secretary of State should make a provision by regulation of notes to a company’s accounts about payments made to the consultants, including information specifying fees that have been paid as a proportion of the total remuneration package of a director. My concern is that, if a contract is so designed, a consultant has an inherent desire to inflate the package to secure a larger fee. If that is the case, shareholders should be made fully aware of it via a disclosure in the annual accounts. As I have said, we applaud the Government’s general direction of travel, but we believe that they could go further, and I will be interested to hear what the Minister has to say about this.

[Jo Swinson]

Directors’ pay has been very much in the news recently, for reasons that the hon. Member for Hartlepool (Mr Wright) has outlined. Between 1998 and 2000, the average total remuneration of FTSE 100 chief executive officers increased fourfold, which was much faster than the increase in prices or in average remuneration levels across other employers. It was also much faster than the increase in the FTSE 100 itself. There was clearly an issue to be addressed, and the Government opened up the debate on directors’ pay a year ago. We drew attention to the fact that top pay in large public companies had grown rapidly without any clear connection to performance, and we asked what could be done about it. We encouraged business and investors to face up to this difficult issue.

In January, the Prime Minister and the Secretary of State committed to taking action, and in June we introduced bold measures into this Bill. I know that the Bill Committee enjoyed a thorough and engaging debate on this issue before the summer break, and I am pleased that our reforms have received such wide support inside and outside Parliament. Investors agree that this comprehensive package of reforms will help them to tackle excessive pay and to restore a clearer link between pay and long-term performance.

We have tabled six minor and technical amendments to the clauses on directors’ remuneration, which I will outline before I speak briefly in response to the other amendments that have been tabled. The technical amendments will tighten up the legislation and ensure that it is as robust and clear as possible. Business and investors support those amendments. Amendments 25 and 30 correct a technical drafting oversight. They clarify that, for the purpose of identifying when companies will be affected by the new provisions, the relevant financial year is the one beginning on or after the day on which the provisions come into force. That is to ensure that companies whose year starts on 1 October are subject to the provisions.

Amendments 26 and 29 make it clear that the definition of “quoted company” shall be the same as that which already appears in the Companies Act 2006. Amendment 27 broadens the definition of what is meant by a remuneration payment so that remuneration paid to a director in his or her capacity as an executive manager of the company or its subsidiary is also captured. Importantly, that will mean that companies cannot circumvent the new restrictions by paying someone a small fee for being a director and a large salary for being a manager.

Amendment 28 tightens up the provisions relating to payments made to former directors. This will ensure that, where former directors are allowed to benefit from long-term pay schemes that mature after they have left, the payments must be consistent with the company’s remuneration policy—and if not, approved by a separate shareholder resolution. I am sure the House will agree that these minor and technical amendments will strengthen and improve the legislation, and I hope all Members will join me in supporting them.

16:45

Opposition Members have suggested a number of areas where they would like the legislation to go further, but for the reasons that my predecessor, my hon. Friend the Member for North Norfolk (Norman Lamb) made clear in Committee, the Government do not agree that the amendments are necessary. I shall explain why.

Amendment 86 proposes that the binding vote on remuneration policy occurs annually, even if a company’s policy has not changed. The hon. Member for Hartlepool set out various objections to the provisions, saying that they were too onerous and inappropriate. We went for a three-year pay policy and, to be fair, this had nothing to do with being onerous; it was about what investors said would work. The attraction of a three-year policy is that it encourages more long-term thinking and discourages the kind of unnecessary annual tinkering that invariably leads to pay going up and getting ever more complex. That approach is backed by major investors and investor bodies such as the Association of British Insurers. Of course, there is nothing to stop companies having an annual vote on pay policy—they have the flexibility to do so—and there is the safety net of a trigger mechanism to protect shareholders. If they are unhappy with how the pay policy is working out and they reject the annual advisory vote, a binding vote on policy at the next annual general meeting will be triggered.

The hon. Member for Hartlepool asked whether the policy will be too vague and too high-level, but the regulations that inform what happens will clearly and succinctly set out to which types of payments directors are entitled, how the pay links to company strategy, how performance will be assessed and how it will translate into awards under different scenarios. Parliament will have a chance separately to debate the regulations at a later stage. If there were any outstanding concerns, they could be put forward then.

Amendments 95 and 96 would make the vote on remuneration a special resolution, requiring 75% shareholder support to pass. Investors have made it very clear that they want an ordinary resolution, subject to a simple majority. It is important to note that we have seen this year that it is absolutely possible for the majority of shareholders to vote against pay proposals. So far this year, seven companies have lost their pay votes—real evidence that the process can work.

Amendment 93 would require companies to consult an employee representative whenever they wish to propose a revised remuneration policy. I am sympathetic to the intention of encouraging employees to be involved and consulted. We share the view that it is helpful for remuneration committees to seek employees’ views on pay—indeed, some already do—and we are encouraging them to report on how they have taken employee views and employee pay into account. I do not believe that the statutory approach set out in the amendment is the right way forward. It is worth reminding the House of the consultation that closed in September, as the Government will shortly come forward with their response. We proposed that companies should report on whether they sought the views of the work force in setting pay. There are also existing tools such as information and consultation arrangements, which can be used to make sure that employees are engaged. The Government definitely sympathise with the spirit of that intention, but we do not think that the statutory approach provides the right way forward.

Finally, the Opposition’s new clause 27 would allow the Secretary of State to make new regulations requiring companies to disclose how remuneration and recruitment consultants are paid. We do not accept the provision because the Secretary of State already has the power to require that to be part of the director’s remuneration report. We have already published draft regulations to implement that, whereby companies will have to explain how consultants have been appointed, used and remunerated.

I hope that I have provided some assurance on these matters. I thank hon. Members for engaging in the issues, but maintain that the proposed amendments—other than the Government amendments—are unnecessary, so we shall not support them.

Question put, That the amendment be made:

16:49

Division 80

Ayes: 219

---

Labour: 205
Scottish National Party: 5
Democratic Unionist Party: 4
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Independent: 1
Alliance: 1
Green Party: 1

Noes: 277

---

Conservative: 235
Liberal Democrat: 42

16:59

Amendment made: 25, page 52, line 8, leave out from ‘begins’ to ‘or’ in line 9 and insert

‘on or after the day on which section 61 of the Enterprise and Regulatory Reform Act 2012 comes into force’.—(Matthew Hancock.)

Clause 62

Restrictions on payments to directors

Amendments made: 26, page 53, line 19, at end insert—

‘ “quoted company” has the same meaning as in Part 15 of this Act;’.

Amendment 27, page 53, line 22, leave out from ‘person’ to ‘other’ in line 23 and insert ‘—

(a) holding, agreeing to hold or having held office as director of a company, or

(b) holding, agreeing to hold or having held, during a period when the person is or was such a director—

(i) any other office or employment in connection with the management of the affairs of the company, or

(ii) any office (as director or otherwise) or employment in connection with the management of the affairs of any subsidiary undertaking of the company,’.

Amendment 28, page 54, line 27, after ‘be’ insert ‘or has been’.—(Matthew Hancock.)

Clause 63

Payments to directors: minor and consequential amendments

Amendment made: 29, page 58, line 4, at end insert—

‘(12) In that Schedule, in the first column, after “quoted company”, insert—

“in Chapter 4A of Part 10 section 226A(1)”.’.

Clause 64

Payments to directors: transitional provision

Amendment made: 30, page 58, line 13, leave out from ‘begin’ to ‘, and’ in line 14 and insert

‘on or after the day on which that section of this Act comes into force’.—(Matthew Hancock.)

Clause 57

Power to change exceptions: copyright and rights in performances

[Matthew Hancock]

I beg to move amendment 23,  page 47, line 17, at end insert—

“( ) But regulations under this section may make only such provision as may be made under subsection (2) of section 2 of the European Communities Act 1972 or such provision as could be made under that subsection if paragraph 1(1)(d) of Schedule 2 to that Act did not apply.’.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to discuss the following:

Government amendment 24.

Amendment 75, in clause 59, page 49, line 19, at end insert—

‘(7) The Secretary of State must have regard to any feasibility study commissioned on the licensing of orphan works in advance of the regulations being laid before Parliament.’.

[Matthew Hancock]

In Committee, a number of questions were asked about the scope of what was then clause 56—now clause 57—on copyright. The hon. Member for North Norfolk (Norman Lamb), who was a Minister in the Department at the time,agreed to reflect on the clause and we have also had further discussions with interested parties.

The Government have considered this point carefully and think that amendments to clause 57 are the best way to address the concerns expressed by Committee members and industry stakeholders. I reassure hon. Members that the policy intent behind the clause remains unchanged. The clause was never intended to give the Government the ability to change copyright exceptions in ways that we cannot already change them and I hope that the amendments now make that abundantly clear.

Changes to copyright exceptions are subject to a tightly prescribed list set out in the EU information society directive. The European Communities Act 1972 provide the mechanism by which EU law is applied at a national level—in this case on copyright exceptions. The clause will permit the Secretary of State to make any changes that remove or narrow an exception without affecting the maximum criminal penalties that Parliament has set. Without the amendment, the criminal penalties might have had to be reduced and I do not think that is the aim of the Bill.

The stakeholders who had raised concerns about the clause, including the British Copyright Council, UK Music, the Publishers Association, the Creators’ Rights Alliance and the Premier League, have written to the Secretary of State confirming their support for the Government’s amendments.

[Jim Dowd (Lewisham West and Penge) (Lab)]

The Minister mentioned the enormous concern across the creative sector about the clause and, more particularly, its purpose when it was first introduced. His reference to the fact that all it does is endorse existing law will have confused many people, as they will have wondered why, if that was so, the clause was needed at all. If it is needed, and if the amendments we are discussing go some way to addressing the problem, can he give us an assurance that any exception arising from Hargreaves, the Intellectual Property Office or any other source will be treated as primary legislation? If he cannot do that, will he undertake that every piece of secondary legislation will be introduced individually and will include a comprehensive impact assessment before it is brought to this House?

[Matthew Hancock]

I can assure the hon. Gentleman that any proposed exceptions will be the subject of secondary legislation and will therefore be debated. Each separate element of a statutory instrument can be debated—that is the function of the secondary legislation procedure.

Amendment 75 would require the Secretary of State to take into account any feasibility study undertaken of which organisation is best placed to issue licences authorising the use of orphan works.

[Kevin Brennan (Cardiff West) (Lab)]

Will the Minister give way?

[Matthew Hancock]

On this point?

[Kevin Brennan]

On the point being debated, yes.

[Matthew Hancock]

I give way.

[Kevin Brennan]

It is usual to give way during this stage. What does the Minister think is the maximum number of exceptions that ought to be included within one statutory instrument, given that he has been unable to give the assurance sought by my hon. Friend the Member for Lewisham West and Penge (Jim Dowd) that each exception will be treated separately if secondary legislation is used? Also, will he confirm that in all cases the affirmative procedure will be used?

[Matthew Hancock]

I give the assurance on the second point: the normal procedures will be used. The normal procedures will govern what goes into one statutory instrument and then, as we all know, debate on a statutory instrument covers all elements of the instrument. That is the procedure for a statutory instrument that is debated.

Amendment 75 proposes that account be taken of any feasibility study before the Government lay regulations on the orphan works scheme—that is, I think, the essence of the amendment. In principle, we understand the need for studies and consideration of such important questions, but we do not think that such a requirement is appropriate in primary legislation. If the proposal is that the conclusions of a feasibility study should automatically and immediately have legislative effect, we have to ask what would happen if the recommendations of a commissioned study could not, for good and legitimate reasons, be accepted. However, I can assure the House that the Government will carefully consider which bodies or body should be responsible for licensing orphan works, including whether they have the necessary independence, expertise, resources and processes.

