Small Business, Enterprise and Employment Bill

Baroness Byford Excerpts

Wednesday 7th January 2015 Grand Committee

[Lord Newby (LD)]

My Lords, as a Leeds United supporter, I begin by congratulating the noble Lord, Lord Mitchell, on the success of Spurs. As a young boy, everybody in my class supported either Wolves or Spurs, as this was a time when Spurs were doing rather well in the FA Cup more generally. I supported Spurs. This was a time when no one who lived in Leeds supported Leeds United, because they were not worth supporting. I graduated to better things but am very pleased that Spurs are still doing well. I also congratulate him on the work that he did on payday lending and getting the current legislation in place. I am sure that all noble Lords agree that that has been a beneficial change, and he was absolutely instrumental in bringing it about.

I am also grateful for the opportunity to discuss the issues raised by this group of amendments. I absolutely understand what the noble Lord is seeking to achieve, but I am not really convinced that they are necessary. Taking them in turn, Amendments 13, 14 and 15 would require that designated banks and credit reference agencies provide information about the criteria used to calculate the credit score of a small or medium-sized business customer. The Government agree that it is vital that businesses have the information they need in order to maximise their chances of securing finance. However, I believe that this is best achieved by improving transparency in the banking sector and by educating businesses to help them understand the impact their behaviours have on their credit scores—not through legislation.

The Government have introduced measures in order to make the banking industry one of the most transparent in the world. These include the requirement on the largest banks to disclose lending by postcode areas, the Federation of Small Businesses’ and British Chambers of Commerce’s new Business Banking Insight survey, commissioned by the Chancellor, which helps small businesses see which bank is best for them, and the independent appeals process, which allows any SME rejected for a loan to get a second chance.

There is a wealth of information in the public domain which businesses can use to understand the impact their behaviours have on their credit scores. This includes the information provided by the CRAs themselves, the Money Advice Service, the British Business Bank, charities and other information providers. An excellent example is the Business Credit Scoring Explained pamphlet produced by Professor Russel Griggs, chair of the independent lending appeals process, which is available on GOV.UK and the British Business Bank website. It is a surprisingly easy to read document. I would have thought that any small business seeking to understand how credit scoring worked would find it immensely useful. It is this wider sort of information that is most valuable and useful to SMEs, in our view, when they are considering how to improve their options for accessing finance.

The Government intend to continue to work closely with business groups, banks and CRAs, to build on the existing good work in this area, to help promote existing material and to create new, informative aids for businesses. However, CRAs and banks compete on the accuracy of the models and methods they use to assess risk. An obligation to reveal this proprietary information could undermine the competitive nature of these markets, which would be in nobody’s interest. Just as importantly, I am concerned that detailed models produced by banks and CRAs would be of little use to the average SME. Examples such as the pamphlet I have just referred to are much more suitable in my view and are of course already available.

Amendment 17 is intended to restrict the information that may be shared under the regulations to information specifically identified by the business. I assure noble Lords that this is already the policy intention. Clause 4 requires that businesses must have agreed to have data provided to CRAs. Our intention is that this agreement will have been given when signing the terms and conditions for a financial product, which is the process that businesses are used to. Therefore, we believe that this amendment is simply not necessary.

Amendment 18 aims to ensure that the Government analyse the costs of the measure. The Government have already published a regulatory impact assessment setting out the impact of the changes on banks, CRAs and businesses. It concluded that banks would incur upfront IT costs of £10.5 million and that CRAs would incur upfront IT costs of £3.5 million but that any ongoing cost of sharing these data would be negligible for established lenders. It also concluded that the measures will increase competition in the CRA market and the market for lending to SMEs, which would produce a downward, not upward, effect on prices charged for credit scores and the cost of lending.

I hope that I have been able to assure the noble Lord that these amendments are not necessary and that he will agree to withdraw the amendment.

[Baroness Byford (Con)]

My Lords, the noble Lord mentioned the whole question of the security of data sharing. I should just like to have confirmation from the Minister that Clause 4 covers that. There is sometimes a risk in sharing data that it can be to the disadvantage of a company, and that would be very unfortunate if it were to happen in this case. I was not sure whether the Minister’s response to the noble Lord, Lord Mitchell, covered that and therefore whether the Bill covers that point.

[Lord Newby]

The important thing is that information which a company has and which might be shared is shared only with the explicit prior approval of the company. As I was saying, this is one of the things that is often included in the terms and conditions of any agreement or relationship that the company has with the bank. Unless the company has explicitly said that it is prepared to have its data shared, they will not be shared. More generally, all the activity that we are talking about is covered by normal Data Protection Act safeguards.

Queen’s Speech

Baroness Byford Excerpts

Monday 13th May 2013 Lords Chamber

[Baroness Byford]

My Lords, the Government are committed to building up the economy, supporting growth in the private sector and the creation of more jobs and opportunities. This is welcome. I also very much welcome the maiden speech of the noble Baroness, Lady Lane-Fox of Soho, because she spoke on the important topic of digital online and the growth of online services. Increasing the coverage of broadband and improving broadband speeds is but one way of achieving this goal. A survey of the Institute of Directors in January 2013 found that fixed-line broadband for urban businesses is generally good but that in rural areas growth was unsatisfactory. Its conclusions state that,

“broadband in rural areas is an urgent priority”.