Although there is some work still to do on deciding which organisation should be responsible, it is unlikely to be a new body. We looked at the arrangements in other jurisdictions: in Canada, the copyright board has that responsibility; in Hungary, the intellectual property office has it. Jurisdictions overseas locate the role in different parts of Government, according to where the appropriate expertise is found. There could be a role for collecting societies to license orphan works of a type where a collecting society already operates in that sector, but many of the orphan works held by museums and archives, for example, are not of types that are currently collectively licensed; such works include unpublished diaries, old photographs and oral history recordings.

In the light of those reassurances and given that the regulations cannot be laid until the work is completed, I ask the hon. Member for Hartlepool (Mr Wright) not to press amendment 75 and the House to support Government amendments 23 and 24.

[Mr Iain Wright]

I was broadly reassured until the Minister made his comments, but now I am as uncertain as ever. The Public Bill Committee spent significant time debating copyright, and rightly so, as the legislative framework—not regulation, but a legislative framework—governing copyright has been a crucial ingredient in allowing Britain to be at the heart of the global creative and cultural industry.

We lead the world in many parts of that cultural and creative sector, from publishing—as we heard, in Committee the then Minister was keen to talk in vivid and animated terms about “Fifty Shades of Grey”—to the video gaming industry, where we lead the world, to music, and I was particularly keen to talk about the Stone Roses, which was fantastic. The Minister does not strike me as being a Stone Roses man; he strikes me more as a JLS-One Direction man. I imagine that he would be keen on that. One Direction seems appropriate, given his closeness to the Chancellor.

We lead the world in different parts of the sector. With a rise in the global middle class, which wants to be entertained, it is important that we continue to lead the world. There are many reasons for our pre-eminence in the industry, not least the solid legislative framework governing copyright and intellectual property. We lose that at our peril.

As I mentioned in previous debates throughout the passage of the Bill, a partnership approach is needed, with Government identifying the competitive sectors in which Britain can lead the world and working closely with business and with those sectors to ensure growth and potential opportunities. We have not yet seen such a partnership approach. It did not seem to exist in the Government’s original drafting of the clause on copyright. The unilateral approach taken by Ministers, without consultation with the industry and—surprise, surprise—without empirical evidence or an impact assessment—where have we heard that before?—caused alarm and uncertainty among stakeholders in the industry and threatened significant and long-term investment decisions for this country.

I quoted in Committee, and it is worth repeating to the House, the submission from UK Music, which said:

“The inclusion of copyright clauses in this Bill came as a surprise to many copyright stakeholders. We widely anticipated copyright legislation, but we did not anticipate that the copyright legislation would be attached to this particular Bill. This ‘surprise’ generated a degree of confusion and alarm amongst our community. This was needless. Better communication between the Government and its key stakeholders would have prevented this.”

Opposition Members entirely agree with those sentiments.

The clause as originally drafted would have given the Secretary of State order-making powers to allow amendment of any exceptions via secondary legislation. This power was considered necessary to deal with the situation where, under the EuropeanCommunities Act 1972, the Government are able to amend exceptions to copyright and performance rights which may, so the Government stated, restrict the maximum statutory penalties. We argued in Committee and tabled amendments to the effect that the wording of the clause was too loose, lacked clarity and provided the Secretary of State with too wide a power to deal with this issue.

In Committee the Government stated that this was not so and that there was no case for our amendment. I therefore welcome the fact, although I am surprised, that the Government tabled amendments 23 and 24, which specify that regulations under this section may make only such provision as may be made under section 2(2) of the 1972 Act. I do not want to be churlish on this point and I am pleased that the Government have listened, albeit somewhat late in the process, to us and, more importantly, to stakeholders.

However, as we have hinted in interventions, there is not complete unanimity throughout the industry when it comes to Government amendments 23 and 24. Some stakeholders, who are looking to invest in the UK, such as British Pathé, are still concerned that the Government have misinterpreted section 2(2) of the 1972 Act. They argue that if that part of the 1972 Act gives the Government powers to change copyright exceptions by statutory instrument, the Government have that right. Nothing in the Bill would change that. There is therefore no need to clarify the point in the Bill, because the power already exists. The only reason for writing the power into the Bill in clause 57 would be if it did not exist. The managing director of British Pathé said to me in an e-mail last night that “the statement is redundant” unless that is the case.

There remains a concern among some stakeholders that clause 57 merely allows extensions to criminal penalties relating to exceptions. However, it has been noted that nearly all copyright infringements relate not to exceptions, but to matters such as piracy and theft, which are neither covered in clause 57, nor addressed by the Government’s amendments. Therefore, given the Minister’s move in this regard, which has been welcomed by much of the industry, will he respond to the specific concerns of companies, such as British Pathé and ITN, that remain despite the Government’s amendments? Will he reassure me on that point?

17:15

[Kevin Brennan]

Will my hon. Friend also seek an assurance from the Minister that, when in future he considers any piece of legislation containing clauses relating to copyright, never again will the umbrella body for the UK music industry be given absolutely no prior knowledge of it? Perhaps the Minister could give the House that assurance when he responds.

[Mr Wright]

I absolutely agree. I will take this opportunity to wish my hon. Friend a happy birthday for yesterday—a birthday he shares with several other Members, not least the eminent Chair of the Culture, Media and Sport Committee, the hon. Member for Maldon (Mr Whittingdale). My hon. Friend made two important interventions. When he intervened on me he mentioned the lack of consultation and the surprise of important stakeholders, such as UK Music, about these provisions. That is not the way to have clarity about Government policy on something as important as the creative and cultural sectors. I hope that that is a wake-up call, because we have seen the Government do the same elsewhere, for example with the feed-in tariffs and the oil and gas tax charges. To move without any concern for what stakeholders are thinking is not in the best interests of the British economy and industry.

The second point that my hon. Friend made, when he intervened on the Minister, relates to the use of statutory instruments. I rose to say that I felt more confused as a result of the Minister’s comments than I did when I entered the Chamber today. Part of our discussions in Committee was about the fear of bundling some of these points into a single statutory instrument. The Minister must have served on a delegated legislation Committee during his time in the House and will know that the only way the House can express a view on such instruments is by voting in favour or against; there is no way we can express a view on individual provisions. Therefore, will he clarify to what extent he will be able to bundle points relating to copyright exceptions into single SIs, which would not allow the House to express our views?

I now to turn to our amendment 75, which proposes that the Secretary of State

“must have regard to any feasibility study commissioned on the licensing of orphan works in advance of the regulations being laid before Parliament.”

We are not against the concept of orphan works, as I mentioned in Committee, provided that safeguards are in place to ensure that the party that wants to use the work has undertaken a diligent search. I recognise—the Minister alluded to this—the huge benefits that could be unlocked as a result of orphan works licensing. For example, I can anticipate SMEs building new platforms and applications for the re-use of digitised content, with innovation and new business models coming forward to use the content commercially so that Britain can lead the world, enriching the research and cultural environment and thereby consolidating the UK’s position as the destination of choice, whether literally or online, in the 21st century as the place for education and research, particularly in the cultural sector.

The Bill provides the legislative framework for orphan works licensing but is, as is probably inevitable and desirable in primary legislation, high-level and somewhat vague in detail. The crucial details that stakeholders will be looking for have yet to be determined and will be available via regulations. However, it would be useful to get on the record as much certainty and clarity as possible about the Government’s intended direction of travel in order to allow the industry, including existing players and potential new entrants to the market, to start gearing up to use the licences commercially. The purpose of our amendment is to probe the Minister on his intended direction of travel and ensure that a feasibility study considers certain aspects of the policy and that the Government take these findings into account, not in a completely solid way but making sure that these matters are addressed.

Will the Minister indicate the identity of the authorising body or bodies? He mentioned it briefly in his opening remarks, but it would be useful to put a little bit more meat on the bones. What sort of time scale is he working towards? When does he anticipate that the introduction of such schemes, and the laying down of regulations as a preliminary step, will take place? What will be the scope of the orphan work licensing schemes? Will this be done on a sector-by-sector basis? Will it be based on a “specific types of work” approach, or will there be a big bang in which all possible orphan work schemes will be incorporated from day 1?

Will the Minister outline how he anticipates that any diligent search on a work-by-work basis will move forward? I am fairly sure that every such search will have to be done on an individual work basis rather than by batching works together. Am I right in that thinking, or is he considering any change in the individual works versus batch approach? Could diligent searches be re-used within a certain time period? How will the Minister—again, this is part of the feasibility study leading into the regulations—strike the balance between the rights of the licensee, allowing the licence holder to commercially use the rights arising from that licence, and the rights of the relevant rights holder? What will happen in the event that the parent comes forward? How will remuneration be worked out in such an event? Will a certain amount of time be stipulated in regulations following the awarding of an orphan works licence?

We lead the world in the cultural and creative industries, and many people will want to take that away from us for a variety of reasons. We need to make sure that we can maintain our competitive advantage. That requires close co-operation, with an active industrial sector strategy between the industry and Government. Sadly, during the passage of the Bill, that has been lacking in the provisions on copyright. I hope that the Minister has learned his lesson and look forward to his comments.

[Mr John Whittingdale (Maldon) (Con)]

We do not have a lot of time, and I do not want to detain the House unduly. However, although it is recognised that this matter forms only a small part of the Bill, the importance of the creative industries to our national economy, and the contribution that they are making to growth, is so essential that we need to look very carefully at anything that affects the livelihoods of those working there—and the creative industries rest on the protection of intellectual property rights.

On Second Reading, I suggested to the Secretary of State that clause 57—then clause 56—could be used to make substantial changes to copyright law through statutory instruments. I am grateful to him for meeting representatives of a wide range of creative industries to discuss those concerns. That has led, to some extent, to the amendment that the Government have tabled. As the Minister said, several representatives of the creative industries, such as UK Music, the British Copyright Council, the Publishers Association and the Premier League, have said that they are now satisfied.

However, as the hon. Member for Hartlepool (Mr Wright) said, that is not a unanimous view across the industry. The Minister has assured us that this is about enforcing penalties but, despite the Government’s amendment, the clause does not mention penalties. I am therefore still not clear as to why the Government did not accept the suggestion that they make it absolutely explicit in the Bill that it is all about penalties. Instead, it talks about exceptions, and it still allows changes to be made to copyright law by statutory instrument. Following the Hargreaves report, there is still great suspicion on the part of many of those in the creative industries that there is an intention to try to dilute intellectual property rights. They fear that the clause could be used—perhaps not by this Government but by a future Government—to bring forward changes to copyright law.

Those fears have been expressed, as the hon. Member for Hartlepool said, by a wide range of organisations, including Associated Press, ITN, Getty Images, the Press Association, British Pathé, Agence France Presse and Deutsche Presse-Agentur. I will quote one sentence from the letter they have sent that sums up the problem that the Government face:

“It therefore remains our concern that…the true purpose of Clause 57…as drafted”

is that

“it will be used as a vehicle to push through a number of changes to copyright exceptions recommended by the Hargreaves Review, which we discussed with you at our meeting because of the detrimental impact to business and the creative industries as well as…ultimately…to the UK’s future economic growth.”

I welcome the Minister’s assurance that that is not the Government’s intention, but it must be of concern that a number of organisations that are important to this country retain that suspicion. Anything that the Government can say or do now to allay that suspicion and make it clear that they do not intend to implement the Hargreaves recommendations in a bundle, via a statutory instrument, would be extremely welcome and would reinforce the point that the provision is not about that, but about criminal penalties.

[Pete Wishart (Perth and North Perthshire) (SNP)]

I do not know whether I should break out into song and wish a belated happy birthday to the hon. Members for Cardiff West (Kevin Brennan) and for Maldon (Mr Whittingdale), or declare my favourite band. Whenever the hon. Member for Cardiff West and I appear in the Chamber together, I always try to plug MP4, because we comprise half the band. We will conclude our world tour of UK party conferences this Saturday, which is worth noting as a landmark occasion.

I agree with and endorse what the Chair of the Culture, Media and Sport Committee said about the value of copyright to our creative industries. It is the very essence of what underpins our success and probably makes the UK the leader in so many sectors throughout the world, from music, drama and film to Premier League football. It is the one thing that makes sure that we can continue to deliver that immense conveyor belt of talent that excels right around the world.

We muck about with copyright at our peril and must tread carefully with regard to copyright exceptions. We have to know exactly what we are doing, which is why impact assessments are vital and why the Minister’s confused response alarms me and is of concern. We have to know what the exact impact will be on all the sectors and everybody involved in the creative industries, and listen carefully to what they have to say.

I welcome the amendment, but only half-heartedly. For once, the Government have listened to representatives from the creative industries, who have not received a particularly good welcome from them over the past few years. They feel undervalued and sense that their concerns, which they make eloquently to the Government, are ignored and that, if they are listened to, it is in a half-hearted way.

The issue of copyright exceptions is important. We have had the Hargreaves report, the Government’s response to it and the Intellectual Property Office’s examination of how the report’s recommendations could be implemented. I am sure that the Minister will be thrilled to know that he is about to receive the report by the all-party group on intellectual property, of which I and the hon. Members for Maldon and for Lewisham West and Penge (Jim Dowd) are members. It will suggest various ways in which IP policy could be better formulated across Government and across Departments, and suggest the need for a real champion of IP copyright, because that is what is missing.

We need a proper investigation and an impact assessment. The assumptions that underpin a number of the Hargreaves recommendations are nonsense. The examples that caught our eye related to copyright exceptions, such as the assertion that an exception for format shifting would be worth £2 billion to the UK economy. The funniest assumption was the claim that an exception for parody of intellectual property could increase the UK economy by £600,000. Those assumptions were challenged, but they were asserted by the IPO without any real foundation. That is why this House has properly to consider copyright exceptions. If we do not, we will be left with that sort of nonsense. We have to make sure that that does not happen again.

I join others in calling on the Minister to listen to the concerns that the creative industries still have about the potential bundling together of proposals in secondary legislation. The Rolls-Royce model is primary legislation, whereby Members of Parliament can come to the House to have a proper debate and kickabout on proposals for copyright exceptions. If that is not to happen, the Minister must provide a better assurance that there will be separate pieces of secondary, delegated legislation, with full impact assessments, so that we can understand the impact that any further copyright exceptions will have on all the relevant sectors.

[Jim Dowd]

To reinforce that point, the wooliness of the Minister’s response, if it is left like that this evening, will have created an awful lot of work for his colleagues at the other end of the building. There are people down there who know better than most Members of this House precisely what the Government’s lack of decision—or else their attempt to hide what they are doing—really means.

17:30

[Pete Wishart]

I am grateful to the hon. Gentleman because he is spot on. The other House has people who have looked at these issues over a long career, who know the dangers and who understand that we have to tread sensitively and carefully when we look at copyright exceptions.

I hope that the Minister listens to the concerns that have been raised not only by the creative industries, but by hon. Members who have an interest in copyright issues. I hope he will give us the assurance that there will be no bundling of copyright exceptions in secondary legislation and that we will have full impact assessments if there are further copyright exceptions. He must also do something to convince those of us in the House and those in the creative industries who still have major concerns about what is being proposed.

I will touch briefly on the Labour amendment. I support it and think that it is sensible to ensure that we have a proper assessment before we move on to the licensing of orphan works. Orphan works have been hotly debated a number of times in the House, particularly when discussing Hargreaves. The matter has caused great anxiety and unhappiness, particularly among photographers, who have massive concerns about how their industry is threatened by the Hargreaves exceptions on orphan works. It is entirely sensible to have a proper assessment before we proceed with the licensing of orphan works. I heard the Minister’s response to the plea from the Labour spokesman for the assessment. I hope that the proposal will be considered properly. We need to hear more about what the Minister intends to do to ensure that we do not do anything wrong in the licensing of orphan works.

Most importantly, we must hear from the Minister that he will do the right thing by the creative industries, that there will be no bundling of legislation, and that Members of this House will have a proper opportunity to scrutinise and debate such measures.

[Sir Malcolm Bruce (Gordon) (LD)]

I defer entirely to the Members who have engaged in the debate hitherto, but I have been alerted this week to outstanding concerns among those involved in intellectual property that the Government have not fully taken account of their concerns and reservations. I heard what the Minister had to say, including his assurance that the Government amendments are designed to achieve that. I have also spoken to the Secretary of State and passed him the detailed reservations that have been communicated to me.

Nevertheless, I have been advised that the uncertainty that the creative industry or intellectual property sector feels may be having a negative effect on commercial decisions. It has been reported to me that some business interests are actively considering relocating out of the UK because of their concerns about the uncertainty. The Minister has made it clear that that is not the Government’s wish or intention. I accept that that is said in good faith. However, I ask him to consider the representations that are being made and to reflect on whether the Government amendments will allay the practical concerns. I appreciate that our consideration is at a late stage, but, as has been mentioned, the legislation will go to another place. Those who are in that place will no doubt want to bring forward more detailed proposals if they are required.

The concern, which has been articulated much more eloquently by others, is that we could lose intellectual property rights in a bundle of legislation that goes through in a Committee Room, without adequate debate or amendment. That could have far-reaching and negative commercial consequences. In recognition of the Government’s dilemma, I would say that we need to strike a balance. It is understood that excessive protection of intellectual property rights can be contrary to free trade. Of course, it is important that we get the balance right. Equally, those who are creative in any sector have the right to know that they will not suddenly find their intellectual property taken away from them at short notice. Protection against that must not be weaker in the UK than elsewhere in the EU or in the rest of the world.

The importance of this matter has been communicated to me by people who know better than I do. They are still concerned that what the Government are doing will threaten the commercial viability of UK investments, and I am sure that is not the Government’s intention.

[Matthew Hancock]

I welcome the Opposition Front Benchers’ support for the two Government amendments in this group. I want to reiterate the value of intellectual property, which is underpinned by our copyright regime, to the UK economy not only in the past but, I imagine, increasingly in the future. A strong IP regime is vital to the creative industries, in which we thrive and are hugely successfully. Ensuring that that regime is right and strong is a crucial part of having a strong economic future. The Digital Economy Act 2010, which strengthened many areas of law, and the extension of the length of copyright in music indicate the Government’s commitment to a strong and supportive intellectual property regime.

I will go through the points that Members have made. It is simply not correct to suggest that these proposals have not been widely consulted on. Indeed, they are based on recommendations in the Hargreaves review, which itself drew on extensive evidence. The response to that review was followed by a formal consultation, which received almost 500 written responses. There has been extensive work with interested parties following that. I reiterate the Government’s willingness to engage with stakeholders including Members, many of whom have a long-standing interest in the subject. Members throughout the House share not just birthdays but interests, and their engagement must and will continue.

The Government will announce their policy intent with regard to the exceptions recommended in Hargreaves this autumn. Exceptions can be introduced, extended and updated using the existing provisions of section 2(2) of the European Communities Act 1972. The proposed way forward represents no change to how exceptions can be introduced and updated under the existing provisions. The problem is that the criminal penalties available in statute brought in under that Act carry a maximum penalty of two years’ imprisonment. In the case of many of the offences that we are discussing, penalties are longer than two years and can be up to 10 years. It is in the interest of those who want to ensure that their copyrights are protected to make sure that criminal penalties are that high. We do not want to have to bring them down to two years, in order to use the 1972 Act. Clause 57 is not needed to implement Hargreaves, but it allows us to do so in a way consistent with the existing, stronger criminal penalties, which I know the industry and many stakeholders support. Having received that reassurance, the British Copyright Council, UK Music, the Publishers Association and the Premier League are happy to support the Government amendments.

[Jim Dowd]

On that point, why does the Minister not do what was suggested by the hon. Member for Maldon (Mr Whittingdale) and simply put in a tightened disciplinary regime and nothing else? Why is that so difficult for the Government to accept, if that is the sole purpose of the clause?

[Matthew Hancock]

Because we want to ensure, as and when technical amendments are considered, that we do not have to water down criminal penalties because of the way that the measures are introduced.

We are not in a position to announce a precise timetable for work on orphan works, but we expect it to be concluded during 2013 and certainly before any regulations are made. I commit the Government to discussing the details with Opposition Front-Bench Members, and others, during that process.

The Government amendments have been tabled with strong support for the IP regime on which much of our industry is based, and although the Government recognise the probing nature of the Opposition amendments, and commit to continued analysis of and engagement on those issues, we do not think that they should be included in the Bill.

Amendment 23 agreed to.

Clause 57

Power to change exceptions: copyright and rights in performances

Amendment made: 24, page 47, line 33, at end insert—

“( ) But regulations under this section may make only such provision as may be made under subsection (2) of section 2 of the European Communities Act 1972 or such provision as could be made under that subsection if paragraph 1(1)(d) of Schedule 2 to that Act did not apply.’.—(Matthew Hancock.)

Clause 68

Extent

Amendments made: 31, page 59, line 34, leave out ‘17(1)(c)’ and insert ‘17(2A)’.

Amendment 32, page 60, line 14, after ‘50,’ insert ‘[Osborne estate],’.

Amendment 33, page 60, line 14, after ‘54’ insert ‘and [Estate agency work]’.

Amendment 34, page 60, line 15, at end insert—

‘() section [Civil liability for breach of health and safety duties] extends only to England and Wales and Scotland except that it also extends to Northern Ireland so far as Parts 1 and 4 of the Health and Safety at Work etc. Act 1974 extend there,’.

Amendment 35, page 60, line 16, leave out ‘section’ and insert ‘sections’.

Amendment 36, page 60, line 16, after ‘52’ insert

‘, [Equality Act 2010: third party harassment of employees and applicants] and [Equality Act 2010: obtaining information for proceedings]’.

Amendment 37, page 60, line 16, leave out ‘extends’ and insert

‘and paragraphs 1, 52 to 54, 56 and 61 of Schedule [Adjudicators: minor and consequential amendments] extend’.

Amendment 38, page 60, line 17, leave out ‘section’ and insert ‘sections’.

Amendment 39, page 60, line 17, before ‘51’ insert

‘[Listed buildings in England: agreements and orders granting listed building consent],’.

Amendment 40, page 60, line 17, before ‘51’ insert

‘[Listed buildings in England: certificates of lawfulness],’.

Amendment 41, page 60, line 17, after ‘51’ insert ‘ and [Adjudicators]’.

Amendment 42, page 60, line 17, leave out first ‘Schedule’ and insert ‘Schedules’.

Amendment 43, page 60, line 17, before ‘16’ insert

‘and [Local listed building consent orders: procedure]’.

Amendment 44, page 60, line 17, after ‘17’ insert

‘, Schedule [Adjudicators: bankruptcy applications by debtors and bankruptcy orders] and paragraphs 2 to 51, 55, 57 to 60 and 62 of Schedule [Adjudicators: minor and consequential amendments]’.

Amendment 45, page 60, line 22, at end insert

‘except that section [Power to provide for equal pay audits] extends only to England and Wales and Scotland’.—(Matthew Hancock.)



Clause 69

Commencement

Amendments made: 46, page 60, line 26, at end insert—

‘() section [Osborne estate];’.

Amendment 47, page 60, line 26, at end insert—

‘() section [Power to provide for equal pay audits];’.—(Matthew Hancock.)

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

I beg to move amendment 69, page 60, line 30, at end insert—

‘(d) Sections [Local authorities: powers relating to deemed consent] and [Restriction of advertisements relating to property letting].’.

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 4—Town and country planning: Amendment of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007—

‘(1) Class 3 of Schedule 3 to the Town and Country Planning (Control of Advertisements) (England) Regulations 2007, (Classes of advertisements for which deemed consent is granted) is amended as follows.

(2) In item 3A, after “sale”, leave out “or letting”.

(3) In item 3A(2), after both uses of “sold”, leave out “or let”.

(4) In item 3A(2), after “sale”, leave out “or letting”.

(5) In item 3A(8), after “sale”, leave out “or letting”.’.

New clause 5—Town and country planning: responsibilities of housing authorities—

‘(1) Local authorities in England which enjoy day-to-day responsibility for housing policy within their local authority area may make by-laws regulating for all or part of the authority the display of external advertisements concerning property lettings.