The CLA estimates that 18% to 20% of rural areas cannot get broadband. This affects around 100,000 businesses, with a turnover of up to £60 billion, many of which are obviously farming or farm-related businesses. Rural broadband influences diversification and has enormous potential for on-farm increases. The noble Baroness stressed the importance of digital growth and online services. She commented that there should be a universal UK system and that it was a basic right for everyone.

I am grateful to the NFU for its briefing on broadband services. Defra’s whole-farm approach involves moving most or all of the farming-related services online and is run through Business Link. Without adequate broadband services many businesses are unable to progress and grow. The House of Lords Communications Committee report of July 2012 criticised the Government’s broadband strategy for failing to create a future- proof national network, concluding that the current programme risks leaving people and businesses in certain areas of the UK behind.

In his introduction to the debate on the report, my noble friend Lord Inglewood highlighted three key elements. First, broadband policy should be driven by the need to arrest and ultimately eliminate the digital divide. Secondly, it should be driven by a long-term but flexible view of the infrastructure’s future; the report referred to fibre-optic hubs that could bring open access into or within reach of every community. Thirdly, it should strive to reinforce the robustness and the resilience of the network as a whole.

I should have spoken in tomorrow’s debate, which obviously covers agriculture, but I cannot and so I have tried to pick three issues that are common to the debate today—namely, regulatory reform, broadband and local government. I move swiftly to regulatory reform.

My noble friend Lord Forsyth, who has just left his seat, said that he felt that there was no need to have in the gracious Speech a Bill to look at the effectiveness of the regulation of business. I am not sure that I agree with him but I share some of his thoughts. Within the agricultural sector, a farming regulation task force was set up in July 2010. It was asked to carry out an independent review of ways to reduce the regulatory burden on farming businesses. The report brought forward some 200 recommendations.

Defra responded in February 2012 and followed up with an implementation group chaired by Richard Macdonald. One year on, it has identified five priority issues. First, there should be a culture change, focusing on outcomes rather than on processes. Secondly, there should be a system of inspection and earned recognition allowing farmers to demonstrate best practice and earn recognition, which would reduce the number of inspections made on-farm. Thirdly, data-sharing and paperwork across Defra and its agencies should be improved. Fourthly, a system for overseeing government projects and developing ways to deliver simplified and integrated environmental regulatory messages should be followed. Fifthly, the electronic reporting of animal movements should be extended.

I have gone into some detail as the evidence reflects that change comes slowly. In its briefings, the NFU recognises that progress has been made but that it is slow, which results in frustration. Its plea is that the recommendations should be driven forward urgently, with the impact on the ground being the real test for delivery. I suspect that other noble Lords will have had similar experiences within their own range of businesses.

Finally, I turn to local government and particularly to planning. In a Written Statement last week from the Department for Communities and Local Government, it was stated that the secondary legislation will, among other things, allow underused and old-fashioned offices to be revamped as dwellings and existing unused agricultural buildings of 500 square metres or less to be used for new businesses, all without recourse to the planning system. As the Written Statement points out, the rural economy will be given a boost,

“while protecting the open countryside from development”.—[Official Report, Commons, 9/5/13; col. 5WS.]

The simplification of planning guidance and a careful relaxation of planning law will benefit both town and country—provided, that is, that the remaining rules are observed, and strictly enforced by local government where they are not.

It is known that in some areas the flouting of planning laws leads to both a marked decrease in community spirit and, in too many cases, to an increased risk for local inhabitants. An obvious risk is where a business is established in premises with poor access to a main road and where planning permission would have been turned down by the Highway Authority if it had known about it. Figures on serious road accidents have already shown a rising trend in rural areas.

A less obvious problem is that businesses without planning permission tend not to advertise their presence. Visitors in vehicles of all kinds use postcodes. Google focuses each postcode on one particular building and satellite navigation systems take drivers to what might be a private dwelling. I know of one dwelling occupied by a single, elderly lady which receives unwanted callers several times a day, from 7.30 am until 9.30 pm. The drivers are looking for second-hand car offers, for sale over the internet, from premises on the other side of the road. Clearly, that site should not have been approved, and it was not.

On 24 April, permission was granted in another place for a Bill requiring local authorities to impose substantial fines for the flouting of planning regulations. Such a move would not affect legitimate development. However, it would support the National Planning Policy Framework, which explicitly recognises that effective enforcement by local government is necessary for maintaining public confidence. Is the Minister confident that local authorities have the planning officers and the finance to make sure that this happens?

Finally, I turn briefly to direct farming issues. Farms and the farming industries provide a variety of different businesses within the whole. They produce food, look after the countryside, care for biodiversity and are involved and engaged in energy projects. One thing makes the farming community different from all other businesses: it is subject to the vagaries of the weather. Over the past year, snow, sunshine and drought followed by floods have obviously had a big impact. Farm incomes for 2012 show a bottom-line decrease of some 14%. UK agriculture is but part of the food industry, but it is an enormously important one that wants to play its part. It needs people with vocational training and appropriate skills. Science and technology are hugely important, while innovation is key to making our businesses grow. Farmers are responding to these issues and they are willing to take calculated risks. They look to diversity and growing new ideas outside their businesses.