(2) If a housing authority has not specifically provided for the display of external notices advertising a property to let then such a notice is not permitted.’.

New clause 6—Town and country planning: offences—

‘(1) It shall be an offence to display an external notice prohibited by subsection (2) of section (Town and country planning: responsibilities of housing authorities).

(2) A person guilty of an offence under subsection (1) is liable, on summary conviction, to a fine not exceeding level 4 on the standard scale.

(3) A person guilty of a second or subsequent offence under subsection (1) is liable, on summary conviction, to a fine not exceeding level 5 on the standard for each seperate such offence.’.

New clause 7—Town and country planning: commencement and extent—

‘(1) Sections (Town and country planning: Amendment of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007, Town and country planning: responsibilities of housing authorities, and Town and country planning: offences) come into force two months after the day on which this Act is passed.

(2) Sections (Town and country planning: Amendment of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007, Town and country planning: responsibilities of housing authorities, and Town and country planning: offences) extend to England only.’.

New clause 20—Local authorities: powers relating to deemed consent—

‘(1) Part 2 Regulation 7 of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007 is amended as follows.

(2) In item (1) delete “Secretary of State” and insert “local authority”.

(3) In item (1) delete “upon a proposal made to her by the local planning authority”.

(4) In item (1) delete “she” and insert “the local authority”.

(5) In item (2) delete “ Secretary of State” and insert “local authority”.

(6) In item (2b) delete “her” and insert “the local authority’s”.

(7) In item (3) delete “Secretary of State” and insert “local authority”.

(8) In item (4) delete “Secretary of State” and insert “local authority”.

(9) In item (5) delete “ Secretary of State” and insert “local authority”.

(10) In item (5b) delete “the local planning authority and to any other” and insert “any”.

(11) In item (5) delete part (c).

(12) In item (5b) delete “her” and insert “the local authority”.

(13) In item (5c(i)) delete “she” and insert “the local authority”.

(14) In item (5c(i)) delete “her” and insert “the local authority’s”.

(15) In item (6) delete from “Where” to end and insert “Where the local authority makes a direction it shall send a copy of its reasons to every person who has made a paragraph (3) representation.”.

(16) In item (7) delete “unless the Secretary of State otherwise directs”.

New clause 21—Restriction of advertisement relating to property lettings—

‘(1) Local authorities in England which enjoy day-to-day responsibility for housing policy within their local authority area may make by-laws restricting for all or part of the authority the display of external advertisements concerning property lettings.

(2) It shall be an offence to display an external advertisement concerning property letting in areas or cases where the Local Planning Authority has, under subsection (1), passed a by-law prohibiting external advertisements concerning property letting.

(3) A person found guilty of an offence under subsection (2) is liable, on summary conviction, to a fine not exceeding level 4 on the standard scale.

(4) A person found guilty of a second or subsequent offence under subsection (2) is liable, on summary conviction, to a fine not exceeding level 5 on the standard scale for each such offence.’.

Amendment 91, line 7 after ‘directors;’, insert

‘to make provision about advertisements concerning property lettings;’.

[Mr Brown]

New clause 21 is subsidiary to new clause 20, as are amendments 91 and 69. I will not speak to new clauses 4 to 7, which offer an alternative way of dealing with the same problem. I believe that new clause 20 offers the better of the two routes forward, and I am grateful to my right hon. Friend the Member for Leeds Central (Hilary Benn), the Front-Bench spokesman on these matters for the parliamentary Labour party, for suggesting it to me. New clause 21 sets out the offences; amendment 69 sets the date of enactment, which will be the same as for the rest of the Bill. I have been advised by the Public Bill Office that amendment 91 is a technical necessity for my principal proposal.

I wish to amend regulation 7 of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007, so that matters relating to the control of estate agents’ “To let” signs are under the control of the local authorities that make byelaws about such matters, rather than being governed by primary legislation and the central regulation that currently applies. The proposals do not abolish the central regulation of the original enactment; they merely give local government the right and ability to supplement it. That could mean extending the use of “To let” signs, but it is far more likely to mean restricting it.

This is a moderate proposition, and when I introduced a ten-minute rule Bill on the subject it had all-party support and its First Reading was not opposed. The problem is that the “To let” sign regime is widely abused in urban areas, and properties with short-term leases find that the signs are left up all year round. Why would an estate agent or landlord want to do that? Because the sign serves as a form of advertisement for the lettings agent. In the modern era, the signs do not facilitate the search for flats; they just advertise the estate agent.

17:45

Local authorities want to deal with the matter, but the available route involves a long and complicated procedure between the local authority and the Department. My local authority in Newcastle upon Tyne has been trying to introduce a licensing regime for five years now, but has not yet done so—not for want of trying on its part. I understand from speaking to my right hon. Friend the Member for Leeds Central that it took Leeds city council, which got a head start on Newcastle in that respect, six years to introduce the regime, but it works well.

If the Government believe in cutting bureaucracy and in a doctrine of subsidiarity—in other words, that a decision is best taken at the lowest appropriate level of government—surely they believe that the regulation of “To let” signs is a matter for local government, and not a matter that the Secretary of State and his Ministers, who have a lot of other important things to do, should concern themselves with detail by detail, local authority by local authority.

Different local authorities may make different decisions on the matter. I say let them. Set the people free!

[Matthew Hancock]

I commend the right hon. Member for Newcastle upon Tyne East (Mr Brown) for his assiduous and long-standing opposition to “To let” signs. I wonder what has driven him to this position, but I recognise and celebrate his tenacity in finding occasions on which to make such proposals in the House—[Interruption.] I might have a little bit of good news for him, if Opposition Members would care to listen.

I appreciate that the proliferation of “To let” signs can be a serious problem, but new clause 21 is slightly disproportionate. The right hon. Gentleman pointed out deficiencies in the current remedy for the local planning authority—seeking a direction under regulation 7 of the Town and Country Planning (Control of Advertisements) (England) Regulations 2007—but his solution is to ban “To let” boards unless a local authority makes byelaws to allow them.

[Mr Brown]

That was my alternative proposal, which I have not moved. My more moderate proposal would allow the local authority to supplement the statutory regulations rather than replace them.

[Matthew Hancock]

I agree with the right hon. Gentleman on allowing local authorities to have the power to change the situation on the ground with regard to “To let” signs. The powers exist, but there are very few applications for them—there have been only 10 in the past six years—which indicates that the problem is not hugely widespread, although it is a serious issue in some areas.

The directions tend to fall into two groups. The first is where there are large houses in sensitive architectural areas, such as Kensington and Chelsea in London, or Brighton and Hove. The second group is where there is a large concentration of student houses, such as in Leeds, Loughborough, Nottingham or Newcastle. Authorities in such areas have already successfully obtained directions and are exercising the necessary control. Therefore, the ability to take control is in law.

The right hon. Gentleman’s solution is to ensure that, instead of being able to apply, more often the power would need to be put in place, but that would be an extra burden. I understand the concern, however, and agree that the Secretary of State has more important things to do. New clause 20 proposes to take the Secretary of State out of the decision-making process. I shall take that point away and discuss it with ministerial colleagues, including in the Department for Communities and Local Government, and with him. I hope that he can take that assurance and that we can take things forward from there.

[Mr Nicholas Brown]

I am grateful for the Minister’s assurance. I wrote to the Department at the time of my ten-minute rule Bill on this subject offering to co-operate with the Government by putting it into Committee and accepting their amendments and any tidying up they wanted, if they agreed to facilitate the Bill’s progress through the House, which, as he will know, is in their gift—without it, I would have had to overcome many more hurdles. I am grateful for his assurance, then, and I hope that he stays in office long enough to implement it, because the previous Ministers did not even have time to answer my letter before being dispatched elsewhere—or, in the case of one of them, just dispatched! I look forward to working with him, and, given his assurance, I will not press my amendment to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 50

Sunset and review provisions

[Matthew Hancock]

I beg to move amendment 21, page 42, line 38, leave out ‘, other than the Scottish Ministers,’.

[Mr Speaker]

With this it will be convenient to discuss the following: Government amendment 22.

Amendment 63, page 43, line 1, leave out ‘may’ and insert ‘must’.

Amendment 64, page 43, line 4, after ‘specified period’, insert ‘, or’.

Amendment 65, page 43, line 6, after ‘specified period’, insert ‘, or’.

Amendment 66, page 43, line 10, leave out line 10 and insert ‘If the provision is made by virtue of subsection (2)(a), it includes’.

Amendment 67, page 43, line 19, leave out ‘may’ and insert ‘must if necessary’.

New clause 26—Review of legislation relating to health and safety at work and application of sunset and review provisions to this legislation—

‘(1) The Secretary of State must—

(a) carry out a review of the effectiveness of all existing legislation relating to health and safety at work, and

(b) prepare and publish a report setting out the conclusions of the review.

(2) The review and report must quantify, in particular—

(a) the effectiveness of the legislation in terms of reducing deaths, injuries and sickness in the workplace,

(b) the human cost, and full societal costs of work-related injuries, deaths and ill-health in terms of pain and suffering, injuries, sickness and years of life lost, and

(c) the full societal costs of the impact of the legislation including those costs resulting from welfare and healthcare spending, and resulting from the number of days lost in the workplace due to ill-health.

(3) Subordinate legislation under section 14A of the Interpretation Act 1978 in respect of any provision relating to health and safety at work may not be made until after the report has been published.’.

[Matthew Hancock]

Amendments 21 and 22 are technical amendments, the effect of which I hope will be straightforward and non-controversial. The changes proposed in Clause 50 will support the implementation of the Government’s policy on reducing the burden of regulation by allowing a sunset and review provision to be included in any future secondary legislation. They will enable the Government to put in place a robust and enduring system for tackling obsolete, burdensome or ineffective regulation, in line with the principles set out in the sunsetting guidance first published in March 2011.

I am pleased to say that those principles and the proposed change in the clause are widely supported and received detailed scrutiny in Committee before the summer. The changes proposed in clause 50 are permissive, broad in scope—intentionally so—and apply to powers to make subordinate legislation falling within the scope of the Interpretation Act 1978. Without qualification, this would include powers in a UK Act of Parliament exercisable by Scottish Ministers, whether in relation to matters devolved to the Scottish Parliament or in relation to matters reserved to Westminster.

Following earlier consultation with Scottish Ministers, however, agreement was reached to exclude powers exercised by Scottish Ministers from the effect of the changes. Among other things, that is consistent with the convention, under the present devolution settlement, which has cross-party support, that the Westminster Parliament will not normally legislate on matters devolved to the Scottish Parliament, without the consent of the Scottish Parliament. That seems reasonable to me.

Following further consultation with interested parties, it has become apparent that a further change is required to address the related issue of the powers of non-ministerial Scottish bodies and other persons under UK legislation. For example, the Registration of Births, Deaths and Marriages (Scotland) Act 1965 provides the registrar with various powers to make subordinate legislation in areas of devolved competence. Equally, the Court of Session has powers under successive UK Acts, most recently the Court of Session Act 1988. Because these are powers to make subordinate legislation within the meaning of the Interpretation Act 1978, they would also be in the scope of the changes proposed in clause 50. The effect of the Government’s amendments is to ensure that the powers exercised by non-ministerial Scottish bodies and other persons that fall within areas of devolved competence are excluded.

[Richard Fuller]

I appreciate the Minister’s giving way. I am enthralled to learn about births, deaths and marriages in Scotland—all things Scottish are important at the moment—but for businesses in my constituency of Bedford, the key question on the sunset provisions is why the Government have proposed only a “may” rather than a “must”. What business leaders in my constituency want to see is a clear indication from the Government that they intend to seek a requirement to sunset all new legislation, rather than this “maybe, maybe not.” In the remaining time, will the Minister please address the question of why he has chosen “may” rather than “must”?