I welcome many of the proposals in the gracious Speech, but the Government are supporting many other things beyond the Bills set out in it.

Queen’s Speech

Baroness Byford Excerpts

Wednesday 16th May 2012 Lords Chamber

[Baroness Byford]

My Lords, there has been criticism that the gracious Speech lacked an agenda for growth, jobs and a stimulus for the economy. That is clearly not true, though, as others have said. The Government are indeed taking steps to free up businesses to allow them to grow and employ other people. I wholeheartedly endorse the stated priority of cutting the deficit and approve the reduction in the number of civil servants. Most of all, I support the measures being taken to reduce the regulatory burden on entrepreneurs to clean up the IT systems with which so many of the departments have been saddled, particularly those in Defra.

I wish success to the negotiations on reducing the pension burden. The previous Government, during their tenure, increased the pension burdens from 7.2% to 14.1% on local government salaries and centrally by over five percentage points to a range of 16.7% up to 25.8% at the most recent elections. These are additional burdens that have to be met, and they are the fault of the previous Government. In the circumstances, I took great exception to the comments by the noble Baroness, Lady Royall, at State Opening, when she asserted that the coalition was unfair, incompetent and out of touch.

There is much to be welcomed in the gracious Speech. I cannot touch on everything but I am particularly glad to see a draft water Bill, an energy Bill, the reduction of regulation and in particular the Groceries Code Adjudicator Bill, which has its Second Reading on Tuesday. That cannot come quickly enough. I am watching the death of market towns, caused mainly by the rapacious advance of supermarkets and aided and abetted, sadly, by local councils that still cannot see the damage that they do to the rural economy. I am aware that so much of the success of these mammoths is due to the stranglehold over those who grow, produce and manufacture items for sale.

Last week we were told of a further fall in the milk price, which the right reverend Prelate the Bishop of Hereford referred to earlier. That is iniquitous. The prices of fuel, fertilisers, grass seeds, animal feed and machinery all continue to rise, some of them rapidly. Supermarkets, on the other hand, are making profits. In the face of recession, those profits have held up very well, and we know that the salaries of those who run the supermarkets are generous. That is what is unfair. Farmers and processors are being openly robbed and they desperately need the support of an adjudicator. We shall deal with this in greater detail on Tuesday.

I am particularly concerned about the fresh milk supply. Will the Minister carry out an exercise to reveal exactly how well supermarkets do? They sell in four-pint, two-pint and one-pint cartons. The price comparisons are all based on the four-pint model, which considerably understates the average return per pint to the supermarket. It also minimises the insult to the farmer. A single pint sells for 49p, which is almost exactly the four times the price that he gets, but the official figures are based on the four-pint model—39p to 42p per pint. We shall debate this further.

The contribution that charities and voluntary workers give to the life of this country is incalculable. It would be wrong to reduce their impact through the side effects of measures taken to deal with the control of the deficit or developments in the commercial sector. In this Christian Aid week, I am pleased that pressure to reduce our international contribution has been resisted and that there are clear intentions to encourage further volunteering and to maximise the value of charitable giving. As an aside, I understand that DfID has agreed to match-fund the first £5 million that Christian Aid achieves this week.

There is no doubt that volunteering can assist individuals into employment, which is good for them and good for the economy. The major benefit, however, must be the application of donations, large and small, to improving the quality of life for people throughout the country—and abroad, as I have indicated—regardless of colour, creed, age or financial circumstances. I hope that the charities Bill may look at ways in which gift-aiding can be simplified and the burdens there reduced.

It does not necessarily need a Queen’s Speech to reflect the importance that I believe farming and agriculture play in our community today. Their role is the driving force behind so much economic activity. Between them, farming and food have 3.5 million jobs. The headline is that the total farming and food sector is worth some £85 billion, the equivalent of 6.9% of GVA. Farming is more than that, though: it is important for jobs both on and off the farm. In all, farming and food production provides 3.5 million jobs, but technology means that employment on the farm may fall. Other areas are growing, however, and in that I particularly include research and development. They will play an important role in our food security in future.

The departments have given some stimulus and help to particular areas. I am best known for my connection with rural areas. In March and April this year, a £160 million package of measures was announced to support rural communities, mostly through the rural economic growth review. Of that, £100 million is to grow rural businesses through the rural development programme for England, some £20 million of grants will extend superfast broadband to remoter areas, some £25 million will promote rural tourism and support its businesses and there will be loans totalling more than £20 million for community-owned renewable energy schemes. In addition, £2 million will help women in rural businesses to develop those businesses. Those do not feature in the gracious Speech but they make a huge difference. It is seed-corn money that makes a difference to enable businesses to start. The Government need to see ways in which they can lighten the load of regulation and red tape so that that seed corn can grow and a business can become one, two and then 10 and perhaps 20. I support the Government in the measures that they have taken in the gracious Speech.