[Matthew Hancock]

One reason is that it would be unreasonable to include a requirement to sunset all legislation, including primary legislation, when some of it is intended to set a long-term framework. For instance, when we set the structures in which our energy market operates, it is important to show clarity and long-term decision making, and we can deliver that, especially where there is cross-party consent. Therefore, although we want to ensure that sunsetting is the norm, especially in secondary legislation, there is a purpose in not doing so for primary legislation where businesses want the certainty of a long-term legislative proposal, rather than having a requirement that all legislation of this House—including, for instance, constitutional legislation—be sunsetted after a period of time. Notwithstanding the fact that income tax remains sunsetted every year, requiring a Finance Bill, it would not be appropriate to have a sunset on every single piece of legislation.

[Richard Fuller]

I appreciate the Minister’s giving way again. I know that in his solid free-market hands businesses should have no fears about the way in which legislation will be imposed further upon them, but he will know, just as I do, that eventually, in the long-distant future, there may be a change of Government—[Hon. Members: “Hear, hear.”]—although maybe not in my lifetime. Does he not agree that, just as night follows day, so sunsets should be applied to all clauses?

[Matthew Hancock]

I think that businesses would hope that legislation put in place for the long term will remain for the long term. The sunsetting in this Bill—as amended by the technical amendments that we are debating—is a major step forward, and the way in which it will be implemented is the right way forward. We are taking an ambitious and strong approach to secondary legislation that will ensure that Ministers and the Government have to check that legislation is working in the way it ought to. Therefore, I would resist the Opposition and non-Government amendments in the group, and I hope we have cross-party support for amendments 21 and 22.

[Mr Iain Wright]

I rise briefly to support the Government in this debate. As far as I am aware we have not tabled any Opposition Front-Bench amendments in this group. As I said in Committee repeatedly, we agree with the approach taken to sunset and review provisions, which are an important part of clause 50. We also set in train the primary authority schemes, which will be extended by clause 53. As for what the Minister said about permissive legislation—I think we are back to “Fifty Shades of Grey” again—and a deregulatory approach to free up business from unduly disproportionate and unnecessary regulation, that is something that we on this side of the House certainly agree with too.

Amendment 21 agreed to.

Amendment made: 22, page 42, line 39, at end insert—

‘except to the extent that—

(a) the power or duty is exercisable by the Scottish Ministers, or

(b) the power or duty is exercisable by any other person within devolved competence (within the meaning of the Scotland Act 1998).’.—(Matthew Hancock.)

18:00

Proceedings interrupted (Programme Order, 16 October).

The Speaker put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

Clause 52

Commission for Equality and Human Rights

Amendment proposed: 56, page 43, line 27, leave out clause 52.—(John McDonnell.)

Question put, That the amendment be made.

18:00

Division 81

Ayes: 230

---

Labour: 214
Scottish National Party: 6
Democratic Unionist Party: 5
Plaid Cymru: 2
Social Democratic & Labour Party: 1
Independent: 1
Alliance: 1
Green Party: 1

Noes: 299

---

Conservative: 249
Liberal Democrat: 49

[Chris Bryant (Rhondda) (Lab)]

On a point of order, Mr. Speaker.

[Mr Speaker]

We will come to the hon. Gentleman’s point of order. I am saving him up. It would be a pity to waste him prematurely.

Clause 40

Cartel Offence

Amendments made: 18, page 37, line 20, at end insert—

‘(6) After section 188A (as inserted by subsection (5) above) insert—

“188B Defences to commission of cartel offence

(1) In a case where the arrangements would (operating as the parties intend) affect the supply in the United Kingdom of a product or service, it is a defence for an individual charged with an offence under section 188(1) to show that, at the time of the making of the agreement, he or she did not intend that the nature of the arrangements would be concealed from customers at all times before they enter into agreements for the supply to them of the product or service.

(2) It is a defence for an individual charged with an offence under section 188(1) to show that, at the time of the making of the agreement, he or she did not intend that the nature of the arrangements would be concealed from the CMA.

(3) It is a defence for an individual charged with an offence under section 188(1) to show that, before the making of the agreement, he or she took reasonable steps to ensure that the nature of the arrangements would be disclosed to professional legal advisers for the purposes of obtaining advice about them before their making or (as the case may be) their implementation.”’.

Amendment 19, page 37, line 20, at end insert—

‘( ) After section 190 of the 2002 Act insert—

“190A Cartel offence: prosecution guidance

(1) The CMA must prepare and publish guidance on the principles to be applied in determining, in any case, whether proceedings for an offence under section 188(1) should be instituted.

(2) The CMA may at any time issue revised or new guidance.

(3) Guidance published by the CMA under this section is to be published in such manner as it considers appropriate.

(4) In preparing guidance under this section the CMA must consult—

(a) the Director of the Serious Fraud Office;

(b) the Lord Advocate; and

(c) such other persons as it considers appropriate.”’.

Amendment 20, page 37, line 21, leave out ‘this section’ and insert ‘subsections (1) to (6)’.—(Jo Swinson.)

[Chris Bryant]

On a point of order, Mr Speaker. I am not sure how to describe my relationship with the Prime Minister, but it is quite on and off. On 25 June, he said that he was going to refuse to answer any of my questions until I apologised to the House—even though I had already apologised to the House. On 27 June, just two days later, he did reply to a question, and he did the same in September, but today he is back to not replying to questions.

I fully understand the ruling that you gave this afternoon, Mr Speaker, as you are not in charge of the quality of answers, but I do not think that there has ever in the history of the House been an occasion when a Prime Minister has said that he or she would—full stop—not reply to any question. I think you have ruled, and previous Speakers have ruled on many occasions previously, that when a Minister refuses to reply to a written question, they must answer it, not least because the ministerial code, written by the Prime Minister, says:

“Ministers should be as open as possible with Parliament and the public, refusing to provide information only when disclosure would not be in the public interest”.

That, of course, is incorporated in a motion of the House, resolved on 19 March 1997. I would have thought that expressly saying that one will not reply to an individual Member of the House is an affront to the House; in particular, it is an affront to my constituents. It should not be countenanced, surely.

[Mr Speaker]

I am very grateful to the hon. Gentleman for his point of order, to which I make two points in response. First, with reference to the ministerial code, I simply remind the House that responsibility for it rests with the Prime Minister, and it seems unlikely that the Prime Minister will be minded to investigate himself. I say that not in a spirit of levity, but because I think it is a pertinent observation in practical terms. Secondly, I am sorry to disappoint the hon. Gentleman, and I do not intend any discourtesy to him, as I take the hon. Gentleman very seriously—almost as seriously as he takes himself. [Laughter.] I do take him extremely seriously and I have a very high respect for him, as he knows. What I would say at this stage is that this is clearly a highly controversial matter, on which I do not feel I can rule off the cuff now. That is not to duck it; I will reflect on the very important point that he has made and I will come back to him and, if appropriate, to the House. I hope that that is helpful.

Third Reading

Queen’s consent signified.

18:17

[Jo Swinson]

I beg to move, That the Bill be now read the Third time.

We have spent the past two days carefully scrutinising this Bill. Right hon. and hon. Members have clearly invested a lot of time examining the detail, and rightly so. We used all of our time on the first day debating the proposed new measures, and I thank the Opposition for ensuring that they received thorough scrutiny.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

rose—

[Jo Swinson]

I give way to my Scottish colleague.

[Thomas Docherty]

It is my understanding that it is custom and practice for the Secretary of State to move Third Reading. Where is he today?

[Jo Swinson]

I am sure that my colleague the Secretary of State has a very busy diary, but he may well be making an appearance—

[Chris Ruane (Vale of Clwyd) (Lab)]

Parliament is not important enough—

[Jo Swinson]

Parliament is certainly important enough. I hope not to disappoint the hon. Member for Dunfermline and West Fife (Thomas Docherty) in my speaking on Third Reading. As he will know, my right hon. Friend the Secretary of State spoke on Second Reading and has been very involved in this Bill, so I am sure that I will be able to deal with the issues raised.

[Mr William Cash (Stone) (Con)]

In view of the fact that the sunset provisions have not been discussed because of the programme motion—[Interruption.] They may have been discussed in the past, but amendments tabled by my hon. Friend the Member for Bedford (Richard Fuller) were not reached. That is the position. In that context, will the Minister be good enough to explain how it will be possible to bypass European legislation under these arrangements?

[Jo Swinson]

I am sorry to disappoint my hon. Friend by correcting him, but these issues were discussed—

[Mr Cash]

Not this afternoon.

[Jo Swinson]

Yes, they were. In fact, the hon. Member for Bedford (Richard Fuller) intervened on my hon. Friend the Under-Secretary of State for Skills when that discussion was taking place—[Interruption.] I suggest to the hon. Member for Stone (Mr Cash) that had he wanted to raise those points, he could have been present for the debate on Report.

I thank the Opposition for ensuring that the measures that we have added to the Bill have received thorough scrutiny. That detailed consideration follows earlier scrutiny in the Public Bill Committee and I extend particular thanks to its members, led for the Opposition by the hon. Members for Hartlepool (Mr Wright), for Edinburgh South (Ian Murray) and for Newcastle upon Tyne Central (Chi Onwurah).

[Mr John Redwood (Wokingham) (Con)]

When does the Minister think the first loans will be made by the green investment bank under this legislation?

[Jo Swinson]

As my right hon. Friend will know, the Government have made £3 billion available through the green investment bank, which has already started to allocate that money. Some £200 million has been allocated and the first money has been not just allocated but spent. We know that that institution will certainly be a great success.

At the end of our proceedings in Committee, the hon. Member for Hartlepool observed:

“The Committee has been serious about the need to scrutinise an important Bill and about the manner of its deliberations and questioning”.––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 17 July 2012; c. 728.]

The Bill is important. It is also part of a wider Government strategy to promote growth, support business and create jobs. Legislation alone cannot guarantee and generate economic activity, but it can help to provide the right conditions for growth and that is what this Bill does. It contains a suite of measures that will lift unnecessary burdens from business and ensure that markets are fair and dynamic to inspire the confidence of business and consumers alike.

The move to a low-carbon economy is a big challenge and, indeed, a big opportunity for this country. Some analysis suggests a demand for more than £200 billion of investment in the next decade to develop the necessary innovative technologies. The challenge is even greater given how new those markets are and the long-term nature of returns on green infrastructure investment, which may deter private sector investors. The coalition Government are meeting that challenge squarely by establishing the world’s first green investment bank and we have made significant progress.

As we were able to announce earlier this afternoon, we have today made an important step forward in the UK’s transition to a green economy with confirmation of the state aid approval that will allow the bank to make commercial investments. That is a significant achievement and means that the bank is firmly on track to be fully operational in the next few weeks.

The Government are deeply aware of the need to do all we can to support business expansion and job creation. The Public Bill Committee heard from business representatives that reform of the employment tribunal system remains a top priority for their members and that the measures in the Bill will increase the confidence of business to recruit. Our reforms will encourage parties to work together to resolve their disputes outside the adversarial, stressful and often costly tribunal system, which will mean that employers will have the confidence to take on and manage staff.

Good leadership and governance of companies is crucial and there should be no reward for failure. Our reforms to directors’ pay, which are supported by both business and investors, will mean greater transparency and more power for shareholders to hold companies to account while allowing genuine success to be rewarded. A free and open market place is key to a growing economy. Pressure from competitive markets helps businesses to boost productivity and that benefits consumers. The Government are helping by setting up the new competition and markets authority to provide a single, strong voice in this area. It will have a duty to promote competition for the benefit of consumers.

The Bill will also strengthen powers to tackle cartels. Cartels damage the interests of business and consumers alike and I am very grateful to the Public Bill Committee—again, I thank its members—for its considered debate on the issue. As a result of the amendments tabled in Committee by Opposition Members, the then Minister, my hon. Friend the Member for North Norfolk (Norman Lamb), made it clear that we would reflect on the points made with a view to improving the provisions. As a result, we have refined how we propose to tackle the problem of cartels, but in a way that still delivers the key objective of ensuring that we have effective powers against them.

Unnecessary regulation stifles growth and strangles innovation. In our red tape challenge, we are examining swathes of regulation and scrapping those that are no longer needed. The Bill supports that work by ensuring that any new secondary legislation can be time-limited. The CBI hailed that step as the "big prize for business". We are making specific reforms, including removing the right to claim compensation from employers for breach of most statutory health and safety duties unless employers have been negligent. We are also streamlining the duties of the Equality and Human Rights Commission. Let me state again for the record that we greatly value the work that the commission does and that the streamlining will in no way reduce its impact. The Government are committed to tackling the barriers to equal opportunity and to promoting economic growth. Unnecessary and complicated regulation restricts our ability to achieve that aim. The repeals in the Bill play a part in tackling the red tape and bureaucracy that holds businesses back.

Ensuring that our copyright laws are fit for the modern age is critical to the growth of the UK's creative industries—one of our most successful export sectors. It is also important for those industries that can make use of materials that may be in digital or other form. We have worked closely with stakeholders on those provisions and will continue to do so. The Bill will help to ensure that we strike the right balance on rewards for creative endeavour, sanctions for unlawful use and greater freedoms when an originator cannot be identified.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

I congratulate Ministers on their painstaking work to identify barriers to growth and enterprise. Is the Minister as disappointed as I am that the Front-Bench spokesmen for the Labour party, whose policies contributed so much to our present position, have learned nothing and still oppose sensible, practical measures to get the economy going, add jobs and ensure that we get people out of the despair of unemployment and into the sunlit uplands of well-paid jobs?

[Jo Swinson]

In the spirit of consensus, I will say that, on some issues, Opposition Front Benchers have said that they will work with the Government, but I am disappointed that, on others, they have not done so or recognised what we are doing in the Bill. The Bill is good for business and good for consumers, and therefore good for the UK economy. I commend it to the House.

00:00

[Mr Umunna]

Let me say first, meaning no disrespect to the Minister, with whom I have enjoyed debating during the Bill’s passage, that I find it quite extraordinary that for this—the Department’s flagship Bill—the Secretary of State is not present.

On Second Reading, the Opposition tabled a reasoned amendment stating that the Bill was a missed opportunity to provide a strategy for economic growth and that it contained inadequate measures to improve business confidence, investment and competiveness. That remains our view on Third Reading. In Committee, as a constructive Opposition, we tabled amendments designed to support business, including measures to ensure that the green investment bank can be a strong and transparent catalyst for green growth; to improve the competition framework; and better to empower shareholders in relation to directors’ remuneration. Throughout that process, we drew on our discussions with business organisations and other stakeholders, as well as the evidence given by witnesses during the evidence sessions.

At this point, I add my thanks to my hon. Friends the Members for Hartlepool (Mr Wright), for Newcastle upon Tyne Central (Chi Onwurah), and for Edinburgh South (Ian Murray) and all the Opposition Members who served on the Bill Committee for their hard work. The Committee stage was something of a marathon, given the rag-bag of often very different measures contained in the Bill, but although we have not always agreed with the Government, it was good to hear the Minister agree that Opposition Members have thoroughly scrutinised the Bill and done so in good spirit and with some humour, too—I understand that “Fifty Shades of Grey”, One Direction and the Stone Roses have all been mentioned during consideration. Despite all the good work, however, Ministers did not accept any of our amendments in Committee, or pledge to return on Report with acceptable alternatives.

In the hope that we might be able to reach agreement on Report, I wrote to the Secretary of State at the end of last month setting out our position, highlighting the parts of the Bill we agree with and those we disagree with. The Secretary of State—I shall quote, as he is not here—replied saying:

“I believe that we support the same goals of promoting growth and reducing unnecessary burdens on business and I note that you are supportive in principle of a number of measures in the Bill.”

Indeed, it is true. We support in principle a number of measures in the Bill, such as those relating to the green investment bank, improving the competition regime and extending the primary authority scheme that we established in Government. There is no doubt about that.

The Secretary of State also referred in his letter to the changes that he has since made to his original proposals contained in the Bill on copyright. I am pleased that he has listened to what we had to say on that and that in some respects he has U-turned, although I understand that several stakeholders remain concerned.

Although we think the Government should go further in their reforms relating to directors’ remuneration, in principle we do not object to what they have done so far. However, despite our best efforts, we have not been able to reach agreement on the other aspects of the Bill to which we strongly object and which the Government refuse to remove from it.

There are certain red lines that the Bill crosses that the Labour party is not prepared to cross. We want to see enterprise flourish, but in a society where people’s rights are respected. We want to see our economy grow, and I hope and expect the next quarter’s GDP figure, which will be released next week, to be a positive number after three quarters of contraction, but growth cannot be at the expense of the basic protections that people enjoy in this country. In the name of growth, part 2 of the Bill will drastically reduce people’s rights at work and part 5, along with other Government measures, takes us along the slippery slope to the abolition of the Equality and Human Rights Commission. This is wrong.

Many of the measures in part 2 find their inspiration in the report of the Prime Minister’s employment law adviser, Adrian Beecroft. By his own admission in the public evidence sessions on the Bill, Mr Beecroft said that his findings were based on conversations and not on a statistically valid sample of people. Of course, the Government are implementing many of his measures. For example, having already increased the service requirement to claim for unfair dismissal in the employment tribunal, by reducing compensatory awards for unfair dismissal the Government seek in the Bill to water down further the rights of all employees in this country, as we heard today, most of whom are not members of a trade union.

As I said on Second Reading, reducing compensatory awards for unfair dismissal in particular will impact on those in middle income occupations. They, like others in lower income occupations, are already facing the biggest squeeze on their living standards in a generation under this Government, and weakening their rights at work will only add to the worry and stress that working people are under. Mr Beecroft, I read, suggested that the Secretary of State, who is not here, is a socialist. Well, I can tell him that the Secretary of State has done his best to prove otherwise in the Bill.

[Mr Graham Stuart]

I am grateful to the hon. Gentleman, who is being most generous. Does he feel that the compensation currently available is exactly right or does he think it should be increased further? He must recognise that there is a balance to be struck between looking after the interests of employees and not causing employers to avoid taking people on for fear of the costs. That balance must be struck and the hon. Gentleman obviously thinks the figure should be at the upper end. Does he want to increase the current levels?

[Mr Umunna]

With respect, I observe for the record that the hon. Gentleman has not been present for most of the debate on the Bill today, yesterday or at any time. If he had been here earlier, he would have heard me make much the same observation as he has just made—that there is a balance to be struck. We disagree with changing the current regime in relation to the compensatory award. I would not say that any system is perfect. For example, in relation to the unfair dismissal regime and the way that it interacts with the tribunals, yes, we have entertained the Government’s Underhill review because we understand that there are some issues. I am not sure that any system would be perfect, but we disagree with what is proposed in the Bill and the way in which it will change the balance. There is obviously a disagreement on that.

With regard to part 5, which relates to the Equality and Human Rights Commission, and the new clauses relating to the Equality Act 2010, the Secretary of State on Second Reading referred to the measures relating to the commission as “legislative tidying-up.” They are nothing of the sort, as I think he knows. He likes to pose as the opposition within on so many matters but waves through the more extreme impulses of his coalition partners.

To compound matters, last week the Government tabled an amendment to the Bill providing for the repeal of the provisions in the 2010 Act relating to liability for third-party harassment of employees, which was one of Adrian Beecroft’s proposals. It was a classic example of the Secretary of State trying to face both ways at once. When questioned on Second Reading about the Government’s intentions by my hon. Friend the Member for Stretford and Urmston (Kate Green), he assured the House that he had no intention of implementing that Beecroft proposal. Then, out of the blue and at the last minute, he presents us with a new clause seeking to do just that.

Samantha Mangwana, a senior employment lawyer at the respected law firm Russell, Jones and Walker Solicitors, asked in today’s Financial Times what signal that sends out. She said

“this is not some meaningless bureaucratic red tape, but the very protections that are in place to protect staff from predatory sexual advances by third parties.”

In conclusion, the unemployment figures released today are very welcome, but more than 2.5 million people are still out of work. In my constituency more than 11 people are chasing every Jobcentre Plus vacancy. Long-term unemployment has risen and the number of young people out of work and claiming benefits for more than a year has gone up yet again, and we are still in a double-dip recession, one of only two G20 countries in that position. That situation will not be resolved by taking away people’s fundamental rights; it will be resolved by getting demand back into the economy. That is what creates jobs, and that should have been the sole focus of an enterprise Bill. It is a shame that that is not the case with this Bill. Instead, we have seen today not the focus on kick-starting the recovery and laying a platform for long-term and sustainable growth, but the final nail in the coffin of any claim the Government could make to marrying competence with compassion. That is why we will vote against the Bill tonight.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I point out that at least six Members wish to speak in the debate.

18:39

[Mr Andrew Turner (Isle of Wight) (Con)]

I want to mention the Osborne estate, since no amendment was tabled until the Bill was on Report. Osborne house was of course built by Prince Albert and lived in by Queen Victoria until 1901. Before I was elected in 2001, its long-standing use as a convalescent home had already come to an end, but better accommodation, more modern individual rooms and higher quality facilities were all needed and they were all too costly. Although the King Edward VII convalescent home was much loved by the people of East Cowes, those who worked there and many people on the island and further afield knew that its days had been numbered for some time.

The part of Osborne house that was used as a convalescent home was restricted by dint of the Osborne Estate Acts of 1902 and 1914 and was to be used for the benefit of service people, their families and senior civil servants. That severely limited the chances of attracting those who could make use of the home. When the current Government were elected in 2010, I knew that we would have an opportunity to bring unused parts of that beautiful and historic building into service once again.

English Heritage has been working hard to find new and innovative uses for the buildings, and I have worked with it to obtain the support of local people. We have held two public meetings, one within the house itself and, subsequently, one in East Cowes town hall, which between 40 and 50 people attended. Although no firm plans were put forward, it was clear that most people want the Osborne estate to be regenerated and think that it is a waste that large parts of it remain unused. The limitations on the use of the former convalescent home will be lifted to a certain extent by the new clause 11, and I welcome that.

I am grateful for the work done by English Heritage—in particular, Mark Pemberton, who has worked with me over many years—and my hon. Friend the Member for Weston-super-Mare (John Penrose), who has visited the house and grounds to see for himself the challenges and opportunities offered there. I am grateful to the people of the island, who have worked so hard and assiduously to ensure that Osborne house, the jewel in the island’s crown—indeed, the jewel in the nation’s crown—will have a suitable role that recognises its historic past and looks forward to a unique and exciting future. I have been pleased to support the amendment and I am now happy to support the Bill’s Third Reading.

18:40

[John McDonnell]

It is important when we pass legislation in this House that we take into account our duty as employers of the staff who will be implementing the legislation. This legislation will abolish the Office of Fair Trading and the Competition Commission, which will be brought together in one body. In the past, legislation—TUPE—has been introduced to ensure that those staff are protected, but TUPE applies only to those staff who are transferred from the public sector into the private sector. Therefore, to cover the situation where there are transfers within the public sector, there was an agreement under the previous Government—a Cabinet Office agreement of principles that was inherited, and supported, by this Government—that recommended that where there were transfers between public sector bodies there would be placed in legislation a commitment that TUPE would be applied. That has not been included in this Bill. It contains a reference to similar conditions to TUPE, but that does not give the guarantees that the staff are expecting; in fact, it jeopardises some of the benefits that have accrued to them over a period of time.

I send the message to the other place that Members of this House and of the other place have a responsibility for the staff whom we employ to implement legislation. Their views should be regarded—their trade unions have made this point to Government and it has been ignored—and they should be protected. I hope that an amendment will be tabled in the other House that gives this protection to the staff.

This is an extremely significant Bill. It undermines our health and safety regime and undermines the employment rights that have been built up over generations, and it means that bad employers will be able to sack, pressurise, bully and victimise staff with impunity.

The Equalities and Human Rights Commission, and the legislation that we enacted in 2006 to ensure that it was effective, have had cross-party support, and I thought that that would be maintained even by this Government. However, this Bill, in addition to the 60% cuts in its budget and the 70% cut in staff, now undermines the commission’s legal foundations. In effect, as my hon. Friend the Member for Streatham (Mr Umunna) said, this is leading towards the abolition of the body and therefore undermining equalities work in this country. What really sticks in my craw is the removal of the duty placed on the commission to promote equality for people with disabilities and to prevent discrimination against them. It reflects badly on the Government if this is the direction in which they are going.

The Bill also demonstrates the Government’s absolute incompetence. We are now in a situation where copyright law is in complete confusion. They cannot even legislate effectively to control estate agents. That is the stage that we have reached with this Bill, and that is why I will oppose it.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I ask for contributions to be short and sweet.

17:41

[Julian Smith]

I support the Bill, which backs risk-takers across Britain—the 4 million businesses with fewer than 10 employees, accounting for 7 million jobs. Most of these businesses are run by people earning less than the average wage.

Despite what Labour says about regulation, it is causing those business owners and entrepreneurs a problem. To continue to get job results like today’s, we have to do more to give those owners confidence to take on more staff. The Bill’s measures—tribunal fees, reducing compensation for unfair dismissal, settlement agreements and the slight rebalancing from employee to employer—will give many entrepreneurs the power and the confidence to take on new staff. The Bill also has measures that will be difficult and challenging for business, such as equal pay orders and board votes, which demonstrates that this Government will not accept bad business behaviour.

Under Labour, business in Britain was being hit by six new regulations every day. There was a relentless focus on job protection rather than job creation; poor oversight of the pay of business boards; and appalling comparative performance on board diversity and on equal pay issues. This Government back the risk-takers, are on the side of the entrepreneur while protecting rights, and are challenging the worst excesses of business that went unchecked for 13 years. Labour is for excessive job protection; we are for job creation. I pay tribute to the excellent two new Ministers and I am sure that their work will ensure that our job figures continue to get better for months and years to come.

17:41

[Mr Anderson]

I had the privilege of serving on the Committee and I have been present during the House’s consideration of the Bill over the past two days. Nothing that we have heard has been evidence-based. We have heard anecdotes, impressions, perceptions, feelings and conversations. During a Committee evidence session, I asked Adrian Beecroft where his empirical evidence was, and his answer—this is in the Official Report— was, “Um.” That is how little evidence he has.

There has been nothing new in the past few days to change that perception, and why is that? Because the Chancellor’s fingerprints are all over this Bill. The part-time Chancellor, part-time political strategist has told people to sell their rights to get shares, and employers are now able to tell people to sell their rights so that they can sack them without any worries. But there are worries and we have heard them today. When asked whether people who volunteer to go would be able to claim jobseeker’s allowance and whether those with mortgage protection would be affected, the Government’s Front-Bench representatives had not even thought of it. They had to run to the officials’ Box to get an answer, because they do not live in the real world. We also heard some crass comments about health and safety yesterday. There were anecdotes about a bottle of bleach in a cupboard and the Minister made comments about school trips and health and safety. They have absolutely no idea what it is like in the real world.

The Secretary of Sate should be present. I think that the reason why he is not is that he is ashamed of this Bill, because he does not agree with what is being done in his name. He has gone from being the sage of Twickenham to being the stooge of Westminster. He is the invisible man in this place—we do not know where he is.

Members should read today’s Daily Mirror, which includes a quote from Jimmy Savile’s assistant, who worked for him for 32 years. When he sacked her, he told her:

“Today’s today, tomorrow’s tomorrow, I’ve got a train to catch.”

Under this Bill, that will become the norm for employers in this country. They will be able to dismiss their employees with the wave of a hand. I say to Government Members, particularly the Liberal Democrats, who should know better, that Jimmy Savile would be proud of them tonight.

18:48

[Mr Redwood]

The Bill contains provisions for a framework to allow the UK green investment bank to report to Ministers and to this House. I say to the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson) that several of us will take a close interest in the bank. We hope that, when she implements the provisions, she will put in place the necessary procedures so that we can all see how well the bank is doing. It is particularly important that she implements rules for the bank, because the Government now have an £80 billion funding for lending scheme, a £50 billion national infrastructure financing scheme, a £20 billion small businesses special loans scheme, and they are doing another round of quantitative easing worth £50 billion. That represents £200 billion-worth of loans, guarantees and special money for the banking sector, which could cover quite a lot of the projects in which the green investment bank might be interested.

I hope the Minister will ensure that there is no unnecessary competition in the public sector for privileged moneys now that we have so many different strands. Now that there is so much money in the big schemes, the green investment bank can relax about some of the biggest projects, because they could clearly be taken care of by the other schemes. Ministers need to think through how all the schemes fit together and how they affect the green investment bank. They must ensure that anyone who seeks money for investment projects in this field has a clear view of which is the appropriate mechanism.

18:50

[Julie Hilling]

I spoke about the Bill in the debate on the Queen’s Speech, I spoke on Second Reading and I have sat through the last two days of debate. I am grateful to have a few moments to speak now. However, my opinion has not changed.

The Bill is called the Enterprise and Regulatory Reform Bill, but I have seen nothing in it that is very enterprising, nothing that will grow businesses, nothing that will take this country out of the double-dip recession that was created in Downing street, and nothing that will stop the Government borrowing more and more money just to pay for the cost of their cuts. What I have seen is a Bill that removes rights for ordinary working people, takes a big stride backwards on equality, takes a leap backwards on health and safety, and makes it easier to sack people. That will increase job insecurity, harm work-force morale and productivity, harm consumer confidence and, ultimately, harm the economy.

The Government do not seem to live in the real world, where it is already lamentably easy to sack workers and where discrimination is still rife. Instead of removing rights, they should be helping every employer to be a good employer, with good advice and support. That would make us more competitive and help this country to thrive. The Bill is a lost opportunity and an exercise in turning back the clock. It has no answers for our economy and it should be absolutely rejected.

18:51

[Richard Fuller]

Enterprise and regulatory reform, part of the title of the Bill, are words to bring succour to those who work in the engine room of the British economy—words that can take a thousand ideas for a new business, which have been discussed over a pint or sketched out on paper, and transform them into job-making, wealth-creating vehicles of growth.

The anticipation for the Bill is almost tangible, but I fear that it will fall short of fulfilling the hopeful expectations. Where is the rolling back of the myriad fees and charges that are blithely imposed on businesses; where is the relief for shopkeepers from the sky-high rateable values set at the peak of Labour’s boom-cum-bust; and where is the implementation of our policy to roll back job-destroying EU regulation?

The Bill’s proceedings should have started with a rallying call to our businesses that this Government are unambiguously on their side; a statement cherishing the principles of the free market as the most liberating force for social good; a determination to embrace, defend and expand the global free market that has lifted hundreds of millions of people from poverty, to which too many were consigned by the misguided socialist policies of the past; a rebuttal of the insidious assumption, which too often underlies Government intervention, that, left to their own devices, people who run their own business cannot be trusted. That assumption should be replaced by a presumption of trust that in starting and growing businesses, people are doing the essential work of a grateful nation, burdened by its debts and seeking the wealth to maintain its cherished public services.

Capitalism delivers by its results what all rival systems can only promise on paper. That is a truth that the Bill should have heralded as clearly and unequivocally as President Obama did just last night:

“I believe the free enterprise system is the greatest engine of prosperity the world has ever known.”

We need to spread access to capital for people to start their own businesses, so that it is as available in Bradford, Burnley, Bath and Bedford as it is in London, Oxford, Cambridge and Edinburgh. We need to create a front-foot nation, a nation of entrepreneurs. It must be as much a part of our culture for people to want to own their own business as to want to own their own home. We need a people with the willingness to start, the ambition to grow and the courage to try again. We need a local community spirit that expects, encourages and supports those endeavours.

18:54

[Katy Clark]

This Bill is a mishmash of ideologically driven measures that have no evidence base. As Opposition Members have repeatedly said, it is Beecroft by the back door. There is no evidence whatever, anywhere in the world, that taking people’s employment rights away from them leads to growth. There is no evidence base for the view that taking away our health and safety protections, which have been fought for by generation after generation, will lead to job creation.

The backdrop to the Bill is, of course, the Government’s red tape challenge and their belief that deregulation will in some way lead to enterprise and a better society. Some Opposition Members have always fought against the Government’s measures, but many Government Members have always believed that they represent the type of society that they wish to see. It is shameful that the Liberal Democrats are providing a face to those measures, and I believe that at the next general election we will see the result and Liberal Democrat Members will be thrown out by the British people.

18:55

[Matthew Hancock]

We have had a wide-ranging debate over two days on Report and now on Third Reading. We have heard speeches by the hon. Members for Bolton West (Julie Hilling), for Hayes and Harlington (John McDonnell), for Blaydon (Mr Anderson) and for North Ayrshire and Arran (Katy Clark) that have railed against enterprise and against the Bill.

By contrast, my hon. Friends the Members for Bedford (Richard Fuller) and for Skipton and Ripon (Julian Smith) have argued passionately for enterprise, business and jobs. I cannot quite match their eloquence or the power of their arguments about the ability of the free market system to create jobs and build prosperity not only in this country but around the world. I am disappointed to find out that President Obama has said something that it will now be impossible for us to say without reference being made to his saying it—that the free enterprise system is the greatest force for progress that the world has ever seen.

[Mr Umunna]

Will the Minister give way?

[Matthew Hancock]

No, I will not. I have only a few minutes. [Hon. Members: “Go on.”] I will come on to the hon. Gentleman’s comments.

My hon. Friend the Member for Isle of Wight (Mr Turner) spoke passionately about his constituency and the need to remove from primary legislation restrictions on Osborne house. It is interesting that in this single Bill we are amending the Osborne Estate Act 1902, the Interpretation Act 1978, the Estate Agents Act 1979 and many more Acts, to promote enterprise.

My right hon. Friend the Member for Wokingham (Mr Redwood) talked about the green investment bank and listed the Government’s various measures to support credit. We are adding a business bank, which may well sweep up some of those other measures. He asked about policy overlap, and I point out that thus far, the funds put into the green investment bank have been for projects with a maximum size of £20 million. That shows the scope of the bank so far.

The Secretary of State is at the John Cass lecture on social mobility. Government Members are in favour of social mobility, but Opposition Members argue that the Secretary of State should not be giving a lecture on it.

[Mr Umunna]

Will the Minister give way?

[Matthew Hancock]

I have two minutes, but I will give way.

[Mr Umunna]

The Minister referred to President Obama’s remarks yesterday. Where in those remarks did he talk about the need to water down people’s rights at work to promote growth?

[Matthew Hancock]

Making it easier for people to have settlement agreements, ensuring that health and safety legislation is implemented reasonably, helping the operation of listed buildings policy and improving the operation of the Equality and Human Rights Commission will all help the free market system, which is the engine of prosperity.

The Government’s record is clear. We now know that when we arrived in office, the structural deficit was £73 billion a year. Since then, however, 1 million new jobs have been created in the private sector. I did not notice any Opposition Members welcoming that fact. There are 170,000 fewer people on benefits, and the deficit is down by a quarter.

We have introduced measures on competition, on making it easier to employ people, on a green investment bank, on improvements to the Estate Agents Act and on health and safety. Members of the House are inspired and motivated to enter politics for many different reasons, and one of the best of those is to work at creating jobs and help employers to create jobs. It looks as if the Opposition will oppose this measure, and in doing so they will show that they are anti-business, anti-enterprise and anti-jobs. They have only one option—more borrowing—whereas the coalition Government are pro-enterprise, pro-business and pro-jobs. We need jobs for people who want to make their lives better, and I commend the Bill to the House.

Question put, That the Bill be read the Third time.

The House divided: Ayes 290, Noes 228.Division No. 82][7 pmAYESAfriyie, AdamAldous, PeterAlexander, rh DannyAmess, Mr DavidAndrew, StuartArbuthnot, rh Mr JamesBacon, Mr RichardBaker, SteveBaldry, Sir TonyBaldwin, HarriettBarker, rh GregoryBaron, Mr JohnBebb, GutoBeith, rh Sir AlanBellingham, Mr HenryBeresford, Sir PaulBingham, AndrewBinley, Mr Brian Birtwistle, GordonBlackman, BobBlackwood, NicolaBoles, NickBone, Mr PeterBottomley, Sir PeterBradley, KarenBrake, rh TomBray, AngieBrazier, Mr JulianBridgen, AndrewBrine, SteveBrokenshire, JamesBrooke, AnnetteBrowne, Mr JeremyBruce, FionaBruce, rh Sir MalcolmBuckland, Mr RobertBurley, Mr AidanBurns, ConorBurns, rh Mr SimonBurrowes, Mr DavidBurstow, rh PaulBurt, AlistairBurt, LorelyByles, DanCairns, AlunCampbell, rh Sir MenziesCarmichael, rh Mr AlistairCarmichael, NeilCarswell, Mr DouglasCash, Mr WilliamChope, Mr ChristopherClappison, Mr JamesClifton-Brown, GeoffreyCoffey, Dr ThérèseCollins, DamianColvile, OliverCox, Mr GeoffreyCrabb, StephenCrockart, MikeCrouch, TraceyDavey, rh Mr EdwardDavies, David T. C. (Monmouth)Davies, GlynDavies, Philipde Bois, NickDjanogly, Mr JonathanDorrell, rh Mr StephenDorries, NadineDoyle-Price, JackieDrax, RichardDuddridge, JamesDuncan, rh Mr AlanDuncan Smith, rh Mr IainEllis, MichaelEllison, JaneEllwood, Mr TobiasEustice, GeorgeEvans, JonathanEvennett, Mr DavidFabricant, MichaelFarron, TimFeatherstone, LynneFox, rh Dr LiamFrancois, rh Mr MarkFreeman, GeorgeFreer, MikeFuller, RichardGale, Sir RogerGarnier, Sir EdwardGarnier, MarkGauke, Mr DavidGeorge, AndrewGibb, Mr NickGilbert, StephenGlen, JohnGoldsmith, ZacGoodwill, Mr RobertGove, rh MichaelGraham, RichardGrant, Mrs HelenGray, Mr JamesGrayling, rh ChrisGreen, rh DamianGreening, rh JustineGriffiths, AndrewGummer, BenGyimah, Mr SamHalfon, RobertHames, DuncanHammond, rh Mr PhilipHancock, MatthewHands, GregHarper, Mr MarkHarrington, RichardHarris, RebeccaHart, SimonHarvey, Sir NickHayes, Mr JohnHeald, OliverHeath, Mr DavidHemming, JohnHenderson, GordonHendry, CharlesHerbert, rh NickHinds, DamianHoban, Mr MarkHollingbery, GeorgeHollobone, Mr PhilipHolloway, Mr AdamHorwood, MartinHowell, JohnHughes, rh SimonHuhne, rh ChrisHuppert, Dr JulianHurd, Mr NickJackson, Mr StewartJames, MargotJenkin, Mr BernardJohnson, GarethJohnson, JosephJones, AndrewJones, rh Mr DavidJones, Mr MarcusKawczynski, DanielKelly, ChrisKennedy, rh Mr CharlesKirby, SimonKnight, rh Mr GregLamb, NormanLancaster, MarkLansley, rh Mr AndrewLeadsom, AndreaLee, JessicaLee, Dr PhillipLefroy, JeremyLeigh, Mr EdwardLeslie, CharlotteLetwin, rh Mr OliverLewis, BrandonLewis, Dr JulianLiddell-Grainger, Mr Ian Lopresti, JackLord, JonathanLoughton, TimLumley, KarenMain, Mrs AnneMaude, rh Mr FrancisMaynard, PaulMcCartney, JasonMcCartney, KarlMcIntosh, Miss AnneMcLoughlin, rh Mr PatrickMcPartland, StephenMenzies, MarkMetcalfe, StephenMiller, rh MariaMills, NigelMilton, AnneMitchell, rh Mr AndrewMoore, rh MichaelMordaunt, PennyMorgan, NickyMorris, Anne MarieMorris, JamesMosley, StephenMowat, DavidMulholland, GregMundell, rh DavidMunt, TessaMurray, SheryllMurrison, Dr AndrewNeill, RobertNewmark, Mr BrooksNewton, SarahNokes, CarolineNorman, JesseNuttall, Mr DavidO'Brien, Mr StephenOfford, Dr MatthewOllerenshaw, EricOpperman, GuyOttaway, RichardPaice, rh Sir JamesParish, NeilPatel, PritiPawsey, MarkPenning, MikePenrose, JohnPercy, AndrewPerry, ClairePhillips, StephenPincher, ChristopherPoulter, Dr DanielPrisk, Mr MarkRaab, Mr DominicRandall, rh Mr JohnReckless, MarkRedwood, rh Mr JohnRees-Mogg, JacobReid, Mr AlanRobathan, rh Mr AndrewRobertson, Mr LaurenceRogerson, DanRosindell, AndrewRudd, AmberRuffley, Mr DavidRussell, Sir BobRutley, DavidSanders, Mr AdrianSandys, LauraScott, Mr LeeSelous, AndrewShapps, rh GrantSharma, AlokShelbrooke, AlecShepherd, Mr RichardSkidmore, ChrisSmith, Miss ChloeSmith, HenrySmith, JulianSmith, Sir RobertSoames, rh NicholasSoubry, AnnaSpelman, rh Mrs CarolineSpencer, Mr MarkStephenson, AndrewStevenson, JohnStewart, BobStreeter, Mr GaryStride, MelStuart, Mr GrahamStunell, rh AndrewSturdy, JulianSwales, IanSwayne, rh Mr DesmondSwinson, JoTapsell, rh Sir PeterTeather, SarahThurso, JohnTimpson, Mr EdwardTomlinson, JustinTredinnick, DavidTurner, Mr AndrewTyrie, Mr AndrewUppal, PaulVaizey, Mr EdwardVara, Mr ShaileshVickers, MartinVilliers, rh Mrs TheresaWalker, Mr CharlesWalker, Mr RobinWalter, Mr RobertWard, Mr DavidWatkinson, AngelaWebb, SteveWharton, JamesWheeler, HeatherWhite, ChrisWhittaker, CraigWhittingdale, Mr JohnWiggin, BillWilliams, Mr MarkWilliams, RogerWilliams, StephenWilliamson, GavinWillott, JennyWilson, Mr RobWright, JeremyWright, SimonYoung, rh Sir GeorgeTellers for the Ayes:Mark Hunter andMr Robert SymsNOESAbbott, Ms DianeAbrahams, DebbieAinsworth, rh Mr BobAlexander, Heidi Ali, RushanaraAllen, Mr GrahamAnderson, Mr DavidAshworth, JonathanAustin, IanBailey, Mr AdrianBain, Mr WilliamBalls, rh EdBanks, GordonBarron, rh Mr KevinBeckett, rh MargaretBegg, Dame AnneBenn, rh HilaryBenton, Mr JoeBerger, LucianaBetts, Mr CliveBlackman-Woods, RobertaBlears, rh HazelBlenkinsop, TomBlomfield, PaulBlunkett, rh Mr DavidBradshaw, rh Mr BenBrennan, KevinBrown, LynBrown, Mr RussellBryant, ChrisBuck, Ms KarenBurden, RichardBurnham, rh AndyByrne, rh Mr LiamCampbell, Mr AlanCampbell, Mr RonnieClark, KatyClarke, rh Mr TomCoaker, VernonCoffey, AnnConnarty, MichaelCooper, RosieCooper, rh YvetteCorbyn, JeremyCrausby, Mr DavidCreagh, MaryCreasy, StellaCruddas, JonCryer, JohnCunningham, AlexCunningham, Mr JimDakin, NicDanczuk, SimonDarling, rh Mr AlistairDavid, WayneDavies, GeraintDe Piero, GloriaDenham, rh Mr JohnDobbin, JimDobson, rh FrankDocherty, ThomasDonaldson, rh Mr Jeffrey M.Donohoe, Mr Brian H.Doran, Mr FrankDowd, JimDoyle, GemmaDromey, JackDugher, MichaelDurkan, MarkEagle, Ms AngelaEagle, MariaEdwards, JonathanEfford, CliveElliott, JulieEngel, NataschaEsterson, BillEvans, ChrisFarrelly, PaulField, rh Mr FrankFitzpatrick, JimFlello, RobertFlint, rh CarolineFovargue, YvonneFrancis, Dr HywelGapes, MikeGilmore, SheilaGlass, PatGlindon, Mrs MaryGodsiff, Mr RogerGoggins, rh PaulGoodman, HelenGreatrex, TomGreen, KateGriffith, NiaGwynne, AndrewHain, rh Mr PeterHamilton, Mr DavidHamilton, FabianHarris, Mr TomHavard, Mr DaiHealey, rh JohnHendrick, MarkHepburn, Mr StephenHeyes, DavidHillier, MegHodge, rh MargaretHodgson, Mrs SharonHoey, KateHopkins, KelvinHosie, StewartHowarth, rh Mr GeorgeHunt, TristramIrranca-Davies, HuwJackson, GlendaJames, Mrs Siân C.Jamieson, CathyJarvis, DanJohnson, rh AlanJohnson, DianaJones, GrahamJones, HelenJones, Mr KevanJoyce, EricKaufman, rh Sir GeraldKeeley, BarbaraKendall, LizKhan, rh SadiqLavery, IanLazarowicz, MarkLeslie, ChrisLewis, Mr IvanLloyd, TonyLong, NaomiLove, Mr AndrewLucas, CarolineLucas, IanMacNeil, Mr Angus BrendanMacShane, rh Mr DenisMactaggart, FionaMahmood, Mr KhalidMahmood, ShabanaMalhotra, SeemaMann, JohnMarsden, Mr GordonMcCabe, SteveMcCann, Mr MichaelMcCarthy, KerryMcClymont, Gregg McDonnell, JohnMcFadden, rh Mr PatMcGovern, AlisonMcGovern, JimMcGuire, rh Mrs AnneMcKechin, AnnMcKenzie, Mr IainMcKinnell, CatherineMeacher, rh Mr MichaelMearns, IanMichael, rh AlunMiller, AndrewMitchell, AustinMoon, Mrs MadeleineMorrice, Graeme (Livingston)Morris, Grahame M. (Easington)Mudie, Mr GeorgeMunn, MegMurphy, rh Mr JimMurphy, rh PaulMurray, IanNandy, LisaNash, PamelaOnwurah, ChiOsborne, SandraOwen, AlbertPaisley, IanPearce, TeresaPerkins, TobyPhillipson, BridgetPound, StephenQureshi, YasminReed, Mr JamieReeves, RachelReynolds, EmmaRiordan, Mrs LindaRobinson, Mr GeoffreyRoy, Mr FrankRoy, LindsayRuane, ChrisRuddock, rh Dame JoanSeabeck, AlisonShannon, JimSharma, Mr VirendraSheridan, JimShuker, GavinSkinner, Mr DennisSlaughter, Mr AndySmith, rh Mr AndrewSmith, AngelaSmith, OwenSpellar, rh Mr JohnStraw, rh Mr JackStringer, GrahamStuart, Ms GiselaSutcliffe, Mr GerryTami, MarkThomas, Mr GarethThornberry, EmilyTimms, rh StephenTrickett, JonTurner, KarlTwigg, DerekUmunna, Mr ChukaVaz, rh KeithVaz, ValerieWalley, JoanWatson, Mr TomWatts, Mr DaveWeir, Mr MikeWhiteford, Dr EilidhWhitehead, Dr AlanWilliamson, ChrisWilson, PhilWilson, SammyWinnick, Mr DavidWinterton, rh Ms RosieWoodward, rh Mr ShaunWright, DavidWright, Mr IainTellers for the Noes:Julie Hilling andSusan Elan JonesQuestion accordingly agreed to.

Bill read the Third time and passed.